2017 (8) TMI 986 - HC - Central Excise

Remission of duty - destruction of goods - presence of competent authority - Whether the learned Tribunal was justified in not granting the remission of duty for P.P. Medicaments which were admittedly not fit for human consumption as being expired and which were destroyed in presence of Food and Drugs Administrative Authority and consequently demanding duty on the destroyed goods from the appellant? - Held that - It is an admitted position that in the present case the aforesaid procedure has not been followed by the appellant and without any approval/permission from the appropriate authority, drugs have been destroyed and that too not in presence of any of the Officers of the appropriate authority. It is the case on behalf of the appellant that as the goods/drugs were destroyed in the presence of the Food and Drugs Administrative Department on 11-1-2006, the appellant is entitled to remission of duty on such goods/drugs. However, the goods/drugs destroyed in presence of the Officers, other than appropriate authority/Officer of the Central Excise Department, cannot be said to be in compliance of Chapter 18 of the C.B.E. & C. s Central Excise Manual. If the appellant is claiming remission of duty on destruction of the drugs under Rule 21 of the Central Excise Rules, 2002, the appellant is required to follow the procedure as required as per Chapter 18 of the C.B.E. & C. s Central Excise Manual. It is required to be noted that on facts it cannot be said that there was inordinate delay on the part of the appropriate authority in not responding to the application submitted by the appellant. What is provided under Chapter 18 of the C.B.E. & C. s Central Excise Manual cannot be said to be procedural condition of technical nature. It is substantive condition, and therefore, non-observance of the same is not condonable and is likely to facilitate the commission of fraud and administrative inconvenience It cannot be said that the learned Tribunal has committed any error, which calls for the interference of this Court - appeal dismissed - decided against appellant.

Issues Involved:
1. Remission of duty for expired P.P. Medicaments destroyed.
2. Denial of remission of duty due to procedural lapses.
3. Disregard of co-ordinate Bench decisions granting remission.
4. Lack of specific intimation to the department regarding destruction.
5. Ignoring the certificate from the Assistant Commissioner of Food and Drugs Control Administration.

Detailed Analysis:

1. Remission of Duty for Expired P.P. Medicaments Destroyed:
The appellant-assessee, engaged in manufacturing P.P. Medicaments, sought remission of duty for expired goods destroyed. The appellant argued that the goods were unfit for human consumption and were destroyed as per the Food and Drugs Control Act. The destruction was done in the presence of the FDA, and a certificate was issued confirming this. The appellant contended that remission of duty is a substantive right under Rule 21 of the Central Excise Rules, 2002, which permits remission for goods unfit for consumption.

2. Denial of Remission of Duty Due to Procedural Lapses:
The Tribunal denied remission because the appellant destroyed the goods without prior permission from the appropriate authority, a requirement under Chapter 18 of the C.B.E. & C.’s Central Excise Manual. The appellant claimed that despite applying for permission, no response was received within 21 days, leading them to destroy the goods. The Tribunal held that the procedural requirements were substantive and not mere formalities, emphasizing that destruction must be supervised by the appropriate authority to ensure compliance and prevent fraud.

3. Disregard of Co-ordinate Bench Decisions Granting Remission:
The appellant cited various precedents where remission was granted under similar circumstances. However, the Tribunal distinguished these cases on factual grounds, noting that in those instances, the delay in granting permission was significantly longer, or the department remained silent despite multiple reminders. The Tribunal found that such were not the facts in the present case, as the department had responded within a reasonable time, requesting additional information which the appellant failed to provide promptly.

4. Lack of Specific Intimation to the Department Regarding Destruction:
The Tribunal noted that the appellant did not follow the proper procedure for intimation and destruction. Although the appellant claimed to have informed the department and destroyed the goods in the FDA's presence, the Tribunal found inconsistencies, such as the appellant requesting permission to destroy goods after the claimed destruction date. This indicated non-compliance with the procedural requirements, which mandated prior approval and supervision by the Central Excise authorities.

5. Ignoring the Certificate from the Assistant Commissioner of Food and Drugs Control Administration:
The appellant relied on the certificate from the FDA to support their claim for remission. However, the Tribunal held that the destruction in the presence of FDA officials did not substitute for the required supervision by Central Excise officers. The Tribunal emphasized that the procedures outlined in Chapter 18 of the C.B.E. & C.’s Central Excise Manual were not followed, rendering the certificate insufficient for granting remission.

Conclusion:
The Tribunal upheld the denial of remission of duty, emphasizing the importance of following the prescribed procedures for destruction and remission under Chapter 18 of the C.B.E. & C.’s Central Excise Manual. The procedural requirements were deemed substantive, and non-compliance could not be condoned. The appeals were dismissed, affirming the orders of the lower authorities.

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