TaxTMI 
TaxTMI 
2026 (7) TMI 1780
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....arwad District, Karnataka. It is engaged in the manufacturing of medicines. After issuance of show cause notice and eliciting a reply, the Assistant Commissioner of Central Excise, Hubli Division (for short, 'Assistant Commissioner, Hubli') passed an order dated 30.11.2005 concerning the period from January 2001 to September 2003. According to the said order, the claim of the appellant that certain samples were cleared for both in-house testing and for testing through outside laboratories, was rejected on the ground that no proper records have been maintained. So holding, the Assistant Commissioner, Hubli observed that the value of in-house samples worked out to Rs. 2,09,301/- and on that excise duty of Rs. 33,488/- was levied. Similarly for samples purportedly sent to outside laboratories, a demand of Rs. 6,226/- was confirmed. 4. Aggrieved, the appellant carried the matter in appeal to the Commissioner of Central Excise (Appeals), Mangalore, Karnataka. The Appellate Authority upheld the order of Assistant Commissioner, Hubli. On further appeal, the Customs, Excise & Service Tax Appellate Tribunal, South Zonal Bench at Bangalore, Karnataka (for short, 'Tribunal') set aside the ....
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....aling 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." 10. To support its conclusion that assessee was required to maintain record for the removal of samples for testing or for clearance for in-house testing or for testing outside the premises, the High Court relied upon paragraph 17 & 18 of the ITC (supra), which reads thus:- "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 same is removed for test. Packing of the cigarettes cannot be said to be incidental or ancillary to the manufacturing process, but the same may be incidental or ancillary to its sale only. In case it is laid down that packing of cigarettes is incidental ....
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....ing any account in relation to the destruction of the cigarette sticks during the course of testing. At this stage, Shri Ganesh submitted that the matter should be remitted either to the Tribunal or the Assessing Authority for affording an 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 appellant Company was not maintaining any such account. In view of the non-maintenance and non-production of accounts in relation to the destruction of cigarette sticks during the course of testing, we are of the opinion that excise duty was leviable on the....
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....on 1-9- 2001, states that assessee is required to maintain a proper account of receipt and the utilization of samples in the test conducted in the laboratory. The removal shall be in the same manner as the goods are removed for home consumptions. 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. 18. Para 3.3.1 of CBEC's Supplementary Instructions for new Excise procedure as on 1.9.2001, under heading 3.3, states that where samples are required for other purposes specified at (iii) (iv) & (v) of paragraph 2.1, the procedure specified at paragraph 3.2 shall be followed. However, it is clarified that when a manufacturer preserves the sample of their product for some period for investigation of complaints, if any, no duty shall be charged on these samples considering that the goods remain within the factory, duty shall be charged, unless exempted by a notification, once the samples are cleared from the factory, if at ....