Duty exemption for in-factory reprocessed defective goods used again in manufacture falls within Notification No. 67/95-C.E.

Defective goods that were entered in RG-1, segregated, reprocessed within the factory, and not cleared as rejected products outside the premises were treated as goods used in further manufacture. Because the minor defects were remedied in-house and the resultant pipe fittings and scrap were again used in producing finished pipes, the goods fell within Notification No. 67/95-C.E. dated 16-03-1995. On that factual basis, the assessee was entitled to duty exemption.

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Issues: Whether defective goods received complaints for minor defects and subsequently segregated, reprocessed within the factory, converted partly into pipe fittings and partly into waste and scrap recycled in manufacture of finished pipes were eligible for duty exemption under Notification No. 67/95-C.E. dated 16-03-1995.

Analysis: The defective goods were entered in the RG-1 register and were not cleared as final rejected products outside the factory. They were reused within the factory premises for further manufacture, with the resultant pipe fittings and recycled scrap being utilised in the production of finished pipes. On this factual basis, the goods fell within the scope of the exemption notification.

Conclusion: The assessee was entitled to duty exemption under Notification No. 67/95-C.E. dated 16-03-1995.

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