The Commissioner Of Central ... vs Rpg Life Sciences Ltd
2010 Latest Caselaw 268 Bom

                                          1                               cexa94-06


              IN THE HIGH COURT OF JUDICATURE AT BOMBAY




                                                                         
                  ORDINARY ORIGINAL CIVIL JURISDICTION

                  CENTRAL EXCISE APPEAL NO.94 OF 2006




                                                 
    The Commissioner of Central Excise,                ]




                                                
    Belapur                                            ]       ..Appellant.
                 V/s.




                                      
    RPG Life Sciences Ltd.,                            ]
    25, MIDC, Thane Belapur Road,
                         ig                            ]
    Navi Mumbai - 400 705.                             ]       ..Respondent.
                       
    Mr. Pradeep S. Jetly with S.D. Bhosale for appellant.

    Mr. Prakash Shah with Jas Sanghvi i/b. PDS Legal for respondent.
      
   



                                     CORAM :   J.P. DEVADHAR AND
                                               R.M. SAVANT, JJ.

DATED : 8TH DECEMBER, 2010

ORAL JUDGMENT (PER J.PDEVADHAR, J.)

1. This appeal was admitted on 29/06/2006 on the following

substantial question of law :-

" Whether control samples drawn for testing are chargeable to central excise duty under the provisions of Central Excise Act,

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1944 and Rules made thereunder ? "

2. The respondent-assessee is engaged in the manufacture of

bulk drugs. On 30/12/1998, a show cause notice was issued to the

assessee calling upon them to show cause as to why duty should not be

recovered in respect of the controlled samples cleared within the factory

for testing and why penalty should not be imposed upon the assessee.

In its reply, the assessee contended that the samples were not removed

outside the factory but were drawn by the in house laboratory within the

factory premises and were actually consumed during the process of

testing itself and, therefore, no excise duty was leviable on the controlled

samples drawn for testing. The assessing officer rejected the claim of

the assessee and passed an order confirming duty and levied penalty.

Appeal filed by the assessee was dismissed by Commissioner

(Appeals). On further appeal, the Tribunal following the larger Bench

decision in the case of Commissioner of Central Excise V/s. Dabur India

Ltd. reported in 2005 (182) E.L.T. 185 (Tri-LB) held that no excise duty

is payable for samples drawn for testing and accordingly allowed the

appeal filed by the assessee. Hence this appeal is filed by the revenue.

3. Mr. Jetly, learned counsel for the revenue submitted that the

larger Bench decision in the case of Dabur India Ltd. (supra) has been

distinguished in a subsequent decision of the Tribunal in the case of

Positive Packaging Industries Ltd. V/s. Commr. of C. Ex., New Panvel

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reported in 2010 (249) E.L.T. 57 (Tri-Mumbai) wherein it is held that in

absence of any exemption notification issued, excise duty would be

payable on samples drawn for testing as per Board's supplementary

instructions.

4. In the present case, the specific case of the assessee is that

samples drawn for testing were not cleared out of the factory but were

cleared within the factory for testing and that the said samples were

consumed in the process of testing.

ig These facts have not been

controverted by the revenue. It is not the case of the revenue that the

assessee has failed to maintain the books / accounts as required under

the Rules relating to the samples drawn for testing. Where the goods

are not cleared out of the factory premises but were drawn for testing

within the factory and in fact were consumed within the factory during the

process of testing, the question of demanding any duty on those

samples does not arise. We draw support for this view from the decision

of the Apex Court in the case of ITC Ltd. V/s. Collector of Central Excise,

Patna reported in 2003 (151) E.L.T. 246 (S.C.), particularly para 11

thereof.

5. Decision of the Tribunal in the case of Positive 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

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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.

    (R.M. SAVANT, J.)                                    (J.P. DEVADHAR, J.)