Returned goods re-cleared on fresh invoices were not treated as fresh dutiable clearances absent contrary evidence.

Returned consignments re-entered into the factory, were intimated to the department, and were subsequently re-cleared to new buyers after cancellation of the original invoices and issue of fresh invoices. On those facts, the mere time gap between the first clearance and the later re-clearance did not by itself make the goods freshly dutiable. In the absence of evidence that the later clearances were not of returned goods, the duty demand could not be sustained, and procedural non-compliance with Rule 173H was held insufficient on its own to support the demand.

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Issues: Whether duty demand could be sustained on the re-clearance of consignments returned by customers and diverted to new customers after intimation and cancellation of the original invoices.

Analysis: The consignments had originally been cleared to customers but were later returned, in some cases because delivery was refused and in others because the customers had no space to receive them. The goods were re-entered in the factory, the Range Superintendent was informed, and the original invoices were cancelled with fresh invoices issued in favour of the subsequent buyers. The record also showed intimation of receipt of the re-entered goods and endorsement of the subsequent invoice number on the cancelled original invoice. In these circumstances, the mere lapse of time between the first clearance and the subsequent clearance was not enough to treat the goods as fresh dutiable goods. In the absence of contrary evidence showing that the later clearances were not of returned goods, the demand could not be upheld, and the alleged non-compliance with the procedure under Rule 173H did not sustain the duty demand.

Conclusion: The duty demand was not sustainable and the issue was decided in favour of the assessee.

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