TMI Blog2018 (12) TMI 1473X X X X Extracts X X X X X X X X Extracts X X X X ..... (Technical) Shri M.H. Patil, Advocate, for appellant Shri N.N. Prabhudesai, Superintendent (AR), for respondent ORDER Per: Sanjiv Srivastava These appeals are directed against the order dated 16.06.2010 of Commissioner (Appeal) Central Excise Mumbai Zone-I, holding as follows: 10. Thus in view of the above facts and circumstances, the impugned Orders-in Original Nos 03/SKS-01/Th- II/2007 dated 30.08.2007 passed by Additional Commissioner of Central Excise Thane-II and 09/2008- 09 dated 24.06.2008 passed by the Assistant Commissioner of Central Excise, Palghar Division, Thane- II Commissionerate, are upheld on all counts. 2.1 The appellants are engaged in the manufacture of P P Medicines classifiable under Chapter 30 of First Schedule to Central Excise Tariff Act, 1985. 2.2 They were drawing samples which are in fully manufactured condition for testing quality of products in their house laboratory as well as preserving for future complaints, if any, till expiry of the said goods. And thereafter the same are destroyed. 2.3 The appellants did not follow the proper procedure as per Central Excise Rules, 2002 and retained/ destroyed the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2.8 Against the orders of adjudicating authority appellants preferred the appeal before the Commissioner (Appeal). Commissioner (Appeal) rejected appeal filed by the appellant holding as stated in para 1, supra. 2.9 Aggrieved appellants have filed this appeal. 3.1 In their appeal appellants have challenged the order of Commissioner (Appeal) on following grounds:- i. Without undergoing specified quality control tests, the medicaments are not marketable and QC tests of the samples is a must and is part of manufacturing process and, hence duty thereon is not payable. ii. The quantity of medicaments taken for quality control tests is not required to be accounted for in Daily Production record, as same is not finished goods, these samples have been duly accounted for in Batch manufacturing records. iii. As per para 2(ii) r/w 3.2 r/w 3.3.1 of Chapter 11 of CBEC supplementary instructions, duty is not payable on the samples taken for test purpose. They also relied up[on series of case laws in their support a. Omega Pharma [2006 (206) ELT 908 (T)]; b. Exon Laboratories [2006 (205) ELT 952 (T)] c. Traco Cable [2000 (126) ELT 952 (t)]; d. Bhansali Engg {1999 (11 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... C)]; g. ITC Ltd. [2003 (151) ELT 246 (SC)]; h. Positive Packaging Industries Ltd. [2010 (249) ELT 57 (Tri.-Mumbai)]; i. SPBL Ltd. [2009 (235) ELT 41 (Raj.)]; j. UP State Sugar Corpn. Ltd. [2015 (321) ELT 629 (All.)]; k. Tata Chemicals Ltd. [2015 (320) ELT 45 (SC)]; l. Albert David Ltd. [2002 (148) ELT 1183 (Tri.-Del.)]; m. Wipro Ltd. [2006 (196) ELT 226 (Tri.-Mumbai)]; n. Mahindra and Mahindra Ltd. [2017 (348) ELT 729 (Tri.-Mumbai). 5.1 We have considered the submissions made. The issue involved in the matter is squarely covered by the decision of larger bench of Tribunal in case of Dabur India Ltd, referred in para 3.1 and 4.2. In the said decision larger bench has considered all the arguments that have been advanced before us now and ruled in the favour of assessee holding that no duty is required to be paid in respect of such samples drawn for quality control purpose. The relevant portions of said decision are reproduced below: 3. Shri A. Lakshmikumaran, learned Advocate for respondent pleaded that the Basic Manual of Departmental Instructions on Excisable Manufactured Product as on 31-12-1979 deals with samples in Para 113 and Para 114. It gi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r preserve the samples of their product for some period for investigation of complaints, if received, no duty should be charged on these samples considering that goods remain within the factory. Duty shall be charged, unless exempted by a notification, once the samples are cleared from the factory. If at any time the manufacturer desires to destroy these samples, procedure specified in Rule 21 of the said Rules shall be followed. 5. Thus, from the instructions, it is clear that right from 1979 the Department have clarified that no duty is required to be charged on the samples, which are retained in the factory for control purposes unless these are cleared from the factory. He relied on the following decisions in support of his claim :- (i) I.T.C. v. C.C.E., Patna - 2003 (151) E.L.T. 246 (S.C.) (ii) Bhansali Engg. Polymers Ltd. v. C.C.E. - 1999 (114) E.L.T. 947 which was confirmed by the Hon ble Supreme Court as reported in 2002 (143) E.L.T. A175 (iii) Bayer Diagnostic India Ltd. v. C.C.E., Vadodara - 2001 (133) E.L.T. 140 wherein it was held that As regards the samples drawn and store in fully manufactured and packaged condition under sub-rule (1) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... na High Court held- 6. On January 28, 2008, counsel for the appellant was directed to place on record copy of the order passed by the Tribunal in case of CCE v. Dabur India Limited. The same has been placed on record. The Tribunal in that case, while following the Basic Manual of Departmental Instructions on Excisable Manufactured Produce as on 31-12-1979 and the supplementary instructions of Excise Manuals effective from 1-9-2001, held that when a manufacturer preserve the samples of their product for some period for investigation of complaints, no duty shall be charged on these samples considering that those goods remain within the factory. It was held that the duty shall be charged only when the samples are cleared from the factory. 7. In view of the said decision, which is based upon the instructions issued by the department, we do not find any illegality in the impugned order. 8. Counsel for the appellant further argued that the assessee is liable for penalty under Section 11AC of the Act for not accounting the control sample in the daily stock account register. We do not find any substance in this argument, as in the case of CCE v. Dabur India Lim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. 5.4 The decision in case of M/s TTK Maersk Medical Ltd, relied upon by the learned AR, has been passed without taking the note of decision of larger Bench of tribunal in case of Dabur India and also the decision of Punjab and Haryana High Court in case of Malcom Pharmaceuticals and hence is per-incuriam. The decisions in case of M/s Aristo Pharmaceuticals, Albert David Ltd Mapra Laboratories were all considered by the larger bench and were not agreed to. The decisions in case of Virat Crane Agri tech Ltd, Mahindra Mahindra Ltd and U P State Sugar Corpn Ltd are in respect of remission of duty and hence is distinguishable. 5.5 In view of the decisions as referred above we do not find any merits in the order of Commissioner (Appeal). Since we are deciding the appeal on merits itself we are not considering the other grounds taken by the appellant in their appeal and during arguments. 6.0 The order of Commissioner (Appeal) is set aside and a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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