2017 (7) TMI 279 - AT - Central Excise

Rate of duty applicable on subject goods - P&P medicaments - whether rate of duty should be the rate of duty of the day, when the goods were imported or it should be the rate of duty of the day, when the goods were removed/ destroyed in the factory? - Held that - In this case, after the manufacture of goods and when their shelf life expired, the appellant was not in a position to clear / remove them even for home consumption. Therefore, the appellant chose to destroy the subject goods. They have paid duty of Central Excise @ leviable on the day of destruction - Once the goods have been allowed to reach the factory premises of the appellant under Notification No.94/96 dated 16.12.96, the significance of the day of reimportation of the goods is not valid for charging the duty. If the appellant removes such goods for home consumption, by taking necessary permission if required, rate of duty would be applicable for the day when the goods are to be removed for home consumption. The demand of duty would be at the rate as applicable on the day of destruction, when the appellant had chosen to destroy the goods and made the payment of duty to the department. When there is no dispute on the fact of payment of duty made by the appellant payable on the day of destruction there is no further liability of payment of duty of Central Excise against the appellant - once we have decided that the appellant has rightly paid the duty on the day of destruction of the goods there cannot be any liability of interest as well as liability of penalty against the appellant. Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Applicability of duty rate on goods for Central Excise.
2. Liability for interest and penalty on unpaid duty.

Analysis:

Issue 1: Applicability of duty rate on goods for Central Excise
The case involved M/s Nicholas Piramal India Ltd. appealing against an order sustaining Central Excise duty amounting to ?10,24,279/- along with interest and equivalent penalty. The appellant had cleared finished goods for export to Japan and China, which were later rejected and not re-exported. The shelf life of the goods expired, and no permission for extension or payment of Central Excise duty was made. The dispute centered on whether duty should be levied based on the day of re-importation or destruction of the goods. The Tribunal held that duty is payable when goods are removed for home consumption, and in this case, duty was correctly paid on the day of destruction. The duty rate applicable was determined to be on the day of destruction, not re-importation, as argued by the department. Therefore, no further duty liability existed for the appellant.

Issue 2: Liability for interest and penalty on unpaid duty
The impugned order had imposed interest and penalty on the appellant, which was challenged. However, since the Tribunal found that the duty was correctly paid on the day of destruction, it held that there was no basis for imposing interest or penalty. As a result, the impugned order was modified, and the appeal was partly allowed, absolving the appellant of any further duty, interest, or penalty liabilities. The decision was based on the understanding that duty payment on the day of destruction was sufficient, and no additional financial obligations were warranted.