2001 (10) TMI 168 - AT - Central Excise

Summary

Issues:
Whether Central Excise duty is payable on cables destroyed during testing.

Analysis:
The appeals revolve around the question of whether Central Excise duty is applicable to cables destroyed during testing. The appellants, manufacturers of fibre optical cables, argue that the cables were not fully manufactured before testing and hence no duty liability should arise. They cite relevant instructions and legal precedents to support their stance. The learned Advocate emphasizes that the destruction of samples before full manufacturing does not attract duty liability, drawing parallels to previous judgments. Moreover, they argue that no revenue loss occurs as the price for the entire lot already accounts for the destroyed sample, constituting a genuine contract price acceptable under the Central Excise Act.

On the contrary, the learned SDR contends that excise duty is payable on the cables as they were fully manufactured and entered into records post-testing. Referring to Central Excise Rules, they argue that even internal consumption within the factory attracts duty liability. The SDR highlights that the goods were supplied to other customers without similar testing and asserts that duty must be paid if specific tests are requested by a customer.

The Tribunal, after considering both arguments, relies on the precedent set by a previous case involving underground telephone cables. In that case, it was established that cables used for mandatory quality control tests cannot be considered excisable goods, and no duty can be charged on destroyed samples. The Tribunal aligns with this reasoning and sets aside the impugned order, ruling in favor of the appellants in both appeals. This decision is in line with the Supreme Court's affirmation of the aforementioned case law, solidifying the stance that duty is not applicable to cables destroyed during mandatory quality control tests.