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2016 (7) TMI 78 - AT - Central ExciseDuty liability on samples drawn for testing within the factory premises - Revenue contented that the Supplementary Instructions of the Central Board of Excise and Customs has laid down procedure for drawal and accounting of samples for testing which apparently insists upon payment of excise duty - FAA set aside the duty demand - Held that:- Samples that are retained in the factory of production for prescribed periods as well as those that are subject to test within the factory are not, in effect, removed from the factory and it would appear that these should not be liable to excise duty at that stage. It would appear that the adjudicating authority has been over-zealous in interpreting the treatment to be accorded to removals to be applicable to all samples whether retained in the factory or taken outside. We have no doubt in our minds that drawing of samples and removal of samples are two different events and it is only the latter that requires discharge of duty liability. Samples that are drawn and retained are, by and large, reintroduced subsequently in the production process and thus metamorphosised as finished goods that are removed on payment of duty. Even if the samples were to lose their identity and characteristics during the testing, the cost of such samples would, in the normal course, be absorbed in the cost of production of finished goods that would ultimately be charged to duty. There is, therefore, no logic in concluding that there is loss of revenue on account of drawal of samples to the extent that such samples are retained or tested within the factory of production. - Decided against revenue
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