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TMI Blog2003 (12) TMI 177X X X X Extracts X X X X X X X X Extracts X X X X ..... oked in this case. Duty demand - We note that the Tribunal in the case of CC v. Bhansali Engg. Polymers Ltd.[ 1999 (10) TMI 158 - CEGAT, NEW DELHI] , has held that ABS Polymer samples drawn for quality control testing within the factory, is not liable to duty. The appeal filed by the Commissioner against this order has been dismissed by the Hon ble Supreme Court in [ 2002 (5) TMI 859 - SC ORDER] . The Hon ble Supreme Court in the case of ITC Ltd. v. CCE, [ 2002 (12) TMI 85 - SUPREME COURT] has categorically observed that if samples are drawn for in house testing and proper records are maintained, then no duty is payable on the quantity taken for testing within the factory. We, therefore, respectfully following the ratio of the above judgments hold that no duty is demandable in respect of the goods which were taken to R D department of the appellants within the factory, for the purpose of testing. Whether the final product and Modvat inputs which were taken outside the factory for trial and testing by other agencies including customers is dutiable or not - In the instant case, Nitrogen is used within approved factory premises and in terms of the Notification cited supra, no duty is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vat credit was availed were cleared for test purposes, outside the factory, (iii) Nitrogen was cleared for non-plant and non-manufacturing purposes within the factory premises. Show cause notice was issued proposing to demand duty in terms of the proviso to Section 11A(1) and the show cause notice culminated in the order of adjudication passed by the original authority by his order dated 26-2-2001 by which he has confirmed a duty demand of Rs. 92,464/- towards samples cleared to their lab and R&D department under proviso to Section 11A(1) of the C.E. Act, 1944. He has also confirmed a duty demand of Rs. 20,430/- on the raw materials cleared as samples outside their factory under proviso to Section 11A(1) of the Act. He has also confirmed a duty demand of Rs. 3,12,935/- on Nitrogen manufactured and cleared for non-plant and non-manufacturing activities under the proviso to Section 11A(1) of the Act. He has also appropriated the sum of Rs. 92,464/- debited by the appellant vide Sl. No. 1044 dated 27-8-99 and another sum of Rs 20,434/- debited vide PLA Sl. No. 1301 dated 22-9-99 towards the duty amounts. The appellants were also imposed mandatory penalty of Rs. 4,91,421/- under Sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... duty has to be paid for such use. 5. We have considered the rival submissions and gone through the case records. We find that we are called upon to answer the following questions in the instant case : (1) Whether the facts and circumstances warrant invocation of longer period of limitation? (2) Whether duty is demandable for the quantities removed to the R&D Department for analysis as samples within the factory premises? (3) Whether duty is demandable in respect of final products cleared outside the factory premises to other agencies and customers for trial and testing without payment of duty? (4) Whether duty is demandable in respect of utilization of Nitrogen for non-plant and non-manufacturing activities within the factory premises? 6. Now we proceed to answer the above questions. As regards the 1st question, we find from the records that the Appellants are Registered with Central Excise. They have filed declaration and price list periodically which have been approved by the Department. This position has not been controverted by the Department. In the circumstances it cannot be held that appellants have held back information from the department so as to warrant invocation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ous outside agencies to test the quality control and technical parameters. They have not cited any authority or citation in support of their plea that such removals need not suffer Central Excise duty. No data with regard to the actual quantity taken for testing, the date of testing, the exact locations where these were taken for testing and by whom the testing was done, whether any documentary documents have been maintained for such outside testing and if so such documents have been verified by the Department, has been placed before us for our consideration. The only plea is that goods taken for such testing outside would not attract duty liability. In such circumstances, we are left with no other alternative except to hold that the goods which are taken outside the factory for testing purpose are required to suffer duty as applicable, at the appropriate rate. 9. As regards, use of Nitrogen within the factory of production, the party has submitted that Nitrogen is used on various plants such as Propylene Oxide, Propylene Glycol, Polyol and Prod. Handling. They have also taken the plea in the grounds of appeal that Nitrogen cannot be used as a refrigerant and is not being used so ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on for purging of tankers belonging to other parties would be eligible for the benefit of exemption under Notification No. 40/85-C.E. dated 17-3-85. The appeal filed by the Department against the said decision of the Tribunal has been dismissed by the Hon'ble Supreme court as reported in E.L.T. Vol 140 A-82. Further, as we have noted above, the department itself on verification found that the administrative and R&D place has been approved as part and parcel of the factory premises. In the instant case, Nitrogen is used within approved factory premises and in terms of the Notification cited supra, no duty is payable if the same is used within the factory of production. The original authority also found that Nitrogen is used for manufacture of chilled water and the chilled water is used in the non plant area. This would mean that it is not directly used in the administrative block as alleged by the Department. Further, the definition of the term "factory" also includes precincts. In any event the nitrogen was used for manufacture of chilled water and the chilled water was used in the non-plant area. As noted above nitrogen was used for refrigeration lines & equipments for purging, an ..... X X X X Extracts X X X X X X X X Extracts X X X X
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