TaxTMI 
TaxTMI 
TaxTMI 
2019 (7) TMI 457
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....ates them to withdraw samples for the purpose of testing before the same is cleared for home consumption. He pointed out that some of the samples are tested while the other are kept as test samples for future testing, if necessary, as controlled samples. He pointed out that demand of Central Excise duty has been made on such samples which has been withdrawn during different periods. Ld. Counsel relied on the following decisions to argue that no duty liability arises on such material which is consumed in testing:- (a) J. K. Industries Limited - 2003 (156) E. L.T. 437 (Tri-Del.) (b) Thermax Culligan Water technologies Limited - 2014 (312) ELT 148 (Tri. Mumbai) (c) Dr. Reddy's Laboratories Limited - 2008 (221) ELT 243 (Tri. Bang.) (d) ....
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....hat even in respect of controlled samples, there is no duty liability as observed by the Tribunal in the case of Thermax Culligan Water Technologies Limited - 2014 (312) ELT 148 (Tri. Mumbai). 4. Ld. AR relies on the impugned order. He also relied on the decision of the Hon'ble Apex Court in the case of ITC Limited (supra). He also relied on the supplementary Instruction No. 3.2.1 of Chapter 11. 5. We have gone through the rival submissions. We find that the issue regarding taxability of samples drawn for testing or as controlled samples, is a question settled by various decisions. Revenue has sought to rely on the Hon'ble Apex Court decision in the case of ITC Limited. The said decision of Hon'ble Apex Court has been distingu....
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....rocess which is incidental or ancillary to the completion of manufactured product. Manufacture of cigarette is completed when the same emerges in the form of sticks of cigarettes which are sent to the laboratory for quality control test. Sticks of cigarettes can be consumed and manufacture of the end-product, i.e. cigarette, which is commercially known in the market as such, is completed before its removal for test and after testing only packing of the same, which is the requirement of Rule 93 of the Rules, is done. Thus, we hold that sticks of cigarette which are removed for the purpose of test in the quality control laboratory located within the factory premises of the appellant-Company are liable to excise duty. Coming now to the 18. s....
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....nal or the assessing authority for affording opportunity to the appellant to produce the accounts and then record a finding as to how many cigarette sticks were destroyed during the course of testing. In our view, no useful purpose will be served by remitting the matter on this question, firstly, because even according to the show cause reply filed by the appellant-Company before the assessing authorities, it had not maintained any account in relation to the destruction of cigarette sticks during the course of quality control test and, secondly, no reason was assigned for not producing any account either before the assessing authority or before the Tribunal in spite of the fact that it was clearly stated in the show cause notice that the ap....
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....s thereunder made is also wrong in law." We find significant force in the above decision of the Tribunal. Further, we find that in the case of Thermax Culligan Water Technologies Limited (supra) the following has been observed in respect of duty liability of control samples:- "5.3 As regards the demand on control samples of purified water, it is an admitted position that the samples had been drawn as per the norms fixed by the Food and Drugs Authorities. These were retained to test the shelf-life of the product of each batch and to analyse the customer complaints. Therefore, it cannot be said that the appellant had cleared the control samples for purposes other than those stipulated. There is also no evidence led by the Revenue to show t....