Appellate tribunal grants duty-free clearance for samples under Notification No. 171/70-C.E.

The appellate tribunal allowed the appeal, granting the assessees the benefit of duty free clearance of samples under Notification No. 171/70-C.E. The tribunal found that the Collector failed to conclusively establish the department's case regarding non-compliance with the notification's conditions. It was noted that the Collector did not address whether the samples were marked as "samples not to be sold" as required. The tribunal emphasized that even if samples were not packed differently but were retained in the factory, they could still qualify for the benefit. As a result, the assessees were granted the consequential benefit.

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Issues:
Claim for duty free clearance of samples under Notification No. 171/70-C.E., as amended.

Analysis:
The appellants, engaged in manufacturing medicaments, were required to draw samples for quality control and testing purposes. They claimed the benefit of duty free clearance of samples under Notification No. 171/70-C.E. The conditions for such clearance included limiting the total value of samples and packing them distinctly as "Samples not to be sold." The dispute arose when the revenue alleged that samples cleared between April 1989 and December 1992 did not meet these conditions, leading to a demand of Rs. 7,873 in duty. The Collector confirmed the demand without imposing a penalty, prompting the appeal.

Before the Collector, the assessees contended that the samples were packed differently from regular trade packing and were marked as "samples not to be sold." However, the Collector's findings indicated discrepancies in the packing of Metacin tablets, suggesting non-compliance with the notification's conditions. The classification lists submitted by the assessees showed various packings, including packets of 10 tablets and 4 tablets, with a specific entry for quality control samples. The Collector's decision seemed to focus on one sample packing without considering the entire classification lists.

The appellate tribunal noted that the Collector's judgment did not address whether the samples were stamped with the required legend indicating they were not for sale. The assessees also cited a previous tribunal judgment, emphasizing that even if samples were not packed differently but were retained in the factory, they could still qualify for the notification's benefit. The tribunal found the Collector failed to establish the department's case conclusively, as it was unclear how many samples were retained or cleared. Consequently, the appeal was allowed, granting the assessees consequential benefit.

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