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TMI Blog1987 (1) TMI 343X X X X Extracts X X X X X X X X Extracts X X X X ..... manufacture of P.C.C. poles falling under item No. 68 of the First Schedule to the Central Excises and Salt Act, 1944 (the Schedule is hereafter referred to as CET, for brevity s sake) and availed themselves of excise duty exemption for clearances upto Rs. 15 lakhs during the financial year 1979-80 in terms of central excise notification No. 89/79, dated 1-3-1979. They commenced payment of duty during the month of February, 1980. On scrutiny of documents, the Central Excise authorities found that, during 1979-80, the respondents had used 158 P.C.C. poles valued at Rs. 26,356.00 for testing by the Rajasthan State Electricity Board (R.S.E.B.). The value of P.C.C. poles was in excess of the eligible exemption limit of Rs. 15 lakhs and the res ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... goods rendered deliberately unfit for consumption but only on those goods which, by virtue of some manufacturing defect, were unfit for use. In the present instance, according to the Assistant Collector, the fully manufactured and fit-to-use poles get broken in testing. In this view, the Assistant Collector, by his Order dated 23-1-1981, confirmed the demand for duly. In appeal, the Appellate Collector, by his impugned order dated 17-12-1981 held that for the reasons that exemption in terms of Notification No. 89/79 referred to the value of goods cleared (not produced) and that under Rule 49, duty was chargeable on goods only at the time of their clearance, the poles in question were not liable to be charged to duty since they were not clea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... goods are removed from the factory. Such removals could be within the factory or without the factory. In the latter case, duty will doubtless have to be charged and paid. And, unless there is a special dispensation by a competent authority, there could be no question of remitting or refunding the duty paid on such goods for whatever reason. The question before us is, however, of the duty liability of excisable goods which are removed within the factory for purposes of test, and are rendered useless in the process. There is no dispute about the position that the poles in question were taken for test and rendered useless after testing. Would the manufacturer be liable to pay duty on such goods? 7. The second proviso to Rule 49 reads as fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or for marketing subject to such conditions as may be imposed by the Collector by order in writing. Normally in such instances an application is made to the Collector for permission for destruction of the goods and permission is granted either in specific instances, or generally, as to the mode of destruction/and it is on the satisfaction of the authorities of the fact of destruction having been carried out that the duty liability is extinguished. Admittedly in the present instance there was neither such an application nor such an order. This was for the reason that the destruction took place in the course of testing and, according to the appellants, the fact of these poles being unfit for marketing became known only by reason of such destr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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