2016 (3) TMI 569

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....struction in the appellants factory premises. It is the case of the Revenue that the appellant while manufacturing coffee decoction, withdraws some quantity for testing the quality of the product and as there is no sale involved and there being clearance of finished goods, appellant is required to discharge the central excise duty on such decoction which is withdrawn from the shop floor for testing. The lower authorities relied upon the judgment of the Apex Court in the case of ITC Ltd. to hold against the appellant. 3. While arguing the appeal, learned counsel submits that the coffee decoction which is withdrawn is for the purpose of testing and it gets destroyed during the testing is not disputed; samples are taken for in-house qualit....

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....ory during the course of which the said samples get destroyed. 5.3. In our considered view, the demand of the duty raised by the Revenue, is unsustainable, incorrect for more than one reason. 5.4. Collection of the samples of finished goods and testing the same for ascertaining the quality is part of the manufacturing process. The assessee, has to ascertain that the final products manufactured by them are conforming to the standards laid down by themselves or as per requirement of the law, which requires, testing of the samples which do get destroyed during such testing. It is common sense, manufacturing of a final product is not complete without the testing of the final products in the in-house laboratory or any agency; as the market....

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....eld as under: "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 the quantity of cigarette sticks that is destroyed in the course of quality control test is not liable to excise duty." 6. Learned DR has also relied upon the very same judgment. In our considered view Apex Court in the said judgment has laid down the law, which states that any sample which is collected for ascertaining the quality of the product and gets destroyed during the test is not liable to excise duty, however, Apex Court has also recorded that the assessee has to show that the goods were destroyed in the process during the quality control test. In the case in h....