Reliance on rejection records upheld where the department failed to prove rejected inputs were actually used in manufacture.

The Tribunal could rely on a Line Rejection Register even though it was not separately declared under Rule 173G(5) of the Central Excise Rules, 1944, because the assessee maintained separate records of rejected colour picture tubes and the department produced no evidence that the rejected tubes were actually used in manufacture. The register was not shown to be unreliable, no contrary register requirement under Rule 173G(4) or Rule 173G(5) was established, and the small quantity of rejections was not treated as sufficient to displace the Tribunal's finding. The Revenue's challenge failed and the relief granted to the assessee was sustained.

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Issues: Whether the Tribunal was justified in relying upon the Line Rejection Register though it was not a declared document under Rule 173G(5) of the Central Excise Rules, 1944.

Analysis: The demand was founded on the premise that rejected colour picture tubes were treated as consumed in manufacture and that the Line Rejection Register could not be relied upon. The Tribunal, however, found that the assessee maintained separate records of rejected tubes, that the department produced no evidence to show actual use of such rejected tubes in the manufacture of televisions, and that the quantity of rejections was insignificant in comparison with total consumption. The Court found no error in that approach. No order under Rule 173G(4) or Rule 173G(5) requiring a different register was shown, and the register was not shown to be unreliable.

Conclusion: The Tribunal was justified in taking the Line Rejection Register into consideration, and the question of law was answered against the Revenue and in favour of the assessee.

Final Conclusion: The appeal failed and the Tribunal's relief to the assessee was sustained.

Ratio Decidendi: Where the department fails to show that an assessee's rejection register is unreliable or that rejected inputs were actually used in manufacture, the Tribunal may rely on the register even if it was not separately declared.

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