Excise on Samples

[Gopal B]

Dear Sir,

We are pharma manufacturers, we are keeping some FG samples for our QC records. shall we pay excise duty on such samples. pls advice.

Thank Q

[KASTURI SETHI]

YES. Since you have removed the finished goods from RG.I register, you will have to pay CE duty. Samples cannot be removed without payment of duty.

Dear Sir,

Can Cenvat Credit be availed on free Samples sent on payment of excise duty to any manufacturing company.

[Suryanarayana Sathineni]

Dear Mr. Gopal Rao,

You have only stated that you are keeping some samples for QC Records and not clearly indicated the purpose.

With he experience of handling pharma Industry issues, I give the following kinds of samples with duty payemnt requirements.

1. Process samples taken for testing during processing including Moisture and vaccum test etc., - NO duty

2. Samples sent out side for customers /market promotion etc., - Duty to be paid

3. Reserved /representative samples - Duty to be paid

Based on the above, you may have to ascertain the purpose of your QC samples and take a call accordingly.

Best Regards

Suryanarayana

[Rajagopalan Ranganathan]

Sir,

If the samples are kept within the factory premises no duty is payable. If the samples are sent out of the factory then duty is payable unless the payment of duty is exempted by specific exemption notification. I presume that since you are drawing samples for QC purpose they are are not removed outside the factory. In this case no duty is payable since there is no removal outside the factory..

[KASTURI SETHI]

Sh.Gopal Rao Ji,

Pl. go through the the relevant case law which is appended below:-

ALBERT DAVID LTD. Versus COMMISSIONER OF CENTRAL EXCISE, MEERUT - 2002 (148) E.L.T. 1183 (Tri. - Del.) - 2002 (10) TMI 120 - CEGAT, COURT NO. III, NEW DELHI

 

[Gopal B]

Dear All Experts, Very Thankful for your valueble replys.

Gopal Rao

AI Summary

Excise on samples: removal outside factory triggers duty, while in-process QC samples retained onsite do not.
Excise liability on samples depends on purpose and movement: process or in-process QC samples retained within the factory do not attract duty, whereas reserved/representative samples and samples sent outside the factory for customers or promotion are treated as removals and liable to duty unless covered by a specific exemption notification. Parties must determine sample purpose and destination and may also consider whether Cenvat credit is available when duty is paid on samples sent to another manufacturer.