TaxTMI 
TaxTMI 
2006 (4) TMI 303
X X X X Extracts X X X X
X X X X Extracts X X X X
....pondents are manufacturers of Detonators, an excisable commodity. The Revenue proceeded against them on the ground that they had not paid the Central Excise duty involved on the Detonators drawn as samples from the each line of production, batch-wise, for the purpose of conducting tests like drop test, shake test, snatch test, series firing, lead plate test, sand bomb test, buxton test, etc. The Original authority confirmed the duty of Rs. 3,60,362/- and imposed a penalty of Rs. 10,000/- under Rule 173Q and Rule 25 of the Central Excise Rules. The Respondents appealed to the Commissioner (Appeals) who allowed the appeal of the Respondents. 3. The Revenue is aggrieved over the decision of the Commissioner (Appeals). Hence they have f....
X X X X Extracts X X X X
X X X X Extracts X X X X
....and instead confined its findings strictly to the facts of the case under reference which has no record of clearance made to testing. (iv) In the present case, the Respondents had the following options before him :- (a) In terms of Para 3.2.2 of CBEC's Central Excise Manual, the assessee is required to maintain a proper account of receipts and the utilization of samples in test, in the laboratory. The removal shall be in the same manner as the goods are removed for home consumption. The manufacturer shall prepare invoice under Rule 11 of the said rules and make issue entries for the goods (samples) in the Daily stock account. Appropriate duty shall be paid by the assessee on these samples before the....
X X X X Extracts X X X X
X X X X Extracts X X X X
....[2003 (162) E.L.T. 612 (Tri. - Mumbai)] wherein it has been held that as drugs could not be sold in market without compliance with Rules ibid, the samples were not marketable and they were not liable to duty - Sections 2 (f) and 3 of Central Excise Act, 1944. (c) J.K. Industries Ltd. v. CCE, Jaipur [2003 (156) E.L.T. 437 (Tri.- Del) wherein it has been held that Samples of tyres, drawn for testing in accordance with BIS Manual, destroyed during testing - testing being essential for making the goods marketable in absence of which the goods cannot be sold and they cannot be treated as marketable - Duty not chargeable. (d) Traco Cable Company Ltd. v. CCE, Cochin [2000 (126) E.L.T. 643 (Tribunal) ....
X X X X Extracts X X X X
X X X X Extracts X X X X
..... Commissioner of C. Ex., Chennai [2004 (167) E.L.T. 434 (Tri. - Chennai)] wherein it has been held that Removal of goods to R & D Section for testing which is situated within factory compound and also marked in Ground Plan - No duty is demandable. (j) Neelkamal Plastics Ltd. v. CCE, Noida [2004 (164) E.L.T. 197 (Tri. - Del.)] wherein it has been held that no duty is payable in respect of the goods which were destroyed during testing, (k) ITC Ltd. v. CCE, Kolkata-VI [2006 (195) E.L.T. 179 (Tri. - Kolkata)] wherein it has been held that Samples destroyed during course of quality control tests in laboratory within factory premises - Appellants maintained complete account relating to destruction of goods during....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Instructions issued by the Central Board of Excise & Customs, mentioned in the grounds of appeal, will be applicable only in respect of the samples drawn from fully manufactured goods and entered into RG-1. (v) The Commissioner (Appeals) has correctly distinguished the Apex Court decision in ITC Ltd. case from the facts of the present case. (vi) The Tribunal in the case of ITC Ltd., v. CCE, Kolkata-VI, cited[ supra, relied on the decision of the Apex Court in the case of ITC Ltd. (supra) held that samples destroyed during the course of quality control test within the factory premises when complete account is maintained cannot be subjected to duty. 5. We have gone through the records of the case carefully. In the ITC Ltd. case....