2026-VIL-1156-GUJ-CE
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CENTRAL EXCISE High Court Cases

Central Excise - Refund of CENVAT credit reversed on inputs contained in expired medicines destroyed as unfit for human consumption - Non-compliance with procedure for remission of duty - Appellant reversed the CENVAT credit on the inputs contained in medicines destroyed as unfit for human consumption. It then filed a refund claim on the ground that the reversal was erroneous, since the goods destroyed were waste pharmaceuticals and no remission was required – Rejection of refund claim on the ground that the Appellant did not follow the procedure in Chapter 18 of the Central Excise Manual - Whether the refund claim of the reversed CENVAT credit is maintainable when the expired medicines were destroyed without following the procedure under Rule 21 read with Chapter 18 - HELD - The issue is covered in favour of the Revenue by the decision of this Court in Sun Pharmaceutical Industries Ltd. The procedure under Chapter 18 is not a procedural condition of a technical nature. It is a substantive condition for claiming remission of duty and destruction of goods. Its non-observance is not condonable and is likely to facilitate the commission of fraud and administrative inconvenience - It is an admitted position that the Appellant destroyed expired medicines unfit for consumption by human beings. The Appellant was required to apply for remission permission from the jurisdictional Central Excise authorities and thereafter remit the duty payable. Rule 21 was therefore contravened. The Notification relied upon by the Appellant, which relates to waste pharmaceuticals, does not apply since the goods destroyed were expired medicines. Under Rule 3(5C) of the CENVAT Credit Rules, 2004, where payment of duty is ordered to be remitted under Rule 21, the CENVAT credit taken on the inputs shall be reversed - As the Appellant did not follow the procedure under Chapter 18, the CENVAT credit was rightly reversed and the refund claim was rightly rejected - The appeals are dismissed
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