2006 (6) TMI 385 - AT - Central Excise

Summary

Issues:
1. Duty liability on batch analysis samples and samples retained in the factory.
2. Leviability of interest under Section 11AB of the Central Excise Act, 1944.

Analysis:

Issue 1: Duty liability on batch analysis samples and samples retained in the factory
The appeals filed by the appellant-manufacturers revolve around the dutiability of batch analysis samples and samples retained in the factory as per the Drugs and Cosmetics Act, 1945. The Tribunal referred to a previous decision in the case of CCE v. Dabur India Ltd., where it was established that manufacturers can retain samples for investigation purposes without incurring duty, provided proper accounts are maintained. The Tribunal concluded that no duty is payable on the samples retained by the manufacturers. The respondent raised concerns about the lack of maintenance of accounts in the RG. 1 register, but it was clarified that the accounts were maintained as per the Drugs and Cosmetics Act, 1945, and batch analysis samples were excluded from the RG. 1 register due to their non-dutiable nature.

Issue 2: Leviability of interest under Section 11AB
Regarding the appeals filed by the applicant-Commissioner on the leviability of interest, the Tribunal relied on the decision in Ramkumar Mills Pvt. Ltd. v. CCE, Bangalore, which determined that interest under Section 11AB of the Central Excise Act, 1944, cannot be demanded before its introduction on 28-9-1996. Since the period in question predates the introduction of Section 11AB, the Tribunal held that no interest is chargeable. This decision was further supported by the finding that no duty is chargeable on batch analysis samples and samples retained in the factory under the Drugs and Cosmetics Act, 1945. Consequently, the appeals filed by the appellant-manufacturers were allowed, while the appeals filed by the applicant-Commissioner were dismissed.

In summary, the Tribunal ruled in favor of the appellant-manufacturers, holding that no duty is payable on batch analysis samples and samples retained in the factory, as per the provisions of the Drugs and Cosmetics Act, 1945. Additionally, the Tribunal determined that no interest is chargeable under Section 11AB for the period before its introduction, leading to the dismissal of the appeals filed by the applicant-Commissioner.