2008 (4) TMI 172 - AT - Central Excise

CESTAT rules in favor of appellant for samples tested on factory premises

The Appellate Tribunal CESTAT Ahmedabad ruled in favor of the appellant, emphasizing that the samples were tested within the factory premises, distinctly ... Dispute relates to the exemption notification 171/70, which grants exemption to samples drawn for the purposes of test - During the adjudication proceedings appellant took a categorical stand that the samples were never cleared by them out of the factory gate & were packed in a distinctly different packing from the regular trade packing and were marked as “samples not to be sold” – adjudicating authority has not rebutted the above stand taken by assessee - Revenue’s appeal rejected Issues:Exemption under notification No. 171/70-C.E. for samples drawn for testing in a laboratory or quality control in the factory premises. Challenge of demand raised through show cause notices. Interpretation of conditions for exemption related to sample value, packaging, and marking. Application of case laws regarding duty liability for samples not meant for sale. Limitation challenge for demand raised.Analysis:The appeal before the Appellate Tribunal CESTAT Ahmedabad concerned the dispute over the exemption notification No. 171/70-C.E., which grants exemption to samples drawn for testing in a laboratory or quality control in the factory premises. The appellant, engaged in manufacturing medicines, faced demands raised through show cause notices for duty amounts. The appellant contended that the samples were never cleared outside the factory gate, were distinctly marked, and were meant for testing within the factory premises only. The Assistant Commissioner confirmed the demand without considering the appellant's claim regarding the distinct marking of samples. The Tribunal noted previous decisions where duty liability was denied for control samples retained in the factory. The Commissioner (Appeals) set aside the Assistant Commissioner's order and allowed the appeal, emphasizing the conditions of the exemption notification regarding distinct packaging and marking of samples not for sale.The Revenue challenged the Commissioner's decision, citing a previous Tribunal decision where non-fulfillment of the condition of samples being in a different pack led to the denial of the exemption. However, the Tribunal found that the samples in the present case were tested only within the factory premises and not cleared outside. The Tribunal observed that the samples were distinctly marked and packed as claimed by the appellant, aligning with the conditions for exemption under the notification. Therefore, the Tribunal rejected the Revenue's appeal, upholding the Commissioner's decision in favor of the appellant.In conclusion, the Appellate Tribunal CESTAT Ahmedabad ruled in favor of the appellant, emphasizing that the samples were tested within the factory premises, distinctly marked, and not cleared outside for sale. The Tribunal found no merit in the Revenue's appeal, thereby affirming the Commissioner's decision to allow the exemption for samples drawn for quality control tests under notification No. 171/70-C.E. The judgment was pronounced on 29-4-2008.