TaxTMI 
TaxTMI 
2025 (6) TMI 1283
X X X X Extracts X X X X
X X X X Extracts X X X X
....CD) into 'domestic tariff area (DTA)', while dropping demand for Rs. 1,10,68,334, as duty on manufactured goods that had to be destroyed owing to shelf-life prescriptions, and also demand of Rs. 97,504, as duty foregone on 'data loggers' imported by them, the dispute before us is limited to 'inputs' and 'packing material' allegedly procured in excess of requirement and having to be destroyed thereafter. 2. According to Learned Counsel for the appellant, the duty liability on 'spent/solvent', arising during manufacture of pharmaceutical products, was liable to duty in accordance with section 3 of Central Excise Act, 1944 and, in acknowledgement thereof, had discharged duty liability before issue of notice. It was also submitted that the components of demand that were dropped in adjudication has not been appealed against by the jurisdictional Commissioner of Customs and Central Excise. 3. Learned Counsel for the appellant submitted that they had procured certain 'inputs' and 'packing material' which, owing to the sensitive nature of their activity, could not be retained beyond the period prescribed in industry protocols. He argued that no liability on these goods arose as both ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....eeping in view the nature of the industry, the request of the assessee is genuine and their request has been considered by the Assistant Commissioner of Customs, Customs Division, Bangalore.' in the minutes [C.No. VIII/48/365/ 2006 Cus. Tech dated 27th February 2007] of the meeting of 100% EOUs on 9th February 2007 chaired by Commissioner of Customs, Bangalore, to highlight that destruction, mandated by prescriptions in laws governing the pharmaceutical industry, turned the goods into 'waste, and, thereby, along with 'capital goods', covered by the governing notification. It was also pointed out that, in the absence of specific provision for recovery, the action taken by the adjudicating authority is tantamount to imposition of conditions, stipulations and procedures at the whims of the jurisdictional customs authorities. It was further submitted that the show cause notice, though issued under section 28 of Customs Act, 1962, was adjudicated without touching upon the framework within which extended period could be invoked and, instead, relied upon enforcing the bond executed by the appellant which was beyond the competence of Commissioner of Customs. 4. Relying on the decisio....
X X X X Extracts X X X X
X X X X Extracts X X X X
....g materials' imported from abroad, as well as such finished manufacture, was concerned, only on, and only from prohibition on export or domestic clearance by the laws governing pharmaceuticals, destroyed goods was conceded in show cause notice dated 19th June 2014. In the annexure to the show cause notice, deployment of inputs in goods that were destroyed had been set out along with the value thereof for computation of duty liability of Rs. 54,51,504 and Rs. 3,10,694 between 31st October 2007 and 31st October 2009 as recoverable. 7. The basis of the demand are twofold; that the destroyed quantities were in excess of the tolerance limit (2%) permitted for goods that were not covered by the 'standard input output norms (SION)' for the relevant product group and that the excess thereof had not been proved to the satisfaction of the proper officer as used in production owing to which condition no. 3(c) and 3(d)(ii) in notification [no. 52/1003-Cus dated 31st March 2003] was breached. It was also pointed out by the original authority that the destruction had been necessitated by lack of diligence in procurement and that, even so, the liability therefrom could had crystallized by elap....
X X X X Extracts X X X X
X X X X Extracts X X X X
....(LoP)', becomes eligible for benefits of exemption. Conditions in the bond are not the conditions contingent upon which exemption is granted; bond, as prescribed, should be furnished. In the event of any other conditions of exemption in notification having been breached, it would be open to the 'proper officer' to proceed in the manner prescribed for recovery of duty foregone as in any other notification issued under section 25 of Customs Act, 1962. Though the proceedings rest upon the only provision for recovery in Customs Act, 1962 that is vested in the proper officer by section 28 of Customs Act, 1962, the proposal in the show cause notice was, for some inexplicable reason, not continued by the adjudicating authority. Though that should suffice for 'red flagging' the proceedings and for discard of the findings and outcome, we proceed further. Not satisfied with effective dropping of proceedings by failing to take recourse to the power invoked in the show cause notice, the jurisdiction to invoke the bond, executed as one of the conditions prescribed in the impugned notification, has not been made clear in the impugned order. The exemption in terms of impugned notification is gran....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d, the legal position is clear. The policy prescriptions governing the 'export oriented unit (EOU)' scheme is also no less clear. The notification governing exemption from duties of customs is also abundantly clear. The goods which have not been cleared for home consumption, either in its finished form or in the form as imported, are not liable to duties of customs; the destruction of goods, which is undisputed, precludes any consequence of non-compliance with the norms and negates presumption of clandestine removal. The adjudicating authority appears to have been carried away beyond the minutiae of control, through registers, which limited authorization, under Customs Act, 1962, for recovery of duty only on such goods that either have been cleared for home consumption or may, by operation of law, be presumed to gave been cleared without payment of duty. 12. It was also inappropriate on the part of the Commissioner of Customs to invoke the provisions of bond executed, only as threshold condition to be eligible for availment of notification [no. 52/2003-Cus dated 31st March 2003] and obliging the executor to conform to the terms of the bond upon demand, without either notice of i....