2008 (9) TMI 368 - AT - Central Excise

Demand of duty in respect of tyres and tubes drawn for test purposes - It is submitted that the question of marketability does not arise in respect of tyres and tubes drawn for test purposes and, therefore, the lower appellate authority erred in discussing the marketability of the goods. - the appellant appears to have conceded that the samples drawn for test purposes during the period of dispute were destroyed in the tests. In the circumstances, non-marketability and non-dutiability of the materials is beyond question. In the result, the appeal of the Revenue gets dismissed.

Summary

Issues involved: Adjudication of show-cause notice vacating demand of duty for tyres and tubes drawn for test purposes; Interpretation of Notification no. 57/88-C.E.; Marketability of goods drawn for test purposes; Applicability of case law on non-dutiability of samples destroyed during tests.

In the judgment by the Appellate Tribunal CESTAT, Chennai, the original authority vacated a demand of duty for tyres and tubes drawn for test purposes. The appeal by the department against this decision was dismissed by the Commissioner (Appeals), leading to the Revenue's present appeal. The appellant argued that Notification no. 57/88-C.E. granting exemption from duty on test samples was rescinded during the relevant period, thus the demand should not have been dropped. The appellant contended that marketability does not apply to goods drawn for testing, criticizing the lower authority's discussion on marketability. The Tribunal referenced a previous case where samples drawn for quality control tests were deemed non-dutiable, a decision upheld by the Supreme Court. The Apex Court's order emphasized that if samples become scrap after testing without being marketed, they are not liable for duty. The appellant did not dispute that the samples in question were destroyed during tests, indicating their non-marketability and non-dutiability, as found by the lower authority. Consequently, the appeal was dismissed, aligning with the case law and the factual concession made by the appellant regarding the destruction of samples during testing.

In conclusion, the Appellate Tribunal CESTAT, Chennai, upheld the lower authority's decision to vacate the demand of duty for tyres and tubes drawn for test purposes. The judgment emphasized the non-marketability and non-dutiability of goods destroyed during testing, in line with established case law and the factual concession made by the appellant. The dismissal of the Revenue's appeal was based on the clear evidence that the samples in question were not marketed after being destroyed during tests, thus exempting them from duty as per the relevant notification and legal precedents.