By TIOL News Service

MUMBAI, FEB 06, 2017: THE dispute pertains to duty liability on samples of medicaments manufactured by appellant that are drawn for quality control testing in external and in-house laboratories which end up getting destroyed during the test process.

According to the lower authorities, para 3.2.2 of Ch. 11 of Central Excise Manual of CBEC stipulates issue of invoice under rule 11 of CER, 2002 and maintenance of account of receipt and utilization, which, allegedly the appellant did not.

The original authority confirmed the CE duty demand of Rs.12,149/- u/s 11A along with interest thereon u/s 11AB of CEA, 1944 and this order was upheld by the Commissioner(A).The reliance placed by the assessee on the Supreme Court decision in CCE v. M/s Traco Cable Co. Ltd - 2002-TIOL-2649-SC-CX was discounted by the lower authorities.

An appeal was filed before the CESTAT in the year 2006.

The matter was heard in September 2016 when none appeared for the appellant.

The Bench observed –

"5. It is seen that the original authority admits that the decision of the Hon'ble Supreme Court cited by appellant holds that samples removed and used for mandatory quality control tests are not excisable goods. Accordingly, there is no alternative but to hold the demand of duty thereon, and concurred with by the first appellate authority, to be violative of the law. It certainly astounds that the Central Board of Excise & Customs, even after a lapse of four years from the decision of the Hon'ble Supreme Court had not consider the necessity of bringing its instructions in conformity with the law of the land, this had compelled law-abiding entities to defend a decided position at considerable detriment to their resources."

Setting aside the impugned order,the appeal was allowed.

(See 2017-TIOL-326-CESTAT-MUM )