2017 (4) TMI 596 - AT - Central Excise

Samples of medicine for testing - dutiability - whether the appellant is liable to discharge the duty liability in addition to the duty discharged by them in respect of the samples of medicines drawn for in house testing and analysis for suitability and marketability of the medicines for sale? - Held that - duty liability discharged by the appellant itself does not arise as there is no clearance of the finished goods from the factory premises - appeal allowed - decided in favor of assessee.

Summary

Issues involved:
1. Duty liability on samples drawn for in-house testing and analysis by a pharmaceutical manufacturer.

Analysis:
The appeal in this case challenged an Order-in-Appeal regarding the duty liability of a pharmaceutical manufacturer on samples drawn for in-house testing and analysis. The main issue was whether the manufacturer was required to discharge duty liability in addition to the duty already paid on the samples drawn for testing and analysis. The manufacturer had discharged duty based on the cost of production plus 10%, while the revenue authorities argued for duty based on the MRP of the goods cleared minus abatement.

Upon hearing both sides and examining the records, the Tribunal found that the samples drawn by the manufacturer for testing and analysis were within the factory premises and were not cleared for home consumption. Citing a judgment by the Hon'ble High Court of Bombay in a similar case, the Tribunal emphasized that when goods are not cleared out of the factory premises but are drawn for testing within the factory and consumed during the testing process, demanding duty on those samples does not arise. The Tribunal distinguished a previous decision where samples were cleared out of the factory, highlighting the difference in the present case where the samples were consumed or destroyed within the factory during testing.

Based on the facts presented and the legal precedents, the Tribunal concluded that the duty liability discharged by the manufacturer did not arise as there was no clearance of finished goods from the factory premises. Therefore, the impugned order was deemed unsustainable and set aside, allowing the appeal with consequential relief, if any. The decision was made in line with the authoritative judicial pronouncements and the specific circumstances of the case, ultimately ruling in favor of the appellant and against the Revenue.