COMMISSIONER OF CENTRAL EXCISE Vs. OZONE AYURVEDIC

JUDGEMENT

(1.) The present appeal has been preferred by the Applicant Commissioner of Central Excise, Chandigarh in reference to order dated 16.12.2005 passed by Custom, Excise and Service Tax Appellate Tribunal (in short 'CESTAT') in reference to order No. 100/07 - SM (BR) & Stay order No. S/51/07 dated 7.12.2006 to declare that of the following question is a substantial question of law and to entertain the present appeal accordingly:

(2.) In order to adjudicate the present appeal, it is necessary to give the factual background of the present case. M/s Ozone Ayurvedic, 34, HPSIDC Indl. Area, Baddi (HP) (hereinafter referred to as "the 'Party'") are engaged in the manufacture of Ayurvedic medicines & beauty or make -up preparation falling under Chapter heading 3003 & 3004 respectively of the First Schedule to the Central Excise Tariff Act, 1985, (5 of 1986). During the course of Audit by the AG (HP) Shimla, it was pointed out that the 'Party' was drawing batch control samples of medicines after labeling and packing in terms of Rule 78 of the Drugs and Cosmetics Rules, 1945. On being pointed out, the 'Party' vide their letter dated 21.10.2003 intimated that during the period April 2002 to March, 2004 they had retained 684 Nos. as control samples which all collectively valued at Rs. 48,782/ - involving Central Excise Duty amounting to Rs. 7805/ -. No duty was being paid by the 'Party' on these control samples although no exemption was available. Accordingly, Show Cause Notice was issued to the 'Party' vide C. No. V(30)D/S/67/03/4232 -34 dated 29.4.2003 for demand of C.E. duty of Rs. 5478/ -, C. No. V(30)D/S/1256/03/843 -44 dated 20.1.2004 for C.E. duty of Rs. 1456/ - and C. No. V(30 & 33) D/S/64/04/7575 -76 dated 16.06.2004 for C.E. duty of Rs. 871/ -.

(3.) Rule 4 of Central Excise Rules 2001/2002 provided that no excisable goods shall be removed from any place where they are manufactured, until the excise duty leviable thereon has been paid. Explanation -II appended to Rule 4 of Central Excise Rules, 2001 reads as under: