2010 (5) TMI 689 - HC - Central Excise

Demand of duty - Whether excise duty is liviable on Control Samples drawn and retained by the Party considering it to be deemed removal under Rule 4 10 11 & 6 of the Central Excise Rules 2002 alleged that Party was drawing batch control samples of medicines after labeling and packing in terms of Rule 78 of the Drugs and Cosmetics Rules 1945 - No duty was being paid by the Party on these control samples although no exemption was available Held that - In the case of Dabur India lt., ( 2005 (2) TMI 166 - CESTAT NEW DELHI ) case was in favour of the Party relying upon the aforesaid decision

Summary

Issues:
1. Whether excise duty is leviable on "Control Samples" drawn and retained by the 'Party'?
2. Whether the question raised is a substantial question of law?

Issue 1:
The case involved an appeal by the Commissioner of Central Excise, Chandigarh, regarding the levy of excise duty on "Control Samples" drawn and retained by a company engaged in manufacturing Ayurvedic medicines and beauty products. The company had retained these samples without paying the excise duty, leading to a Show Cause Notice for the duty amount. The Adjudicating Authority confirmed the duty, but the Commissioner (Appeals) later allowed the company's appeal. The department then appealed to the CESTAT, which decided in favor of the company based on a previous Tribunal decision. The High Court referenced relevant Central Excise Rules, including Rule 4, which states that excisable goods cannot be removed without paying the duty, and Explanation-II which deems goods utilized for manufacturing as removed immediately after such utilization.

Issue 2:
The High Court analyzed whether the question raised regarding the levy of excise duty on control samples constituted a substantial question of law. It referred to Rule 4, 6, 10, and 11 of the Central Excise Rules. The Court dismissed the appeal, stating that a previous decision had already determined a similar question to be not a substantial question of law. Therefore, the present appeal was also deemed devoid of merit and dismissed based on the previous rulings.

This detailed analysis of the legal judgment highlights the key issues, relevant legal provisions, and the court's decision regarding the levy of excise duty on control samples and the substantiality of the legal question raised in the case.