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TMI Blog2015 (11) TMI 1343X X X X Extracts X X X X X X X X Extracts X X X X ..... manufacture of excisable goods viz. chocolates falling under chapter number 18 of the Central Excise Tariff Act, 1985. In the visit to the factory of the appellant-assessee by the Revenue officers on 16th and 17th of October, 2003 they noted that the assessee is drawing samples, without payment of Central Excise duty for in-house testing of quality of the goods manufactured and without following any procedure under the Central Excise law, on hourly basis, daily for all the 3 shifts. The statement of the Supervisor of Quality Assurance Department was recorded and also statement of Assistant Warehousing Manager, wherein it was accepted that they were drawing the samples of the products (chocolates) daily, shift wise, and the samples were for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lso alleged that the appellant contravened the provisions of (i) Rule 10 of Central Excise Rules, 2001/2002 read with the erstwhile Rule 53 and Rule 226 of the erstwhile Central Excise Rules, 1944 read with section 38A of Central Excise Act, 1944 in as much as they have failed to maintain proper accounts in respect of the samples cleared for in-house testing, in a legible manner, indicating the particulars regarding destruction of goods produced or manufactured, opening balance, quantity produced or manufactured, inventory of goods, quantity involved for testing, assessable value, the amount of duty payable and particulars regarding amount of duty actually paid which were deficiently accounted for in RG1/Daily Stock Account Register. (2) Ru ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... independent testing agencies; (4) for samples required to be sent to Government Test Centres including the chemical examiner for test. So far as quantification of the duty in dispute is concerned for the samples cleared for in house testing purposes, the goods cleared as sample by the assessee have nor been cleared for sale outside the factory premises and not amounting to sale and therefore the violation of the same is to be seen as per Section 4 of Central Excise Act read with Rule 8 of Central Excise Valuation Rules 1975 and 2000 respectively as applicable and accordingly the assessee was required to show-cause as to why Central Excise duty amounting to Rs. 3,94,671.4/- plus education cess totalling to Rs. 3,98,523.63/- should not be re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (168) ELT 466 where it is held that no interest and penalty is payable as there is no wilful breach of law and/or contumacious conduct. As extended period was involved, therefore rejecting the submissions of the assessee he imposed penalty of Rs. 3,90,584/- under Section 11AC of the Act along with demand for interest. Being aggrieved the appellant-assessee preferred appeal before the Commissioner (Appeals). 3. Before the Commissioner (Appeals) it was contended that the adjudicating authority had failed to appreciate that the types of samples drawn were quality control samples, infestation samples and control samples drawn before completion of packing and used for testing of quality and that the goods were destroyed during the course of qua ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g, as there is no clearance, no duty is demandable. It was further urged that the adjudicating authority have failed to properly interpret para-3.3 of Chapter 11 of CBECs Excise Manual of Supplementary Instructions, under which no duty is payable if samples are preserved in the factory for a certain period for investigation of complaints, if any. The intended procedure as per paragraph 3.2.2 of the said Manual was not applicable to the facts of the assessee's case. It was further urged that the adjudicating authority had erred in relying on the ruling of the Honble Apex Court in the case of ITC Ltd. Vs. CCE (supra) and had the failed to comprehend that the samples of the appellants are not marketable. The decision in ITC case had no a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... herein it is recorded that the assessee had maintained registers for such samples. It is further recorded in the notice based on the statement of the supervisor quality assurance department that samples are drawn for testing the various parameters like infestation, quality control, etc. There is a specific procedure for drawing of samples and the particular quantities of samples are drawn as control samples and for various investigations. The samples drawn were in finished form and were retained for different periods from the date of drawl and disposed off by way of destruction. As regards the infestation samples these are also drawn from the manufacturing line and after testing these are preserved for a period of three months. After the pe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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