GODREJ FOOD LTD Vs. UNION OF INDIA

JUDGEMENT

(1.) THE petitioners are manufacturers of a product named 'soya Milk Great Shake'. A dispute as to the classification of the product under the Central Excise Tariff and its exemption from payment of Excise Duty, was pending with the Excise Authorities as also in the High Court. According to the petitioners, in view of the controversy, the petitioners stopped manufacturing the Soya Milk since June, 1989. They were, however, in possession of unsold stock. Since the stock became unfit for the human consumption, the petitioners desired to destroy the stock. They, therefore, addressed a letter dated 20th April, 1990 to the Assistant Collector, Central Excise, Bhopal, informing him about the stock of 5886 trays of Soya Milk, which had become unfit for human consumption. They also intimated the Department of their intention to destroy the stock because it had become unfit for human consumption. It was also brought to the notice of the Department that according to the Petitioners the product was exempt from payment of the Excise Duty. It was also stated in the letter that if nothing was heard within a fortnight, the stocks would be destroyed. According to the petitioners, no action was taken on this letter and no reply was received by them. However, on 16-5-1990 the Superintendent, Central Excise Range-V, sought certain information which was supplied by the petitioners on the same day.

(2.) ON 24-6-1990 Shri R. K. Singh, Food Inspector District Raigar visited the premises of the petitioners, wherein the old stock of Soya Milk was kept. The said Food Inspector in the course of his inspection observed that the said stock was unfit for human consumption and was likely to create harm to the human life and it was not advisable to keep the stock as it was. He, therefore, instructed the petitioners to immediately destroy the product, failing which the licence for manufacturing food products would be withdrawn. The inspection report dated 24-6-1990 has been filed with the petition. On 25-5-1990 the petitioners brought to the notice of the Assistant Commissioner, Central Excise that the product had started bloating and had started spoiling other products kept in the godown, which was objected by the Pollution Board officials and, therefore, the petitioners were constrained to destroy the stock. It was also reminded that the petitioners' intention to destroy the stock was already communicated to the Department and the Department had not replied, presumably because the product was exempt from the duty.

(3.) EVEN after this, the petitioners waited till 8-6-1990, on which day they destroyed the stocks in the presence of panchas, after preparing a Panchanama. On 22-6-1990 the fact of destruction of the stock was reported to the Asstt. Collector, Central Excise, Bhopal along with a copy of the Panchanama. On 22-6-1990 itself, the Supdt. Central Excise, Bhopal wrote to the petitioners objecting to the destruction on the ground that the petitioners failed to obtain any permission to do so and the destruction was done without supervision of the proper officer. In this letter dated 22-6-1990 the petitioners were called upon to explain the circumstances under which 5886 trays of the Soya Milk Great Shake, having the production value of Rs. 1,86,763. 92 and excisable value of Rs. 2,05,374. 30 were destroyed without payment of the Central Excise Duty, totalling Rs. 32,346. 46. The petitioners were also called upon to give reasons as to why action for violation of Central Excise Rules, should not be initiated against them. The explanation given by the petitioners was not found satisfactory and a show cause notice dated 20-11-1991 was issued. It is this show cause notice, which is under challenge in this petition, though the prayers are general.