Contemporaneous repair records can defeat a clandestine manufacture allegation where serial number traceability was never available.

Colour picture tubes returned by television manufacturers for repair were claimed to fall under the repair procedure rather than be treated as clandestinely manufactured goods. The note states that contemporaneous records such as D-3 declarations, repair registers, sender invoices and despatch invoices were sufficient to show receipt for repair under Rule 173H. Because serial numbers were not available from the original clearance stage, serial number-wise correlation could not reasonably be insisted upon. In the absence of contrary evidence, clandestine manufacture was not presumed and the excise demand and confiscation were said to be unsustainable.

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Issues: Whether colour picture tubes received back by the manufacturer for repair were liable to central excise duty as clandestinely manufactured goods, and whether the documentary evidence of return and repair was sufficient without serial number-wise correlation.

Analysis: The goods were claimed to have been returned by television manufacturers for repair, and the record included D-3 declarations, repair registers, sender invoices under Rule 57F(3), and despatch invoices. The absence of serial numbers from the initial clearance stage meant that a serial number-wise correlation could not reasonably be insisted upon. In the absence of any contrary evidence, the contemporaneous documents sufficiently established that the items were received for repair under Rule 173H and were not newly manufactured goods.

Conclusion: The allegation of clandestine manufacture failed, and the demand of central excise duty was unsustainable. The issue was decided in favour of the assessee.

Final Conclusion: The appeals succeeded, and the confiscation and duty demand were set aside with consequential relief.

Ratio Decidendi: Where receipt for repair is supported by contemporaneous documentary evidence and no serial number-wise traceability existed from the original clearance stage, clandestine manufacture cannot be presumed in the absence of contrary evidence.

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