AI Drafter 
TaxTMI 
TaxTMI 
2016 (6) TMI 149
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....006 and PII/BKS/301-302/2005 dated 14 th July 2005 of Commissioner of Central Excise (Appeals), Pune - II. 2. M/s Hindustan Lever Ltd, aggrieved by the three orders-in-appeal, is before us along with Shri Prashant Chavathe who was penalized under Rule 209A of Central Excise Rules, 1944 read with section 38 of Central Excise Act, 1944. The notice for demand of duty had been issued to M/s Vashishti Detergents Ltd which has since merged with the appellant company. The confirmation of demand of excise duty are Rs. 32,83,544.41 for the period from February 1999 to July 2003 vide order-in-original no. 18/ADC/CEX/2004 dated 29 th October 2004 which also imposed penalty of like amount on the assessee and Rs. 50,000/- on the employee, Rs. 5,31,57....
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.... 6 issued under F. No. 224/7/86-CX.6 dated 15 th January 1987 and further circular no. 1/91-CX.3 dated 4 th January 1991 in relation to taking cigarettes out of the factory of production for quality control tests. It was specifically held that the instructions of the Central Board of Excise and Customs are binding on departmental officers in view of the decision of the Hon'ble Supreme Court in Mahavir Aluminium Ltd. v. Commissioner of Central Excise, Jaipur [1999 (114) ELT 371 (SC)] and Paper Product Limited v. Commissioner of Central Excise [1999 (112) ELT 765 (SC). The first appellate authority reiterated the binding nature of circulars. 5. The primary contention of Revenue is that the Supplementary Instructions of the Central Boar....
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....emises for testing. In particular we note para 3.2.2. "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." 8. We note that the said instructions do admit that the Central Excise Rules does not contain any specific provision for dutiability of samples drawn for t....
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....d into the production process, they would, undoubtedly, make their way into stock of finished goods and would, in due course, be removed on payment of duty. Even if the samples were to lose their identity and characteristics in testing, the cost of such samples would, in the normal course of business, be absorbed into the finished products which are subject to duty. There is, therefore, no logic in concluding that there is a loss of revenue on account of drawal of samples to the extent that those are retained or tested within the factory of production. 11. In Thermax Cullgian Water Technologies Ltd. v. Commissioner of Central Excise [2014 (312) ELT 148] the Tribunal has held: "5.3 As regards the demand on control samples of purified w....
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.... are cleared for test or for destruction at that time assessment should be made for duty, if any, leviable as per law. In the present case, the Revenue has not adduced any evidence that the control samples have been removed from the factory and has not been consumed or lost or destroyed during the course of testing. In the absence of any corroborative evidence of removal of these samples from the factory, the demand of duty on such control samples cannot be sustained." 12. The Hon'ble High Court of Bombay in Commissioner of Central Excise v. RPG Life Sciences Ltd. [2011 (264) ELT 346 (Bom.)] has held that: 4. In the present case, the specific case of the assessee is that samples drawn for testing were not cleared out of the factor....