Custom, Excise & Service Tax Tribunal
M/S. Universal Dairy Products (P) Ltd vs Commissioner Of Central Excise on 22 February, 2012
IN THE CUSTOMS, EXCISE AND SERVICE TAX
APPELLATE TRIBUNAL, NEW DELHI
PRINCIPAL BENCH, COURT NO. III
Excise Appeal No. 3962 of 2006- SM
Excise Appeal No. 3004 of 2007- SM
[Arising out of Order-in-Original No. 2/Commr/Tech/Rem/2006 dated 20.9.2006 and Order-in-Appeal No. 288 -CE/ APPL/KNP / 2007 dated 22.8.2007 both passed by the Commissioner of Central Excise (Appeals) Kanpur]
For approval and signature:
Hon'ble Ms. Archana Wadhwa, Member (Judicial)
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M/s. Universal Dairy Products (P) Ltd. Appellants
Vs.
Commissioner of Central Excise Respondent
Kanpur
Appearance:
Shri K.K. Anand, Advocate for the Appellants
Shri Fateh Singh, SDR for the Respondent
Date of Hearing : 4.11.2011
Date of decision : 22.2.2012
ORAL ORDER NO . ________________________
Per Archna Wadhwa:
Common issue is involved in these appeals and, therefore, both are being taken up together for disposal.
2. The relevant facts of the case, in brief, are that the appellants are engaged in the manufacture of Ice cream falling under Heading No. 2105 of the Schedule to the Central Excise Tariff Act, 1985. A fire accident took place in their factory on 1st May, 2005 and destroyed ice cream. They filed application dated 26.5.2005 for remission of duty on the ice cream destroyed in fire. A show cause notice dated 24.11.2006 was issued proposing to reject the remission application. Further, another show cause notice dated 28.4.2006 was issued demanding duty of Rs.1,39,837/- in respect of the quantity of 11902 units / 19912.80 Ltrs. of Ice cream reportedly damaged during the fire accident occurred in the factory on 1.5.2005. The Commissioner of Central Excise vide Order dated 20.9.2006 rejected the claim for remission of duty of Rs.1,39,837/- against which the appellant filed appeal No. E/3962/06 by Adjudication Order dated 7.5.2007. The Assistant Commissioner of Central Excise, Agra confirmed the demand of duty of Rs.1,39,837/- along with interest, which was upheld by the Commissioner (Appeals). The appellant filed Appeal No. E/3004/ 2007.
3. Learned Advocate on behalf of the appellant submits that the ice cream is a perishable goods. He submits that there is no dispute that the goods were damaged by fire. He also submits that by letter dated 6.5.2005, they have informed the total quantity of 11,902/- units / 19912.80 litres have been effected by fire. It has also been informed that the exact quantity of damaged material shall be informed after destruction. Then on 8.5.2005, the damaged goods were destroyed in the presence of the surveyor, who issued certificate of destruction. On 9.5.2005, the appellants informed the Superintendent of Central Excise, regarding destruction of the damaged goods. He submits that the Commissioner has rejected the remission application on the ground that the destruction of the damaged goods was undertaken without following the procedure as laid down in CBSE Excise Manual of Supplementary Instruction. He submits that the damaged goods were in such a condition that there was no scope to intimate the Central Excise officers. However, the goods were destroyed in the presence of the surveyor. He relied upon the decision of the Tribunal in the case of Godfrey Philips India Ltd. vs. CCE, Mumbai [2008 (233) ELT 842 (Tri-Mum)].
4. Learned DR on behalf of the Revenue reiterates the findings of the Commissioner. He particularly drew the attention of the Bench to the relevant provisions of Chapter 18 of CBSE of Excise Manual of Supplementary Instructions. He submits that it is mandatory requirement to obtain permission for destruction of the damaged goods in the presence of the officers. He submits that in the present case, the appellants have not obtained the permission from the Central Excise officers for destruction of the goods for the same are violation of the instructions. He submits that the case laws laid down by the learned Advocate is not applicable in this case as in the said case, the goods were destroyed due to flood.
5. After hearing both the sides and on perusal of the records, I find that Rule 21 of the Central Excise Rules, 2002 provides for remission of duty in certain situation. Chapter 18 of CBSE Excise Manual of Supplementary Instructions had given a guidelines for remission of duty and destruction of the goods. The relevant portion of the procedure for remission of duty in the said supplementary instructions are reproduced below:-
1.4 The procedure to be followed for destruction of goods and remission of duty thereon shall be as follows:-
(i) A manufacturer desiring to destroy and seek remission of duty in respect of the excisable goods manufactured in his factory, in terms of Rule 21 on the grounds that the said goods have been rendered unfit for consumption or for marketing, will make an application in duplicate to the Range Officer indicating complete details of the goods and reasons for destruction, along with the proof that the goods have become unfit for consumption or for marketing such as report of chemical test or any other test, conducted by a Government recognised laboratory.
(ii) The application will be quickly processed by the Range Officer. In case the Range officer is competent to allow destruction and remission (in terms of para 1.2 above), he will proceed to take necessary action at his level. In case the matter falls within the competency of superior officer, he will forward the application along with his recommendation to the Deputy / Assistant Commissioner of the Division within 15 days of receipt.
6. On going through the order of the Commissioner rejecting the request for remission, I find that the fact of occurrence of fire in the appellants factory and the fact of intimating the same within 24 hours does not stand disputed by the Commissioner. It is also seen that the Range Superintendent visited the factory on 4.5.2001 and by that time the damaged goods could not be quantified by the appellants. The goods were actually segregated subsequently and were destroyed on 8.5.2005 in the presence of surveyor. The remission stands rejected by the Commissioner on the sole ground that the provisions of para 1.3 of Chapter 18 of CBSE Excise Manual of Supplementary Instructions does not stand fully complied with and the proper procedure has not been followed.
7. The appellants have strongly contested the same on the ground that ice-cream is human consumption item and has to be kept at the temperature of minus 180 C. Due to fire incident, the entire cooling system was disturbed and the ice-cream has lost its identity being the milk product of perishable nature. Drawl of sample and keeping it in a suitable temperature in the transit up to Government recognised testing laboratory was not feasible and manageable.
8.. The short ground on which the Commissioner has denied the benefit of remission is non-observance of the procedure as recorded in the manual. Though, I find that such procedure is required to be followed but in the facts and circumstances of the present case involving the product which is perishable in nature and the said fact has to be kept in a particular temperature, I am of the view that the strict non-observance of the above Rule should not be adopted as a reason for denial of the benefit otherwise available to the appellant. Admittedly, there was fire in the appellants factory, intimation about the same was given to the revenue, Superintendent visited the factory within 4 days, subsequent destruction of the goods was in the presence of surveyor, who also issued certificate of destruction and the same was also intimated vide their letter dated 9.5.2005. In these circumstances, it will not be justifiable to deny the benefit of remission to the appellant on the sole ground of strict observance of the procedure. As such, by extending the benefit to the appellant, I set aside the impugned order of the Commissioner denying the remission.
9. Inasmuch as the subsequent demand is only consequence of denial of remission, the same is also required to be set aside and appeals are allowed with consequential relief to the appellants.
( Pronounced in the open Court on 22.2.2012)
( Archana Wadhwa ) Member(Judicial)
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