Reasoned refusal required for remission: unmarketable contaminated tobacco and incomplete cigarettes were not liable to duty.

Refusal to permit destruction of contaminated tobacco and cigarettes, and the resulting duty demand, had to rest on a reasoned quasi-judicial determination because it affected civil liability; the unreasoned refusal was unsustainable. Goods certified as unfit for human consumption and incomplete cigarettes, being non-marketable and liable to destruction under excise supervision, were not dutiable goods. Once destruction with remission was permitted under the prescribed procedure, no duty could be levied on such goods. Relief was therefore granted to the assessee against the proposed demand, with permission to destroy the contaminated goods.

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Issues: (i) whether refusal to permit destruction of contaminated tobacco and cigarettes and the consequential demand for duty could stand without a reasoned order after consideration of the assessee's request; (ii) whether goods found unfit for human consumption and incomplete cigarettes, when not marketable and sought to be destroyed under excise control, could be subjected to duty.

Issue (i): refusal of remission or destruction permission under the excise scheme affects a valuable civil consequence and must therefore be supported by reasons. Where the application had remained pending for years and the assessee was informed only through a communication demanding duty, the decision was held to be unsustainable.

Conclusion: The refusal and consequential demand were set aside in favour of the assessee.

Issue (ii): goods certified as unfit for human consumption and liable to destruction under excise supervision could not be treated as dutiable goods once they were incapable of being marketed. Incomplete cigarettes, not having reached the stage of fully manufactured goods, also did not attract duty liability. On the facts, remission followed destruction and no duty could be levied on such goods.

Conclusion: The goods were held not liable to duty and destruction with remission was permitted in favour of the assessee.

Final Conclusion: The appeal succeeded and the assessee obtained relief against the proposed duty demand, with permission to destroy the contaminated goods under excise supervision.

Ratio Decidendi: A refusal to grant remission or destruction of excisable goods, when it imposes a civil liability, must be a reasoned quasi-judicial determination; goods unfit for human consumption and incomplete, non-marketable goods do not attract duty once destruction is permitted under the prescribed excise procedure.

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