TaxTMI 
TaxTMI 
2007 (8) TMI 128
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....e record of these samples drawn for testing is maintained by them. As the samples were being destroyed within the factory premises for the purpose of testing and before marketing duty was not being paid on the same which was disputed by the department. Duty on the same was demanded and confirmed by the Deputy Commissioner. This order was however set aside by the Commissioner (Appeals) on the ground that the testing of explosives is mandatory under the Explosive Rules, 1983 without which the explosives cannot be marketed and since these samples were destroyed in testing no duty is payable on the same. While arriving at this decision, the Commissioner (Appeals) has referred to the decision of the Tribunal in the case of J. K. Industries Limit....
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....ed for not producing any account either before the assessing authority or the Tribunal, therefore there was no point to discuss excitability of cigarette destroyed during quality control test and hence it was ruled that, excise duty was leviable on the entire stock of cigarette sticks sent to the laboratory for quality control test. The SDR refers to paras 17 and 18 of the decision in the case of ITC Limited which are reproduced as under :- "17. From a conspectus of the aforesaid decisions, it would be clear that for the purposes of levy of excise duty, the test to be applied is whether the goods manufactured are marketable or not. In the present case, the cigarette, which is the end product of tobacco, is fit for consumption before the sa....
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.... 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 account was maintained in relation to the quantity of cigarette sticks sent to the laboratory for testing, but no account was maintained as to how much quality was destroyed during the process of testing. It was pointed out by the learned Addit....
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.... destruction 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." 5. From the above decision it was submitted that it cannot be concluded that the samples for testing will not be required to suffer duty, if the accounting thereof is maintained in the factory. What has been stressed and pointed out by the Hon'ble Supreme Court in that case was that, since no account in respect of cigarettes destroyed in the process of quality control test was maintained by the company M/s. ITC Ltd., the entire stock of cigarettes sent for quality control test was liable to Central Excise duty. In view of this, it was ple....