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TMI Blog2019 (7) TMI 457X X X X Extracts X X X X X X X X Extracts X X X X ..... ER (JUDICIAL) AND MR. RAJU, MEMBER (TECHNICAL) Shri Saurabh Dixit, Advocate for the Appellant Shri T.K.Sikdar, Assistant Commissioner (AR) for the Respondent ORDER These appeals have been filed by M/s. Alembic Pharmaceuticals Limited against the confirmation of demand of Central Excise duty on the samples which are withdrawn for testing within the factory premises. 2. Ld. Counsel for the appellant pointed out that law mandates them to withdraw samples for the purpose of testing before the same is cleared for home consumption. He pointed out that some of the samples are tested while the other are kept as test samples for future testing, if necessary, as controlled samples. He pointed out th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ointed out that the said decision may not be applicable to pharmaceutical products as in case of pharma products the marketability cannot be achieved without testing. He pointed out that in the case of Cigarettes it cannot be said that product is not marketable without testing. He pointed out that the decision of the Hon'ble Apex Court in the case of ITC Limited has been distinguished by the Tribunal in the case of Glaxo Smithkline Pharmaceuticals Limited - 2003 (162) E.L.T. 612 (Tri. Mumbai). Ld. Counsel also pointed that even in respect of controlled samples, there is no duty liability as observed by the Tribunal in the case of Thermax Culligan Water Technologies Limited 2014 (312) ELT 148 (Tri. Mumbai). 4. Ld. AR relies on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Packing of the cigarette cannot be said to be incidental or ancillary to the manufacturing process, but the same may be incidental or ancillary to its sale only. In case it is laid down that packing of cigarette is incidental or ancillary to the completion of manufactured products, the same may result into evasion of excise duty as before packing the cigarettes the same may be regularly supplied to each and every employee for his consumption without payment of excise duty thereon. The definition of manufacture under Section 2(f) very clearly includes process which is incidental or ancillary to the completion of manufactured product. Manufacture of cigarette is completed when the same emerges in the form of sticks of cigarettes which are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e show cause notice the appellant-Company was specifically called upon to show cause for non-maintenance of account in relation to the sticks of cigarette sent for quality control test, but in spite of that it failed to produce any account whatsoever to show as to how much quantity of cigarette sticks was sent for quality control test during different periods, much less producing any account in relation to the destruction of the cigarette sticks during the course of testing. At this stage, Shri Ganesh submitted that the matter should be remitted either to the Tribunal or the assessing authority for affording opportunity to the appellant to produce the accounts and then record a finding as to how many cigarette sticks were destroyed during t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppellants. Of course, it is made by way of concession by the Counsel for the Revenue. As stated earlier, the situation in both cases i.e. the instant case and ITC s case are entirely different. In view of the above, we are of the view that the Appellants have made out a case, that the impugned Order confirming the demand is wrong in law. The denial of Modvat credit in respect of storage of the inputs for manufacturing samples and destruction of inputs before its use in the production of the final product complying with the provisions of the Drugs and Cosmetics Act and Rules thereunder made is also wrong in law. We find significant force in the above decision of the Tribunal. Further, we find that in the case of Thermax Culligan Wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se, it was held that, as long as the control samples are kept in the factory and not cleared from there, the same will not be chargeable to duty if proper account is maintained. When these samples are cleared for test or for destruction at that time assessment should be made for duty, if any, leviable as per law. In the present case, the Revenue has not adduced any evidence that the control samples have been removed from the factory and has not been consumed or lost or destroyed during the course of testing. In the absence of any corroborative evidence of removal of these samples from the factory, the demand of duty on such control samples cannot be sustained. 6. In view of the above, relying on the said decisions of Glaxo Smithkl ..... X X X X Extracts X X X X X X X X Extracts X X X X
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