2002 (10) TMI 120 - AT - Central Excise

Tribunal confirms excise duty on control samples, emphasizing Central Excise Rules.

ALBERT DAVID LTD. Versus COMMISSIONER OF CENTRAL EXCISE, MEERUT

ALBERT DAVID LTD. Versus COMMISSIONER OF CENTRAL EXCISE, MEERUT - 2002 (148) E.L.T. 1183 (Tri. - Del.) Issues:- Appeal against Order-in-Appeal confirming central excise duty and penalty.- Treatment of control samples in relation to central excise duty.- Interpretation of Rules 9 and 49 of the Central Excise Rules.Analysis:1. Appeal against Order-in-Appeal:The appeal was filed by M/s. Albert David Ltd. against the Order-in-Appeal confirming the demand of central excise duty and penalty. The Additional Commissioner had earlier held that control samples should have been accounted for in the RG-I register and imposed duty on the seized control samples. The Commissioner (Appeals) set aside the confiscation of seized goods, confirmed duty on destroyed control samples, and reduced the penalty. The appellant argued that control samples are not finished goods and are not for sale, citing relevant case laws. However, the Tribunal upheld the demand of duty on control samples removed before passing quality control tests, deeming them excisable goods under the Central Excise Rules.2. Treatment of Control Samples:The Tribunal considered the nature of control samples kept by M/s. Albert David Ltd. as per the Drugs and Cosmetics Act. It was noted that the control samples were of medicines manufactured by the appellants and were retained until passing quality control tests. The Tribunal rejected the argument that these samples were not excisable goods, emphasizing that once the quality control test was successful, the goods became liable for central excise duty. The Tribunal referred to Rules 9 and 49 of the Central Excise Rules, which deem excisable goods utilized as samples to have been removed from the place of manufacture.3. Interpretation of Rules 9 and 49:The Tribunal clarified that under Rules 9 and 49 of the Central Excise Rules, excisable goods utilized as samples within the factory premises are deemed to have been removed from the place of manufacture. Citing a previous case, the Tribunal reiterated that taking samples for retention inside the factory, as per the Drugs and Cosmetics Act, constitutes clearance under the Central Excise Rules. The Tribunal found no merit in the appellant's argument that duty was confirmed on expired samples, affirming that duty was demanded on medicines removed for control samples. The Tribunal upheld the demand of duty but reduced the penalty imposed.In conclusion, the Tribunal dismissed the appeal and confirmed the demand of duty on control samples removed before passing quality control tests, emphasizing the applicability of the Central Excise Rules and previous case laws in determining excisability.