Removal of Samples - Central Excise Practice Manual (OLD) - Central Excise

REMOVAL OF SAMPLES Duty is payable on samples even if they are not sold as excise duty is paid on the manufacturing activity. Thus duty is payable on samples whether given free or for testing. Normally samples of manufactured goods and of inputs are taken for the following purposes: 1. For trial and approval to the customer, 2. For test purposes with in the factory, 3. For supply against sale contracts or for enforcement for control measures, 4. For making enquiries by CE officers, 5. To be distributed to doctors/hospitals, 6. For display at exhibition, fairs and in show cases, 7. Drawn for testing purposes by CE Department, 8. Drawn under procedures relating to exports, assessment etc. by CE department. I. Procedure for the drawal and accounting of samples: 1. Samples sent for trial and approval to the customers - Removal procedure Accounting procedure Duty liability Re-entry of samples removed : - the procedure and instructions specified in Rule 16 should be followed. : - duty in respect of such samples should be discharge in the manner specified in rule 8 before their removal unless otherwise exempted by a duty exemption notification. Generally testing samples are sent for the following purposes: - 2. Samples sent for test purposes - Removal procedure Accounting procedure Duty liability : - appropriate duty should be paid on such samples before their removal unless otherwise exempted by a duty exemption notification. : - manufacturer should remove goods under the invoice and record the removal details in his Daily Stock Account. An account of receipts and utilisation of samples in the test, in the laboratory has to be maintained by the assessee Removal procedure Accounting procedure : - no entry is required in daily stock account as such samples are drawn on returnable basis after obtaining acknowledgement. Range officer should maintain a simple account showing the date of taking the sample, quantity taken and date of return. The officer who draws sample will give the acknowledgement to the assessee and take at the time of return of sample. : - sample used for market enquiries can be drawn on written order of AC/DC. Removal procedure Duty liability : - appropriate duty should be paid on such samples before their removal unless otherwise exempted by a duty exemption notification. : - samples sent for testing shall be removed in the same manner as the removal of goods for home consumption i.e. on payment of duty. When specific quantity is not mention: - When specific quantity is mention: - in such case, arequisition order from Chemical Examiner shall be attached with it. Samples shall be drawn in reasonable quantity or as mention in Annexure-I in the Central Excise Manual of Chemical Laboratories in the customs house. An account of all departmental samples drawn and sent to the chemical examiner should be maintained by the Range officer. Special procedure for testing and re-testing of samples drawn by the department A test memo is prepared in triplicate, to be distributed in the following manner: Original - to chemical officer. Duplicate - to be retained for range officer's record. Triplicate - to AC/DC. Samples are drawn in quadruplicate in the presence of the owner/Manager. Quantity of sample should be minimum or as specified by the commissioner. Samples should be sealed with excise samples. Declaration should be obtained that samples are representatives of the lot. The four samples should be marked and distributed in the following manner: Original - to chemical examiner (along with declaration and test memorandum under intimation to AC/DC). Duplicate - to AC/ DC for safe custody. Triplicate - to Range officer for future reference. Quadruplicate - to owner for his own record. Chemical examiner will return the remnant sample, if fit for re-test and not in other cases, together with his test report to AC or Adjudicating/Appellant authority and the test result will be communicated to the assessee speedily. In case assessee is not satisfied with such test, he can apply to AC for re-test within 90 days from the date of communications received after payment of prescribed fees (fees specified in Appendix A of Central Excise Manual of Chemical Laboratories in the customs house). Request for re-test in outside govt. /semi-govt. laboratory may be allowed with prior permission from commissioner/ Appellate/ Revisionary authority on confirmation from revenue laboratories for not having facility for particular test in departmental laboratory. The cost of re-test to be borne by the assessee. Re-test is ordinarily carried out on remnant sample if available in sufficient quantity, otherwise on duplicate/ triplicate samples. Assessee can get authenticated samples to get analysed in a laboratory of his own choice and submit findings for due consideration and to ensure full particulars of samples and intact of seal indicated clearly in test report. Assessee can get the copy of test report only on request and that too in a concise form. Cost of samples drawn by the department for official purposes may be reimbursed on manufacturer's request out of the contingency by the divisional officer. Samples drawn but not sent for test to laboratories should be preserved for 6 months from the date of analytical report. The samples have to be preserved till the period of settlement/ disposal of appeal is over, in case of any discrepancy. The assessee may destroy the remnants - After assessee accepts the analytical report, or After completion of period of appeal/ revision. Procedure for samples drawn at the time of export of goods Samples are drawn in a set of three. Two sets of samples are to be delivered to the customs officer at the point of export. By handing over to the exporter or to his agent by the CE officer examining the consignment. Customs officer will verify the goods with such samples in accordance with the orders of Board or the commissioner of customs. Third copy will be retained by the CE officer for his records. Duty is not payable in the following cases: Samples fully manufactured and in marketable condition and is not removed out of the factory such as: - Samples removed to laboratory which is located within the factory. Samples preserved in factory for some period for investigation of complaints. Samples which cannot be made marketable such as: - Samples kept in factory beyond date of expiry and hence not marketable. Samples drawn for statutory requirements such as destructive testing of goods in the factory. Destructive testing is an unavoidable accident and hence if duty is paid refund can be obtained. Samples without packing and not saleable. II. Other requirements: - 1. Quantum of samples that can be drawn - 4. Samples sent for other purposes (i.e. for exhibitions, supply against sale contracts, control measures etc.) - But in the case of preservation of samples for some period, no duty shall be charged considering that goods remained in the factory, however if later on they are proposed to be destroyed within the factory, remission of duty can be obtained according to Rule 21 but for this, proper record should be maintained by the assessee otherwise remission of duty will not be available. 3. Samples drawn by excise officers for market enquiries - : - samples sent outside the factory for testing shall be removed in the same manner as the removal of goods for home consumption i.e. on payment of duty. o for preservation for investigation of complaints, o by in-house laboratory for testing quality, o to sent to chemical examiners including government Test centers., o for test at other concerns or to independent testing agencies. : - manufacturer should remove goods under the invoice and record the removal details in his Daily Stock Account. : - samples sent to customers under trading shall be removed in the same manner as the removal of goods for home consumption i.e. on payment of duty. Valuation of Free Samples where product is covered under MRP porivsions If MRP is printed on these free sample, Section 4A will be applicable for valuation otherwise Section 4 read with rule 4 of Valuation rules will be applicable.