TaxTMI 
TaxTMI 
2010 (5) TMI 590
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....eal the present appeal, it is necessary to give the brief facts of the case that M/s. Dabur India Ltd., Baddi (hereinafter referred to as the 'PARTY') is the manufacturer of Medicaments falling under Chapter 30 of the Central Excise Tariff Act, 1985. The "PARTY" has asked for the refund claim amounting to Rs. 15,73,215/-, Rs. 34,444/- and Rs. 17,433/- on the grounds that these were paid as Central Excise duty on Control samples preserved/drawn during 1999-2000, however, as per Chapter-11 of the New Excise Procedure when a manufacturer preserves/retains the samples of their product for some period for investigation of complaints, if any, no duty should be charged on these samples considering that the goods remain within the factory. The Adjudicating Authority rejected the claim for refund on the ground that samples drawn and retained were not exempted by any notification during the relevant period. Being aggrieved with the order of the Adjudicating Authority, the 'PARTY' filed appeal to Commissioner (Appeals) Central Excise, on the ground that since there is no removal from the factory, no duty can be demanded. The Commissioner (Appeals) allowed the appeal of the 'PARTY' and s....
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....ed or any premises appurtenant thereto, which may be specified by the [Commissioner] in this behalf, whether for consumption, export or manufacture of any other commodity in or outside such place, until the excise duty leviable thereon has been paid at such place and in such manner as is prescribed in these Rules or as the [Commissioner] may require and except on presentation of an application in the proper form and on obtaining the permission of the proper officer on the form : [Provided that the molasses produced in a Khandsari sugar factory may be removed without payment of duty leviable thereon and the duty of excise leviable on such molasses shall be paid by the procurer, as if such molasses has been manufactured by such procurer, on the date of receipt of such molasses in his factory] [Provided also] that the [Commissioner] may, if he thinks fit instead of requiring payment of duty in respect of each separate consignment of goods removed from the place or premises specified in this behalf, or form a store-room or warehouse duly approved, appointed or [registered] by him, keep with any person dealing in such goods an account-current of the duties payable thereon and such....
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....action of the proper officer to have been lost or destroyed by natural causes or by unavoidable accident during handling or storage in such store-room or other approved premises : Provided further that the proper officer may not demand duty due on any goods claimed by the manufacturer as unfit for consumption or for marketing subject to such conditions as may be imposed by the [Commissioner] by order in writing.] (2) Notwithstanding anything contained in sub-rule (1), excisable goods made in a factory to which provisions of Chapter VII of these rules have been extended by the Central Government by notification in the Official Gazette, may be removed from the factory in which they are made to any warehouse [registered] under rule 140 for the storage of such goods and situated outside the [registered] premises of the factory and subject to such exemptions, limitations and conditions as may, from time to time, be specified in this behalf by the Central Government. [(3) Notwithstanding anything contained in such-rule (1), the Central Government, under-circumstances of exceptional nature, allow, by notification in the Official Gazette, any excisable goods to be remove....
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....the word 'consumption' may involve in the narrow sense using the article to such an extent as to reach the stage of its non-existence. But the word 'consumption' in fiscal law need not to confined to such a narrow meaning. It has a wider meaning in which any sort of utilization of the commodity would as well amount to consumption of the article, albeit that article retaining its identity even after use." (B) Supreme Court in Kathiawar Industries Ltd. v. Jaffrabad Municipality, AIR 1979 SC 1721, has observed that precise meaning to be given to these words would depend upon the context in which they are used. The words 'consumption' in its primary sense means the act of consuming and in ordinary parlance means the use of an article in a way which destroys, wastes or uses up that article. But in some legal contexts, the word 'consumption' has a wider meaning. It is not necessary that by the act of consumption the commodity must be destroyed or used up'. The word 'use' has a wider import than 'consumption'. In view of the observations made by Supreme Court in Kathiawar's case (supra), the retaining of samples shall mean utilization of the goods as such for the purpose of the Ru....
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....ve been given weightage. Learned 'CESTAT' has observed in paragraph-3 of order dated 8-2-2005 as below :- "The Basic Manual of Departmental Instructions on Excisable Manufactured Product as on 31-12-1979 deals with samples in para 113 and para 14. It gives the various categories of samples drawn which are as under :- (i) for supply as trade samples to customers for trial; (ii) for test purposes; (iii) for supply against contracts or orders from the government or for enforcement of control measures; (iv) For display at exhibitions, fairs and in show cases (v) For market inquiries by Central Excise Officers Procedure for the drawal and accounting of these samples. I. Trade samples II. Samples for test purposes The samples from this category will generally include- (a) Samples required for laboratory test in the factory and for preservation for investigation of complaints; (b) Samples required for tests at sister concerns and in....
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.... samples of their product for some period for investigation of complaints, if any. No duty should be charged on these samples but an account of such samples should be maintained in the prescribed form. If at any time the manufacturer desires to clear these samples then there should be assessed to duty as applicable. The Customs, Excise & Service Tax Appellate Tribunal has further held that the control samples as long as these are kept in the factory and not cleared from there, these will not be chargeable to duty if proper account is maintained. When these samples are cleared for test or for destruction at that time assessment should be made for duty, if any, liviable as per law. 9. On the other hand, learned counsel for 'PARTY' (Dabur India Limited) has submitted that once circular has been issued by CBEC's the same is binding on Department - The Department cannot be permitted to urge that such circulars are not binding on it, in view of the decision of Hon'ble Supreme Court in Union of India v. Arviva Industries (I) Ltd., 2008 (10) S.T.R. 534 (S.C.) = 2007 (209) E.L.T. 5 (S.C.). 10. Learned counsel for Dabur India Ltd. has invited the attention of this Court to th....
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....sp;The samples of this category will generally include :- (i) Samples drawn by in-house laboratory for testing quality and adherence to product specifications; (ii) Samples drawn for preservation for investigation of complaints; (iii) Samples drawn for test at other concerns and independent testing agencies; (iv) Samples required to be sent to Government Test Centers including the Chemical Examiners for test. 3.2.2 The assessee is required to maintain a proper account of receipts and the utilization of samples in the 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 their removal for test purposes unless otherwise exempted by a duty exemption notification. 3.3 Samples for other purposes. 3.3.1 Where samples are required for the purposes specified at (iii), (iv) and (v) of paragraph 2....
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....e the order of the Additional Commissioner (AE), Central Excise, while following its decision in CCE, Chandigarh v. Dabur India Limited, wherein it was held that the control samples retained in the factory premises for the purpose of laboratory tests are not required to be charged to duty. 6. On January 28, 2008, counsel for the appellant was directed to place on record copy of the order passed by the Tribunal in case of CCE v. Dabur India Limited. The same has been placed on record. The Tribunal in that case, while following the Basic Manual of Departmental Instructions on Excisable Manufactured Produce as on 31-12-1979 and the supplementary instructions of Excise Manuals effective from 1-9-2001, held that when a manufacturer preserve the samples of their product for some period for investigation of complaints, no duty shall be charged on these samples considering that those goods remain within the factory. It was held that the duty shall be charged only when the samples are cleared from the factory. 7. In view of the said decision, which is based upon the instructions issued by the department, we do not find any illegality in the impugned order. 8. Counsel....