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2016 (6) TMI 149 - AT - Central ExciseLeviability of duty on samples drawn - Manufacture of toilet soaps and detergents required to be tested at certain prescribed stages of the manufacturing process and samples, drawn from each batch, are to be retained for prescribed periods - samples for test purpose has been further segregated as those drawn for 'in-house laboratory testing' and for 'preservation for investigation of complaints' as well as samples which are drawn for sending outside the factory premises for testing. Held that:- in the absence of a specific exemption for samples taken outside the factory premises, they are liable to duty in a manner similar to goods removed from the factory of production. However, samples which are retained in the factory of production for a prescribed period for conformity with standards as well as those which are tested within the factory are not, in effect, removed from the factory and it would appear that these should not be held liable to excise duty at that stage. It would appear that the adjudicating authority has been over-zealous in interpreting the provision relating to duty liability on removal to be applicable to all samples because of juxtaposition of sentences. We have no doubt in our mind that drawing of samples and removal of samples are two different events and it is only the latter that calls for discharge of duty liability. To the extent that samples are reintroduced 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. Therefore, in view of instruction prescribing duty payment only upon removal from the factory, the ultimate inclusion of the samples or the costs in goods that are cleared from the factory of production and the decision of Tribunal in the case of Thermax Cullgian Water Technologies Ltd. v. Commissioner of Central Excise [2013 (12) TMI 977 - CESTAT MUMBAI] and the decision of Hon'ble High Court of Bombay in the case of Commissioner of Central Excise v. RPG Life Sciences Ltd. [2010 (12) TMI 52 - BOMBAY HIGH COURT], it is found that levy of duty on samples is without authority of law. - Decided in favour of appellant
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