1998 (10) TMI 121 - AT - Central Excise

Summary

Issues:
1. Interpretation of Notification No. 171/70-C.E.
2. Compliance with conditions of the Notification.
3. Requirement of distinct packing for control samples.
4. Maintenance of proper records for Central Excise purposes.
5. Imposition of penalty for breach of provisions.

Interpretation of Notification No. 171/70-C.E.:
The case involved an appeal against Order-in-Original No. 194/91 passed by the Additional Collector, Central Excise, Bombay-II. The appellants were engaged in manufacturing Patent or Proprietary Medicines falling under Chapter Heading No. 3003 and were availing benefits under Notification No. 171/70-C.E. The dispute arose when the department alleged that the appellants cleared control samples without following the correct procedure and conditions of the said Notification.

Compliance with conditions of the Notification:
The appellants contended that they were substantially complying with the conditions of the Notification and were maintaining proper records of the control samples drawn. They argued that they were not selling the control samples in the market but were obligated to maintain them from each batch of medicines. However, the Additional Collector confirmed the demand, stating that the appellants failed to satisfy all the conditions of the Notification.

Requirement of distinct packing for control samples:
The crucial issue revolved around whether the control samples were packed in a form distinctly different from regular trade packing as required by the Notification. The appellants admitted that due to technical constraints, their packing machine could not accept a different size of packing. This admission indicated a failure to fulfill the conditions of the Notification regarding distinct packing for control samples.

Maintenance of proper records for Central Excise purposes:
The department argued that the appellants did not enter the control samples in the RG-1 register, did not inform the Department of their sampling procedure, and failed to maintain a regular account while removing the samples. The failure to adhere to these record-keeping requirements for Central Excise purposes further weakened the appellants' case.

Imposition of penalty for breach of provisions:
The appellants contended that they had a bona fide belief in compliance with all requirements and had no intention to evade duty. However, the Tribunal observed that the appellants failed to demonstrate full compliance with the Notification's conditions. The Tribunal upheld the Additional Collector's decision, emphasizing that the appellants did not satisfy the Notification's requirements, including distinct packing for control samples and proper record-keeping. Consequently, the appeal was dismissed, highlighting the importance of strict adherence to statutory provisions in excise matters.