2020 (4) TMI 501 - AT - Central Excise

Remission of duty - samples which were destroyed in the factory itself - whether the duty is required to be paid on the samples which were not removed from the factory but destroyed after conducting necessary tests on the same? - HELD THAT - Undisputedly, the Appellants drew samples during the course of manufacture of aerated water for testing purposes. After testing, the remnant samples were kept for future complaints relating to the said manufactured products. After a period of time, the remnant samples were also destroyed. Reliance placed in the case of THE COMMISSIONER OF CENTRAL EXCISE VERSUS RPG LIFE SCIENCES LTD 2010 (12) TMI 52 - BOMBAY HIGH COURT where it was held that Where the goods are not cleared out of the factory premises but were drawn for testing within the factory and in fact were consumed within the factory during the process of testing, the question of demanding any duty on those samples does not arise. In the present case, the Appellants are undisputedly maintaining the records meticulously on the consumption and disposal of the samples - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Liability to pay duty on samples destroyed within the factory premises without being removed.
2. Applicability of judgments in similar cases to the present scenario.

Analysis:
1. The appeal was filed against the Order-in-Appeal passed by the Commissioner of C & CE (Appeals), Mumbai, demanding duty payment of ?69,14,771 on samples of aerated water destroyed within the factory premises without being removed. The Appellants contended that the samples were drawn for testing and future complaints, with a major portion exhausted during testing and the remnant destroyed. The Revenue argued that no formal application for remission of duty was filed for the destroyed samples. The Tribunal examined whether duty was required to be paid on samples destroyed within the factory after testing.

2. The Tribunal referred to judgments such as ITC Ltd Vs Collector of C.E., Patna, CCE Nagpur Vs Economic Explosives Ltd, CCE Belapur Vs RPG Life Sciences Ltd, and Pepsico (I) Holding Ltd Vs CCE Mumbai-V cited by the Appellants. The Tribunal also considered the judgment in Positive Packaging Industries Ltd Vs CCE New Panvel and ITC Ltd case referred by the Revenue. The Tribunal noted that the issue was whether duty was payable on samples destroyed within the factory premises after testing and found that the Appellants had maintained meticulous records on sample consumption and disposal.

3. Relying on the judgment of the Hon'ble Bombay High Court in the case of RPG Life Sciences Ltd, the Tribunal concluded that when samples were drawn for testing within the factory premises and consumed during testing without being cleared outside, no duty was required to be paid on such samples. The Tribunal found no merit in the demand for duty payment on the destroyed samples, setting aside the impugned order and allowing the appeal with consequential relief, if any, as per law.

This detailed analysis of the judgment highlights the key issues of liability for duty payment on samples destroyed within the factory premises and the application of relevant legal precedents to the case at hand.