J.K. INDUSTRIES LTD. Vs. CCE

JUDGEMENT

(1.) In these two appeals, arising out of two Adjudication Orders the common issue involved is whether Central Excise duty is chargeable on the tyres, destroyed during the testing undertaken by M/s. J.K. Industries Ltd.

(2.) Shri B.L. Narasimhan, learned Advocate, submitted that the Appellants manufacture tyres and tubes after taking the approval from Bureau of Indian Standards (BIS), and accordingly they manufacture tyres as per ISI specification only; that in these circumstances they are bound to follow the terms and conditions stipulated by BIS; that as per conditions of BIS Manual they draw samples from time to time and maintain record of samples drawn and tested; that the test conducted on the tyres are Fully Wheel test, Plunger test, and Dimensional test; that after these tests the tyres become useless and they are cut and scrapped; that the Commissioner under the impugned Orders have confirmed the demand on these tyres on the ground that tyres having been manufactured are liable to Central Excise duty even before the tests are conducted. The learned Advocate, further, submitted that it has been settled by the Tribunal in a number of decisions that the samples drawn for quality control testing within the factory are not assessable goods because only after such testing the final product becomes marketable. He relied upon the following decisions :

(3.) Countering the arguments Shri Jagdish Singh, learned DR, reiterated the findings contained in the impugned Order. He, further, emphasized that it is not in dispute that the tyres which have been removed by the Appellants from shop floor for Inhouse testing were fully manufactured tyres ready for use, that these tyres had neither been entered in statutory records i.e. RG -1 register nor any duty of Excise was paid before they were removed from the factory premises for Inhouse testing; that as per Section 3 of the Central Excise Act all the excisable goods manufactured in India are liable to Central Excise duty unless and until they are exempted from payment of duty under Notification issued under Section 5A of the Act; that as per provisions of Rules 9, 47 and 49 of the Central Excise Rules, 1944 as soon as the goods are manufactured a charge is operated on the goods and the collection of duty is postponed till the time of removal for home consumption or for the manufacture of any other commodity or for further production; that the duty is required to be paid as soon as the goods are issued from the place of manufacture; that accordingly the duty is payable by them in the present matters as the tyres are in fully manufactured condition and these have been removed only to conform with the requirement of BIS. He also mentions that the decision in the case of ITC Ltd. is not applicable to the facts of the present matters as in the case of cigarettes specific Rules such as Rule 93 requires cigarettes to be put into packets which would be enclosed in a wrapper and affixed with manufacturer's label; that such requirement is not there in respect of tyres and as such tyres are excisable as soon as these are manufactured. In reply learned Advocate also referred to the decision in the case of CCE v. Surya Roshni Ltd., 2002 (49) RLT 919 (Tri.).