Duty on excise samples sent to laboratory not payable when first moved from the factory premises.

Duty on excisable samples drawn from each batch and sent to a laboratory was analysed under Rule 49(1) of the Central Excise Rules, 1944, which postpones duty until goods are about to be issued out of the specified place or removed from approved storage. Rule 9 was read to define the relevant manufacturing premises, including appurtenant premises specified by the Commissioner. The departmental manual, which allowed samples to be drawn without duty and even destroyed subject to proper accounts, was treated as contemporaneous exposition, reinforced by the Department's own prior orders on the same practice. On that basis, duty was not payable when the samples first moved to the laboratory, and the demand was held unsustainable.

---

---

Issues: Whether duty was payable on samples drawn from each batch and sent to the laboratory, or only when the samples were actually removed from the factory after the retention period.

Analysis: Rule 49(1) of the Central Excise Rules, 1944 postpones duty on excisable goods until they are about to be issued out of the specified place or removed from an approved store room or other approved place of storage. Rule 9 refers to the place where goods are produced, cured or manufactured, including premises appurtenant thereto specified by the Commissioner. The departmental manual itself stated that, subject to proper accounts being kept, samples may be drawn without charging duty and may even be destroyed, which was treated as contemporaneous exposition of the law. The Department's own prior orders on the same practice further supported that understanding.

Conclusion: Duty was not payable when the samples were first moved to the laboratory, and the demand was unsustainable. The issue was decided in favour of the assessee.

---