2005 (2) TMI 289 - AT - Central Excise

Summary

Issues:
1. Appeal by Revenue against penalty and interest under Sections 11AC and 11AB of the Central Excise Act, 1944.
2. Assessee's appeal regarding duty demands on physician samples, denial of credit for inputs used in manufacturing samples, and reversal of credit on inputs used in duty-free products cleared for export to Iraq.

Analysis:
1. The Revenue's appeal contested the penalty and interest under Sections 11AC and 11AB of the Central Excise Act, 1944. The Tribunal noted that the penalty and interest cannot be upheld for the period before 28-9-1996, citing the decision in the case of ELGI Equipments. Consequently, the Revenue's appeal was dismissed.

2. Regarding the issues raised by the assessee, the first issue pertained to whether physician samples retained for record-keeping under the Drugs and Cosmetics Act, 1940 are subject to duty demands. The Tribunal relied on previous decisions and concluded that duty cannot be demanded on such samples as long as they are retained within the factory premises and not consumed for purposes other than quality testing.

3. The second issue raised by the assessee concerned the denial of credit for inputs used in manufacturing samples for which no duty was paid. The Tribunal ruled that if the samples are not subject to duty, then the denial of credit for inputs used in their manufacture cannot be justified.

4. The third issue involved the denial of credit for inputs used in products cleared duty-free for export to Iraq under an ad hoc exemption. The Tribunal directed the matter to be remitted back to the original authority for consideration of evidence regarding the actual export of goods to Iraq. If the export is established, credit on duty for inputs used in the exported goods should not be denied. However, if the export is not proven, necessary demands should be made.

5. In conclusion, the Tribunal disposed of the appeals based on the above analysis, addressing each issue raised by the parties and providing specific directions for further proceedings where necessary.