TMI Blog2016 (7) TMI 78X X X X Extracts X X X X X X X X Extracts X X X X ..... ld appear that the adjudicating authority has been over-zealous in interpreting the treatment to be accorded to removals to be applicable to all samples whether retained in the factory or taken outside. We have no doubt in our minds that drawing of samples and removal of samples are two different events and it is only the latter that requires discharge of duty liability. Samples that are drawn and retained are, by and large, reintroduced subsequently in the production process and thus metamorphosised as finished goods that are removed on payment of duty. Even if the samples were to lose their identity and characteristics during the testing, the cost of such samples would, in the normal course, be absorbed in the cost of production of fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6 issued under F. No. 224/7/86-CX.6 dated 15th January 1987 and further circular no. 1/91-CX.3 dated 04/01/1991 relating to cigarettes being taken out of the factory of production for quality control tests. It was held that the instructions of the Central Board of Excise and Customs are binding on the departmental officers in view of the decision of the Hon ble Supreme Court in Mahavir Aluminium Ltd. v. Commissioner of Central Excise, Jaipur [1999 (114) ELT 371 (SC)] and Paper Product Limited v. Commissioner of Central Excise [1999 (112) ELT 765 (SC)]. The first appellate authority, on the other hand, has acknowledged the contention of the respondent that the cables are manufactured by them against specific orders of customers and that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dure categorises samples as (i) Trade samples sent to customers for trial; (ii) Samples for test purposes; (iii) Samples for supply against sale contracts or for enforcement of control measures; (iv) Samples for display at exhibitions, fairs and in show-case; and (v) Samples for market inquiries by Central Excise Officers. 6. It goes on to elaborate upon the various categories of samples and, in relation to samples for test purpose, has further segregated them as those drawn for in-house laboratory testing and for preservation for investigation into complaints as well as samples which are drawn for sending outside the factory premises for testing. In particular we note para 3.2.2. 3.2.2. The assessee is required to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... escribed periods as well as those that are subject to test within the factory are not, in effect, removed from the factory and it would appear that these should not be liable to excise duty at that stage. It would appear that the adjudicating authority has been over-zealous in interpreting the treatment to be accorded to removals to be applicable to all samples whether retained in the factory or taken outside. We have no doubt in our minds that drawing of samples and removal of samples are two different events and it is only the latter that requires discharge of duty liability. Samples that are drawn and retained are, by and large, reintroduced subsequently in the production process and thus metamorphosised as finished goods that are remove ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he case of J.K. Industries Ltd. (cited supra) it was held that samples of tyres drawn for in-house testing and destroyed during testing is not liable to any excise duty. The ratio of these decisions applies to the facts of the present case. 5.4 The reliance placed by the Revenue in the case of Commissioner of Central Excise, Chandigarh v. Dabur India Ltd. - 2005 (182) E.L.T. 185 (Tri.-Del.), does not support the case of the Revenue. In the said case, it was held that, as long as the control samples are kept in the factory and not cleared from there, the same will not be chargeable to duty if proper account is maintained. When these samples are cleared for test or for destruction at that time assessment should be made for duty, if any, le ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Packaging Industries Ltd. (supra) relied upon by the counsel for the revenue is distinguishable on facts. In that case the samples were cleared out of the factory and sold as scrap, whereas, in the present case, the samples are consumed/ destroyed within the factory during the process of testing. Therefore, the decision of the Tribunal in the case of Positive Packaging Industries Ltd. (supra) has no relevance to the facts of the present case. 6. In these circumstances, in our opinion, the decision of the Tribunal, in the facts of the present case cannot be faulted. In the result, the appeal is dismissed by answering the question in favour of the assessee and against the revenue. There shall be no order as to costs. 12. In view of th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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