TaxTMI 
TaxTMI 
2011 (8) TMI 1396
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....ated 31.08.2007 wherein the appeal filed by the assessee has been allowed setting aside the order passed by the Commissioner of Central Excise (Appeals), Mangalore, in Appeal No. 59/2006 dated 21.02.2006. 2. This appeal is admitted on 05.08.2009 to consider the following substantial questions of law :- a) Whether the Tribunal is correct in overriding the provisions of CBEC's Supplementary Instructions and observations of the Apex Court in the matter of M/S ITC LIMITED VS CCE. PATNA (reported in 2003 (151) ELT 246 (SC)? b) Whether the Tribunal is correct in allowing exception to samples cleared in-house even when prescribed procedure in law is not followed? c) Whether the Tribunal is correct in holding that the ....
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....uthority negatived the contentions of the assessee by holding that no accounts have been maintained regarding the samples used for testing and also moved out of the premises for testing and since the mandatory provision of maintaining accounts in that behalf has not been complied with, confirmed the proposal made in the show cause notice and ordered for issue of demand notice for Rs. 33,488/- on samples cleared for in-house testing and demand of central excise duty payable on the samples cleared for testing purposes to outside agencies works out to Rs. 6,226/- and imposed penalty and interest in accordance with the provisions of Sections 11AB & 11AC of the Central Excise Act. 1944 [for short 'the Act']. 5. Being aggrieved by the said ord....
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....een preferred by the Revenue for considering the afore-said substantial questions of law. 8. The learned counsel appearing for the appellant/Revenue submitted that the fact that samples were sent for in-house testing and also for testing outside the premises is not disputed. Admittedly, no accounts have been maintained regarding the samples that are sent to the laboratory and about the destruction of samples and therefore, in view of the decision of the Supreme Court in I.T.C. LTD. Versus COLLECTOR OF CENTRAL EXCISE. PATNA reported in 2003 (151) E.L.T. (S.C.), the First Appellate Authority has rightly confirmed the order passed by the adjudicating authority and the CESTAT only on the basis of certain observations made by the original aut....
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.... Supplementary Instructions for new Excise Procedure, Chapter 11 dealing with the samples would clearly show that the assessee was required to maintain records for said removal of samples for testing or for such clearance for in-house testing or for testing outside the premises and hence, clearance are to be treated as clearance for house consumption and the said fact is not disputed by the appellants/appellants herein. 13. The Hon'ble Supreme Court has clearly observed in paragraphs 17 & 18 of its judgment in ITC's Case, referred to above, as follows :- "17. In the present case, the cigarette, which is the end product of tobacco, is fit for consumption before the same is removed for test. Packing of the cigarette cannot be said....
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....t 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 quantity was destroyed during the process of testing. It was pointed out by learned Additional Solicitor General that though in the show cause notice the appellant -Company ....