Control samples retained in the factory are not excisable until clearance, and departmental circulars support that interpretation.

Control samples retained in the factory for laboratory testing or complaint investigation are not treated as removal or deemed removal for excise duty purposes when proper records are maintained. The Court relied on departmental manuals and clarificatory circulars to hold that Rules 9 and 49 of the Central Excise Rules, 1944 do not expressly impose duty on such samples and cannot override the settled departmental understanding. It further held that duty arises only when the samples are cleared from the factory, and the reference did not raise a substantial question of law. The revenue appeal was rejected and the assessee's non-dutiability position was upheld.

---

---

Issues: Whether excise duty is leviable on control samples retained in the factory as a deemed removal under Rule 9 and Rule 49 of the Central Excise Rules, 1944, and whether the appeal raised any substantial question of law.

Analysis: The Court relied on the departmental manuals and clarificatory instructions, which consistently stated that samples preserved in the factory for laboratory testing or for investigation of complaints are not liable to duty so long as they remain in the factory and proper account is maintained. It held that the explanations to Rule 9 and Rule 49 do not expressly impose duty on such control samples and cannot be read to override the settled departmental understanding. The Court also noted the consistent view that circulars binding on the Department support the interpretation that duty arises only when the samples are cleared from the factory.

Conclusion: Control samples retained in the factory for laboratory tests are not chargeable to excise duty, and the question referred does not give rise to a substantial question of law.

Final Conclusion: The revenue appeal was rejected, and the assessee's position on non-dutiability of retained control samples was upheld.

Ratio Decidendi: Samples retained within the factory for testing or complaint investigation do not amount to removal or deemed removal for excise duty purposes when proper accounts are maintained, and departmental circulars clarifying this position are binding on the Department.

---