2007 (11) TMI 465

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....ve heard both sides and find that in the case of ITC Ltd. v. CCE, 2003 (151) E.L.T. 246 (S.C.), the Apex Court has held that sticks of cigarettes which are removed for the purpose of testing quality control located within the factory premises are liable to excise duty. The Court has, however, further held that quantity of cigarettes sticks destroyed in the course of quality control test is not liable to excise duty. The Court upheld duty liability on the cigarettes sent to the laboratory for quality control test in view of non-maintenance and non-production of accounts in relation to destruction of the goods during the course of testing. Relevant paragraph of the judgment are reproduced herein below :- "17. From a conspectus of the af....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....he factory premises of the appellant company are liable to excise duty. 18. Coming now to the second question, it may be stated that learned Counsel appearing on behalf of the Revenue could not dispute the proposition that quantity of cigarette sticks that is destroyed in the course of quality control test is not liable to excise duty. He, however, submitted that no evidence whatsoever was adduced on behalf of the appellant-company either before the assessing authorities or the Tribunal to show that any cigarette stick was destroyed in the process of quality control test, much less cigarette sticks of any particular quantity inasmuch as, undisputedly, for major period no account at all was maintained and for some period, though accoun....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....ruction of cigarette sticks during the course of testing, we, are of the opinion that excise duty was leviable on the entire stock of cigarette sticks sent to the laboratory for quality control test." 3. The interpretation of the revenue that demand is required to be confirmed even on destroyed batteries is contrary to the finding contained in paragraph 18 of the Apex Court decision. Further, the ITC judgment has also been followed by the judgment of CCE, Hyderabad v. Gulf Oil Corporation Ltd., 2006 (201) E.L.T. 433 wherein it has been held that the Apex Court has laid down in the ITC case that when a product is destroyed in the course of quality control testing it is not liable to excise duty, and the reason in Apex Court ruling that....