Tribunal Rules Medicine Control Samples Exempt from Duty Unless Cleared from Factory for Testing.

The tribunal determined that control samples of medicine retained within the factory for testing and investigation purposes are not subject to duty under the Central Excise Rules, 1944, unless cleared from the premises. The tribunal remanded the appeals to the Division Bench for final disposal, emphasizing duty assessment only upon clearance of such samples.

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Issues:
Dutiability of control samples for medicine retained in the factory.

Analysis:
The appellant argued that control samples retained in the factory are chargeable to duty under Rule 9 and Rule 49 of the Central Excise Rules, 1944, as excisable goods consumed or utilized within the factory are deemed to have been removed. Citing tribunal decisions, the appellant contended that samples retained for control purposes are deemed cleared under the Rules. The absence of an exemption notification was highlighted to support the duty chargeability on such samples. The appellant also emphasized that certain instructions were not applicable for the relevant period of the appeals.

The respondent, on the other hand, referred to the Basic Manual of Departmental Instructions and Supplementary Instructions effective from 1-9-2001, which clarified that no duty is required to be charged on samples retained in the factory for control purposes unless cleared. The respondent relied on tribunal decisions affirming that duty is not applicable to samples kept in the factory for investigation purposes, as long as they are not marketed or consumed.

The tribunal examined the submissions and noted the clarity provided by the Excise Manuals that duty is not chargeable on control samples retained in the factory for testing and investigation purposes. It was emphasized that duty becomes applicable only when such samples are cleared from the factory. The tribunal concluded that as long as the control samples remain in the factory and are not cleared, they are not subject to duty. However, duty assessment is required when these samples are eventually cleared for testing or destruction. The Larger Bench's decision was solely on the duty chargeability of control samples retained in the factory, and the appeals were remanded to the Division Bench for final disposal.

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