TMI Blog1999 (7) TMI 214X X X X Extracts X X X X X X X X Extracts X X X X ..... ng departments during every shift for tests such as inspection of wrapping and, packing, cigarettes defects, checking of moisture contents of tobacco, checking of physical parameters of cigarettes and firmness tests etc. in their quality control laboratory. But no central excise duty is paid on such cigarettes drawn for tests. It was further alleged that the cigarettes so taken for testing purposes in the quality control lab are undoubtedly manufactured and there is no exemption from duty in respect of cigarettes used/consumed for the testing purposes. Hence it was alleged on the basis of the foregoing that the appellants herein have evaded central excise duty of Rs. 13,91,847.66 during the period 28-1-1987 to 28-9-1990. The appellants were ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se as mentioned above. 5. The Tribunal in the said case was however of the view that the demand of duty would be confined to the period of 6 months alone because no finding of suppression of facts or mala fide could be sustained against the appellants. 6. Collector in the impugned order while relying on the Tribunal s judgment in the appellants own case reported in 1993 (63) E.L.T. 186 Tribunal, as mentioned (supra), regarding the leviability of excise duty on samples of cigarettes (loose and packet) has distinguished the Tribunal s judgment on the question of time bar and has come to a conclusion that the larger period of limitation would be available to the Revenue, because the appellants herein, despite being penalised 5 times persis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ory for proper packing etc. It is therefore urged by the ld. Advocate that the tests carried out by the appellant in the present case are a pre-marketable stage of the cigarettes. Unless the goods are marketable they cannot be considered to be a manufactured goods. He, therefore, submits that no duty liability at all arises on the cigarettes drawn for the purposes of tests as mentioned above. 8. With regard to the marketability, he further points out that the cigarettes are not marketable, unless they are packed and the packings carry the specified warning under the relevant Act. In this connection he has drawn attention to the several provisions namely, Sections 2(b), 2(c), 2(k), Sections 3(1) and (2), Section 9, Section 10, Section 15 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... drawn for testing in quality control laboratory as mentioned above. 9. Next plea of the ld. Advocate is that even if it is assumed the duty is leviable on such cigarettes drawn for testing, the demand of duty is barred by time inasmuch as the show cause notice has been issued for the period beyond 6 months for most of the period involved. He submits that it cannot be the case of the Revenue that the Department was not aware about the drawal of samples of loose cigarettes for testing in their laboratory because the permission was granted by the Department as far back as 1954. Apart from that collection of duty on cigarettes is under physical control whereby an Inspector of Central Excise, and other officers keep on visiting the factory of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the face of behaviour and conduct of the appellants for drawing the samples without payment of duty in the absence of any exemption notification, despite 5 adjudication order being against them, the question of knowledge is no longer relevant in the present case, because it is a case of blatant contravention of Central Excise law with intent to evade payment of duty. Hence the invokation of larger period of limitation for demand of duty is sustainable. 12. We have carefully considered the pleas advanced from both sides. We observe that the case of the appellants relied upon by the ld. lower authority and consequently the ld. JDR relates to the empirical test carried out by the appellants on fully finished cigarettes, though loose and not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pre-marketable stage of the cigarettes. Only after fulfilment of these tests the cigarettes can be said to be marketable and therefore, excisable. It will, therefore be not correct to hold in the aforesaid facts and circumstances that the tests have been carried out by taking the samples from the excisable product-cigarettes. In the aforesaid view the demand of duty on cigarettes drawn for testing in appellant s laboratory is not sustainable. 13. In view of our aforesaid finding it is not really necessary to go into the plea of limitation as advanced by the ld. Advocate. Nevertheless, we may record that the contention of the appellants is well founded even in this respect. It cannot be said, on the authority of 1954 letter and the phys ..... X X X X Extracts X X X X X X X X Extracts X X X X
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