1995 (11) TMI 148

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....ion were stored in outside pits and permission for such outside storage had been obtained. It is seen from the records that the molasses weighing 52,230 quintals had deteriorated and had become unfit for use. During the relevant time, the molasses was controlled by the State Excise Department and no quantity of molasses could be removed without their permission. Molasses is an important input for alcohol and the control by the State Excise Department appeared to be strict. The appellants sought permission from the State Excise Department for draining out of the damaged molasses. The permission by those authorities was granted. Thereafter,  they intimated the Central Excise Department. 2. Shri H.P. Arora, ld. Advocate submitted ....

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....ision in the case of Khalilabad Sugar Mills Pvt. Ltd. v. CCE, Allahabad - 1994 (73) E.L.T. 393 (Tri.). In this case, the Tribunal had taken a view in similar circumstances that the demand for duty on the goods actually destroyed was not sustainable in law. The Tribunal have further observed that as the goods were destroyed without the permission of Central Excise authorities, the imposition of penalty was justified. Para 6 from that decision is extracted below :- "6. Heard the submissions of both sides and considered them. I find that the appellant had sent a letter to the Superintendent, Central Excise on 4-3-1989 intimating inter alia that goods were not marketable as per the certificate given by the Alcohol Technologist nor were ....

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....ing." The substantive effect of this proviso is that the excisable goods are not liable to duty if they are unfit for consumption or marketing. This fact is not disputed in the instant case. Substantive condition for claiming remission of duty is that the goods are destroyed in a manner so that these are irretrievable as such goods. Destruction of the goods in the instant case is not disputed by the Department. Therefore, the breach of any other procedural condition which may have been prescribed by the Collector may involve imposition of liability to duty for breach of procedure. Imposition of liability to duty for breach of procedure is not called for. Accordingly, the demand of duty in the impugned order is set aside." On examinati....