B. N. Agrawal, J. - (1.)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.
(2.)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 removed, which was liable to excise duty. Out of the aforesaid show cause notices, first show cause notice was issued by the Collector of Central Excise, Patna on 25th July, 1990 and the appellant-company was required to pay excise duty to the tune of Rs. 65,45,630.32 besides penalty in relation to the period from March 1973 to April 1990 under the provisions of Central Excise Act, 1944 (hereinafter referred to as the Act) and the rules framed thereunder which was issued in case No. 6-MP of 1991. Other three notices were issued in the months of January and February, 1991 by the Additional Collector of Central Excise, Patna, in relation to period between May and December, 1990 in case Nos. E-522, E-523 and E-524 of 1992 and total amount of excise duty leviable upon the appellant company was Rs. 6, 14,278.48 besides penalty.
(3.)The appellant company contested the demand on grounds, inter alia, that no duty was leviable on samples of cigarettes drawn for test purposes in the quality control laboratory within the factory since the process of manufacture of cigarettes is not completed until the same are packed as packing is a process incidental or ancillary to the process of manufacture of cigarettes and packing of cigarettes is done after the samples sent are tested in the laboratory. According to it, some quantity of cigarettes is destroyed in the process of testing.