2014 (10) TMI 377 - AT - Central Excise

Levy of duty on quality control samples - preserved samples - samples consumed during testing of the medicines by the assessee - Held that - Bombay High Court in CCE, Belapur Vs. RPG Life Sciences Ltd., - 2010 (12) TMI 52 - BOMBAY HIGH COURT held that excise duty is not demandable when goods are not cleared from the factory premises but consumed during testing. Similarly in the case of CCE, Chandigarh Vs. Dabur India Ltd. 2005 (2) TMI 166 - CESTAT, NEW DELHI , a Larger Bench of this Tribunal held that control samples retained in factory is not liable to duty if proper account is maintained. The said decision was also upheld by the Hon ble High Court of Himachal Pradesh at Shimla in the case of Dabur India Ltd. 2010 (5) TMI 590 - HIMACHAL PRADESH HIGH COURT wherein it was held that the samples of product, preserved/retained for period of investigation of complaints cannot be said to be consumed or utilized as such or for manufacture of other commodity and they cannot be deemed to have been removed from the place of manufacture and hence, they are not liable to excise duty - Decided against Revenue.

Summary

Issues:
- Appeal against dropping demand of duty on quality control samples consumed during testing of medicines.
- Interpretation of previous tribunal and court decisions regarding excise duty on quality control samples.
- Application of the principles established in previous cases to the present case.

Analysis:
1. The main issue in this judgment is the appeal filed by the Revenue against the dropping of duty demand on quality control samples consumed during testing of medicines by the assessee. The lower appellate authority had upheld the decision of the adjudicating authority in this regard.

2. The Revenue contended that the decisions of the Tribunal in the cases of Aristo Pharma Ltd. and Mapra Laboratories Pvt. Ltd. were misplaced, and they referred to a pending appeal before the Hon'ble High Court of Bombay. The Revenue relied on the decision of the Hon'ble Apex Court in the case of ITC Ltd. vs. CCE, Patna, regarding excisability of goods destroyed during quality control tests.

3. On the other hand, the respondent's counsel argued that previous decisions by the Tribunal and various High Courts had consistently held that excise duty is not leviable on quality control samples consumed during testing. They highlighted the cases of CCE, Belapur vs. RPG Life Sciences Ltd. and CCE, Chandigarh vs. Dabur India Ltd., which supported their position.

4. The Tribunal analyzed the submissions from both sides and referred to the decisions of the Hon'ble Bombay High Court, the Hon'ble High Court of Himachal Pradesh, and previous Tribunal judgments. It was noted that excise duty is not demandable when goods are not cleared from the factory premises but consumed during testing, as established in previous cases.

5. The Tribunal emphasized that proper maintenance of accounts for control samples is crucial, as seen in the case of CCE, Chandigarh vs. Dabur India Ltd. The absence of evidence showing removal of samples from the factory, coupled with the respondent's proper batch-wise account maintenance, led the Tribunal to dismiss the Revenue's appeal. The principles established in previous decisions were found to be applicable to the present case, resulting in the dismissal of the appeal.

This detailed analysis of the judgment provides a comprehensive overview of the issues involved and the reasoning behind the Tribunal's decision to dismiss the Revenue's appeal regarding excise duty on quality control samples consumed during testing.