1988 (12) TMI 213 - AT - Central Excise

Summary

Issues:
1. Whether the procedure adopted by the respondent Collector in rejecting the appellant's application for destruction of goods was contrary to principles of natural justice.
2. Whether the power conferred on the Collector under Rule 49 is discretionary and not quasi-judicial.

Analysis:
1. The appellant claimed that a certain brand of cigarettes was unfit for marketing or consumption and sought permission for destruction. The Collector rejected the application without providing an opportunity for the appellant to prove the goods' condition. The appellant argued that the Collector's action was against the principles of natural justice as they were not given a chance to present evidence supporting their claim. The Tribunal held that in cases where a manufacturer claims goods as unfit for consumption to avoid excise duty liability, there is no need for extensive probing by the authority. The Tribunal emphasized that excise duty is primarily a tax on goods consumed within the country of production, and if goods are genuinely unfit for consumption, destruction should be allowed to avoid duty liability.

2. The respondent Collector contended that the power under Rule 49 is discretionary and not quasi-judicial, thus no hearing or show cause was necessary. However, the Tribunal disagreed, stating that the Collector's decision on whether goods are fit for consumption or marketing, leading to excise duty liability, is a quasi-judicial matter. Referring to a Supreme Court case, the Tribunal highlighted the importance of a quasi-judicial decision preceded by an enquiry involving principles of natural justice when imposing liability. The Tribunal concluded that the Collector's decision in this case was quasi-judicial and should have followed principles of natural justice.

3. The Tribunal found that there was a miscarriage of natural justice in the Collector's decision and remanded the case back to the Collector for re-adjudication in accordance with the principles of natural justice. The Tribunal also directed the Collector to re-adjudicate the case promptly due to the appellant's godowns being full of non-marketable goods. The re-adjudication was ordered to be completed within one month of the receipt of the Tribunal's order.