I.T.C. LTD vs. COLLECTOR OF CENTRAL EXCISE, PATNA

C.A. No.-006402-006405 - 1995Supreme Court10 December 20026 pages
For Petitioner: RAJAN NARAINFor Respondent: B. KRISHNA PRASAD
AI SummaryDismissed

What did the Supreme Court hold?

The Supreme Court held that cigarettes removed for quality control testing within the factory premises are considered manufactured and liable for excise duty. The Court also ruled that no excise duty is leviable on cigarettes destroyed during testing, but since the company failed to maintain or produce accounts for destroyed quantities, duty was leviable on the entire stock sent for testing.

What were the facts?

The appellant, ITC Limited, a cigarette manufacturer, was issued show cause notices for clearing cigarettes as samples for quality control testing without payment of excise duty. The company argued that the manufacturing process was not complete until packing, which occurred after testing, and that some samples were destroyed.

What were the issues?

Whether cigarettes cleared as samples for internal testing are considered manufactured and liable for excise duty, and whether duty is leviable on samples destroyed during testing.

Which sections of the Income-tax Act were involved?

Section 2(f),Section 3(1)(a)

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Cause title — parties, addresses and appearances
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 1 of 6 CASE NO.: Appeal (civil) 6402-05 of 1995 PETITIONER: I.T.C.Limited RESPONDENT: Collector of Central Excise, Patna DATE OF JUDGMENT: 10/12/2002 BENCH: S.N. VARIAVA & B.N. AGRAWAL.

JUDGMENT: J U D G M E N T B.N.AGRAWAL, J.

The order impugned in these appeals was passed by Customs, Excise and Gold (Control) Appellate Tribunal (hereinafter referred to as ‘the Tribunal’) in appeals preferred against the orders of assessing authorities whereby excise duty was levied and penalty imposed.

The short facts are that four show cause notices were issued to the appellant-Company, which was manufacturer of cigarette, alleging therein that it had been clearing without payment of excise duty 20 sticks of cigarette from each cigarette making machine in the cigarette making department on each working day as samples for test in their quality control laboratory within the factory premises, total quantity each day being 65 packets of cigarettes of each brand manufactured in the factory. It was further alleged that the company neither submitted any classification list nor maintained any account in respect of quantity of cigarettes rem

The order continues below.

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