Re- clearance of rejected goods counted in aggregate clearances where the prescribed exemption procedure was not followed.

Clearances of goods returned as rejected goods were held includable in the aggregate value for exemption purposes because the notification's exclusion applied only where the prescribed procedure for receipt back and re-clearance was followed. The assessee's claim that repaired and re-cleared goods should be omitted from the yearly clearance value was rejected in view of the notification's clarification. As the required procedure for recording and clearing returned goods had not been complied with, the disputed clearances did not qualify for exclusion, and the duty demand and penalty were sustained.

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Issues: Whether clearances of rejected goods, after rectification and re-clearance, were excludable from the aggregate value of clearances for the purpose of the exemption notification and consequent duty demand.

Analysis: The exemption notification prescribed concessional rates up to the specified aggregate value of clearances during the financial year and also contained an explanatory clarification governing what clearances were to be excluded while computing that aggregate. The assessee's plea was that goods rejected by the buyer, received back, repaired and thereafter cleared on payment of duty should not be counted in the aggregate clearances. The Tribunal held that this contention could not be accepted in view of the clarification contained in the notification. It further noted that where goods are received back as rejected goods, a prescribed procedure is required for recording and clearance of such goods, and that procedure had not been followed.

Conclusion: The disputed clearances were not excluded from the aggregate clearances, the duty demand and penalty were sustained, and the appeal failed.

Ratio Decidendi: Goods received back as rejected goods can be excluded from the aggregate clearances for exemption purposes only when the prescribed procedure is duly followed; in the absence of such compliance, their subsequent clearance remains includable.

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