Statutory remission for destroyed unfit goods overrides procedural lapse when destruction is proved and goods are irretrievable

Duty could not be fastened on molasses found unfit for human consumption and destroyed under State Excise supervision, because actual destruction and irretrievability satisfied the substantive condition for remission. The absence of prior Central Excise permission was treated as a procedural lapse only and did not create duty liability where the goods were not marketable and their destruction was undisputed. The B.2 bond could not override the statutory remission available under the rules, and the duty demand was therefore unsustainable.

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Issues: Whether duty could be demanded on molasses which had become unfit for human consumption and were destroyed under the supervision of State Excise authorities, notwithstanding the absence of prior permission from Central Excise authorities and the terms of the B.2 bond.

Analysis: The molasses were found unfit for human consumption on chemical examination and were actually destroyed under the supervision of State Excise officials, a fact not disputed by the Department. The governing rule recognised that duty need not be demanded on goods claimed as unfit for consumption or marketing, subject to conditions imposed by the Collector. The failure to obtain prior Central Excise permission was treated as, at most, a procedural lapse and not a basis for fastening duty liability when destruction was proved and the goods were irretrievable. The bond undertaking could not override the statutory remission available under the rules.

Conclusion: The demand of duty was unsustainable and was set aside in favour of the assessee.

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