TaxTMI 
TaxTMI 
2006 (7) TMI 77
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....elief. 3.Shri K.S. Ravi Shankar and K.S. Naveen Kumar, learned Advocates appeared for the appellants and Shri R.K. Singla, learned Jt. CDR and Shri Ganesh Havanur, learned SDR appeared on behalf of the Revenue. 4.Shri Ravi Shankar, learned Advocate urged the following points :- (i) The appellants, manufacturer of Cigarettes, has Quality Information Service Department (QUIS) situated within the factory. Samples of cigarettes sticks are sent to QUIS Department for the purpose of quality testing. The details of the nature of the tests were submitted to the department from time to time. They maintained register in which full particulars of the samples drawn were duly recorded. (ii) The durability of QUIS samples is in dispute between the appellants and the department over a long period of time. The Tribunal in the case of Godfrey Philips India Ltd. v. CCE, Bombay [1999 (114) E.L.T. 70] held that samples drawn for testing are at a pre-marketable stage and are not excisable goods. Following the above decision, the Tribunal's Kolkata Bench in the appellant's own case, reported in 2001 (137) E.L.T. 829 held that cigarettes sticks ....
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....; However the Department issued a show cause notice dated 29-9-2004 demanding duty on cigarettes sticks removed for quality testing during the period from September 1999 to November 2002 invoking proviso to Section 11A of the Central Excise Act, 1944. Interest was demanded. Penalty provisions were also invoked. The appellant's plea that the show cause notice was barred by limitation was not accepted by the Adjudicating Authority. After giving personal hearing the Adjudicating Authority passed the impugned order. (vi) The Commissioner has not taken into account the fact that for the impugned period, the judicial decision was in favour of the appellants and therefore there was no need to maintain the records of the QUIS samples drawn for testing purpose under Central Excise law. (vii) The Commissioner's finding that physical control exercised by the Department was only in relation to clearances of cigarettes from the factory and not to any removal to QUIS Department is wrong. The Departmental officers were posted in the factory and they were aware of all the activities inside the factory. (viii) The Commissioner's finding that the sample room of the a....
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....ing before the Supreme Court and as there were conflicting decisions on the issue of excisability of cigarettes samples taken for quality tests, there could be no intention on the part of the appellants to evade payment of duty. The above Order-in-Appeal has not been challenged in appeal by the Department and has attained finality. The Commissioner instead of following the said order, distinguished the said order on a fallacious ground that in the said decision, the issue involved was only of those QUIS samples destroyed during testing and not those samples which after testing are reprocessed as in the present case. It was submitted that the evidence in the form of periodic show cause notices produced during adjudication wherein clearly demonstrates the above finding of the Commissioner is not justified. (xiv) The appellants stopped payment of duty and discontinued maintenance of records on samples drawn for testing only after the decision of the Tribunal's Kolkata Bench in their own case. Therefore the appellants acted in a bona fide manner. (xv) The learned Advocate cited the following decisions to urge that the extended period was not available to the Department to demand ....
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....ave been invoked, Rule 209 and 25 would have no application. The imposition of penalty under old Rule 209 and new Rule 25 is therefore not sustainable. The instruction contained in the Manual of Supplementary instructions, issued by the CBEC, in Chapter 13, Part III, Para 2.2 has been ignored, which deals with non-imposition of dual penalty under parallel provisions. Therefore, the impugned order is neither legal nor proper. 5.The learned Jt. CDR and SDR reiterated the order of the lower authority. 6.We have carefully considered the submissions made by both the sides. The main issue to be decided is whether the show cause notice issued to the appellants is hit by time bar or not and whether there is justification for invoking the longer period to demand duty on samples of Cigarettes removed for QUIS test for the period from September 1999 to November 2002. The question of dutiability of samples of Cigarettes removed for test has finally been decided by the Apex Court in the case of M/s. ITC Ltd. v. CCE, Patna [2003 (151) E.L.T. 246]. The above decision was delivered on 10-12-2002. The appellants have stated that till they received a favourable decision with regard to the issu....
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.... would have been removed and estimated the duty liability. It should be borne in mind that in the absence of maintenance of record, the appellants estimated the duty liability and paid a sum of Rs. 65,38,263/- voluntarily. The basis adopted by the appellants in voluntarily discharging the duty liability for the period from December 2002 to September 2003 has been adopted by the Revenue in calculating the duty liability for the period 1999 - 2002. In other words, the demand in the show cause notice is purely based on theoretical estimate and not on the account of unearthing of any private records by the Department as recorded by the adjudicating authority in Para 13 of his findings. We reproduce the relevant extract. "On the contrary, the demand of duty of Rs. 1,65,80,915/- made in the present show cause notice is in respect of the quantities of samples of cigarettes drawn and not accounted for in the statutory records but were unearthed on verification of private records of the assessee after the pronouncement of Supreme Court judgment." When the Commissioner stated in the adjudication order that the (demand is made on the basis of private record unearthed, those record shoul....