2007 (11) TMI 191 - AT - Central Excise

Samples after testing both in the laboratory and for shelf-life were destroyed by draining or were rendered unfit for use - samples were duly accounted for in the private register of the appellant and in fact the revenue has quantified the duty on the basis of the quantity shown in these private records - eligible for the remission of duty

Summary

Issues:
- Duty demand on samples not entered in statutory records
- Requirement of duty payment on samples drawn for testing purposes
- Remission of duty for destroyed samples
- Compliance with Central Excise Rules, 2002

Duty demand on samples not entered in statutory records:
The case involved appeals where the appellant, a manufacturer of aerated water, drew samples for testing within the factory but did not enter them in statutory records. The appellant argued that duty was demanded because the samples were not recorded in the statutory registers, even though they were destroyed or drained after testing. The Tribunal noted that the samples were fully finished products, and while they should have been entered in statutory records, the fact that they were destroyed or rendered unfit for use meant that duty could not be demanded. The Tribunal referred to a previous case where duty was not levied on samples destroyed during testing, emphasizing that duty cannot be demanded if the samples were destroyed or rendered unfit for use.

Requirement of duty payment on samples drawn for testing purposes:
The appellant contended that duty was demanded because the samples were considered fully finished goods that needed to be accounted for in statutory records. The Tribunal acknowledged that there was no exemption for samples drawn for testing purposes, but highlighted that duty could be remitted for samples that were destroyed or rendered unfit for use. The Tribunal emphasized that the samples in question were duly recorded in private registers, and the duty demand was not justified since the samples were destroyed after testing.

Remission of duty for destroyed samples:
The issue of remission of duty for destroyed samples was crucial in the case. The Tribunal noted that the samples drawn by the appellant were destroyed or rendered unfit for use after testing. While the duty was demanded by the department, the Tribunal held that duty could not be demanded for samples that were destroyed or rendered unfit for use. The Tribunal referenced a previous case where duty was not levied on samples destroyed during testing, emphasizing that duty remission could be sought for such samples.

Compliance with Central Excise Rules, 2002:
The case raised concerns about compliance with the Central Excise Rules, 2002, regarding the entry of samples in statutory records. The appellant argued that the samples were duly recorded in private registers, and the duty demand was unjustified since the samples were destroyed or rendered unfit for use. The Tribunal emphasized the importance of maintaining proper records for samples sent for testing and highlighted the need for remission of duty for samples that are destroyed or rendered unfit for use. Ultimately, the Tribunal set aside the orders of the Commissioner (Appeals) and allowed the appeals, considering the samples were destroyed and duty could not be demanded in such circumstances.