2001 (4) TMI 396 - AT - Central Excise

Summary

Issues:
1. Whether duty is payable on samples of excisable goods when initially removed to the laboratory.
2. Interpretation of Rule 49 regarding payment of duty on excisable goods.
3. Consistency in the application of the law by the Department.

Analysis:
1. The appellant, a manufacturer of shoe polishes and creams, drew samples from each batch for quality control purposes. The Commissioner held that duty is payable on these samples when initially removed to the laboratory. The appellant contended that duty is payable on excisable goods when removed from the place of production, and since the laboratory was part of the factory, there was no removal from the factory when samples were taken for testing. The duty was paid only when the samples were actually removed. Previous decisions by the Commissioner and Assistant Collector favored the appellant, emphasizing the understanding of Rule 49.

2. Rule 49 states that duty is not required until excisable goods are about to be issued out of the place of production or removed from an approved storage place. The Department's instructions allowed the drawing of samples without duty payment, reflecting their understanding of the law. The Department's consistent application of this interpretation in past cases indicated their acknowledgment of the correct application of the law. The Commissioner's attempt to justify the duty payment on samples by citing different periods in earlier orders was deemed feeble and inconsistent with the established understanding.

3. The Tribunal found that the Department had no case on merits, emphasizing the importance of consistency in applying the law. Persisting in a contrary course of action, despite previous decisions favoring the appellant, was deemed improper and caused unnecessary hardship. The Tribunal advised the Department to accept settled matters to avoid unnecessary disputes and maintain a fair and consistent application of the law. The appeal was allowed, and the impugned order was set aside, in favor of the appellant.