Factory-drawn loose cigarettes for testing and R&D were eligible for the notification rate, not tariff duty.

Loose cigarettes drawn within a factory for test purposes and research and development were treated as falling within Notification No. 14/90-C.E. because the notification applied where the goods were classifiable under sub-heading 2403.11 and imposed no further condition beyond that tariff classification. Rule 93 of the Central Excise Rules, 1944 was read as applying only to goods delivered from the factory, so it did not govern cigarettes retained and used internally for testing and R&D. On that basis, the cigarettes were chargeable at the effective notification rate and not at the tariff rate, and the Revenue's appeal failed.

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Issues: Whether loose cigarettes drawn within the factory for test purposes and research and development were chargeable to duty at the tariff rate or at the effective rate under Notification No. 14/90-C.E. dated 20-3-1990.

Analysis: The notification prescribed an exemption-linked duty structure for cigarettes falling under sub-heading 2403.11, with rates determined by the length of the cigarettes. The only express condition in the notification was that the goods must fall under the specified tariff sub-heading. Rule 93 of the Central Excise Rules, 1944 was relied upon to contend that cigarettes had to be delivered from the factory in packed condition, but the language of the rule was confined to goods delivered from the factory. The loose cigarettes in question were drawn only for test purposes and research and development within the factory, and were not delivered outside the factory.

Conclusion: The loose cigarettes were chargeable at the rate applicable under Notification No. 14/90-C.E. dated 20-3-1990 and not at the tariff rate; the Revenue's appeal failed.

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