TMI Blog2015 (11) TMI 1343X X X X Extracts X X X X X X X X Extracts X X X X ..... SHRI ANIL CHOUDHARY, MEMBER (JUDICIAL) For the Petitioner : Shri S.L. Hasija, Supdt. (A.R.) For the Respondent : Shri M.P. Baxi, Advocate ORDER Per: Anil Choudhary: The Revenue and the assessee are both in appeal against the Order-in-Appeal No. P-II/BKS/403/2005 dated 24.11.2005 passed by the Commissioner of Central Excise (Appeals) Pune-II. 2. The brief facts are that the appellant-assessee is engaged in the 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 tests n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act, 1944 in as much as they have failed to pay the Central Excise duty on the said samples cleared without payment of duty and further the assessee failed to pay the duty on the said samples cleared by them and accordingly show-cause notice dated 25.04.2005 for the period April, 2000 and December, 2004 was issued alleging therein that the assessee is clearing the finished goods for quality control tests but no proper procedure was followed nor records maintained properly. Though they have maintained the registers in the quality assurance department, they did not have the quantitative details of receipts and disposal of the same. It only shows manufacturing line from which they are drawn. It is further alleged that in respect of clearances of samples for testing, there is no specific special exemption from payment of Central Excise duty or from observing the formalities for maintenance of accounts under the Central Excise law for the samples drawn and cleared to the In-house quality control laboratory for testing purposes. Moreover as per the instruction in supplementary manual the provisions of (1) samples drawn for in-house laboratory for testing quality and adherence to product ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 04 (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 ₹ 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 quality testing. It cannot be equated with consumption of samples after completion of manufacturing. Therefore the goods are not excisable. It was further urged that infestation samples and control samples were drawn after packing of the manufactured goods so that the samples could be identified for checking genuineness of complaint from the customer/Food and Drugs Adulteration administration. On the packing, batch number, manufacturing dat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ise Rules. Further as regards penalty it was urged that the same is not imposable as disputed duty was paid with interest prior to be date of issue of show-cause notice. 4. The learned Commissioner (Appeals), observing that the appellant have paid the entire duty amount before the issue of show-cause notice and relying on the ruling in the case of Machino Montell (supra) held that no penalty and interest is chargeable. Accordingly allowing the appeal in part the differential duty was sustained and the demand of interest and penalty was set aside. Being aggrieved with the said order the appellant-assessee preferred appeal before this Tribunal against the confirmation of duty while the Revenue is in appeal challenging the dropping of penalty by the Commissioner (Appeals). 5. The Counsel for the appellant Mr. MP Baxi took me through the show-cause notice and points out from para 4 of the notice, wherein 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. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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