SANDOZ PVT. LTD. Vs. COMMISSIONER OF CENTRAL EXCISE

JUDGEMENT

(1.) THE appeal is directed against Order -in -Original No. 03 -04/COMMR./Bel -I/R -IV/AKP/2008 -09, dated 28 -5 -2008 passed by the Commissioner of Central Excise & Customs, Belapur. Vide the impugned order the learned adjudicating authority has confirmed a duty demand of Rs. 1,12,94,803/ - under the provisions of Section 11A of the Central Excise Act, 1944 read with Section 142 of the Customs Act, 1962 and read with the conditions of B -17 bond executed by the appellant. He has further held that the appellant is also liable to pay interest on the said duty demand under the provisions of Section 11AB of the Central Excise Act, 1944 read with Section 28AB of the Customs Act, 1962. Aggrieved of the same the appellant is before us.

(2.) THE learned counsel for the appellant submits that the appellant had procured both indigenous as well as imported raw material for the manufacture and export the finished products. A part of these raw materials were procured duty free under Notification No. 53/97 -Cus. and procured duty free indigenously under Notification 1/95 -C.E. Part of the raw materials were used in the manufacture of finished products and the balance raw materials were lying in stock when the fire accident broke out. It is not the case of the department that the appellant had violated the conditions of the exemption Notification under which the goods were procured duty -free. The appellant had utilised raw material for the manufacture of finished products which were to be subsequently exported. In view of the destruction of the finished products due to the fire accident, the condition of export of finished products became an impossibility. It is in this context, the appellant sought remission of customs duty on the inputs under Section 23 of the Customs, 1962 which provides for remission of Customs duty in case any imported goods have been lost or destroyed as such before clearance for home consumption. Since the 100% EOU is a bonded warehouse and the clearance has to be effected subsequent to manufacture of the finished goods, the provisions for remission of duty would apply for inputs lying as such in the bonded warehouse as also on the inputs contained in the finished products which were destroyed. Similarly, Rule 21 of the Central Excise Rules, 2002 provides for remission of duty if goods are destroyed by natural causes or by inevitable accident or are claimed by the manufacturer as unfit for consumption or for marketing at any point of time before removal. Therefore, the provisions of remission under the Customs Act and the Central Excise Rules are required to be enforced independent of other provisions. As regards the goods procured domestically following the procedure set out under Central Excise (Removal of Goods at Concessional Rate of Duty for Manufacture of Excisable Goods) Rules, 2001, the provisions of the said Rules would apply when goods are lost or destroyed during transport from the place of procurement to the manufacturer's premises or during handling or storage in the manufacturer's premises. When the goods have been used in the manufacture of finished products, the said provisions would not apply. Therefore, denial of remission by the adjudicating authority in respect of both the imported raw material as well as indigenous raw materials is unsustainable in law.

(3.) WE have carefully considered the submissions made by both the sides.