TaxTMI 
TaxTMI 
2002 (4) TMI 443
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....umax Industries Ltd., Shri D.K. Jain, Managing Director and Shri J.S.S. Rao, General Manager (Commercial), besides confiscating the seized goods and giving an option to redeem the same on payment of fine, on the ground that the excisable goods were removed without payment of duty in the guise of rejected/repaired goods and there was shortage as well as excess of finished goods in the factory. 2. Shri V. Lakshmikumaran, learned Advocate, submitted that the Appellants Company manufacture signalling equipment such as lamp assembly for motor vehicles, head lamp, rear comb, front comb, side indicator, etc., and components thereof; that almost the entire production is supplied to Original Equipment (OE) manufacturers like Maruti Udyog, Te....
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....e defects are incurable in nature, neither the notice nor the impugned order has led in any evidence to show as to why and how the defective goods are not repairable; that on the other hand they have established based on 57F(2) challans and Returned Product Analysis Register maintained by them that they had repaired the defective goods and the repaired item alone had been sent back to the customers; that the rejection received are inspected and categorized for necessary action; that in the case of head lamp assembly, the rejections are basically because of leakage, lens scratch, bulb not glowing and damaged parts; that in case of leakage, the lamp is subjected to re-working by opening the lens and recycling of the whole processes; that in r....
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.... Rule 57F(4) Register, which pertain to the processes to be carried out, due to the small nature of the defects, viz., loose connection, bulb not glowing etc.; that non-filling-up these columns cannot be a ground to infer that no reprocessing repair had been carried out by them at all. He also mentioned that during the disputed period, the total production was 2.77 crores in numbers and the total quantity of removals under Rule 57F(4) is 2.62 lakhs which comes to 0.945% and in terms of value it constitutes only 0.67%; that when they had paid excise duty to the extent of Rs. 63.87 crores during the relevant period and duty demanded is Rs. 38 lakhs which is only a miniscule percentage (less than 1%), it is incorrect to assume and that too wit....
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....Jagdish Singh, learned Departmental Representative, reiterated the findings as contained in the impugned Order to the effect that a Company having ISO 2000 Certificates, would not get the goods returned for minor defects such as 'bulb not glowing', 'loose connection' or parts missing; that defects appeared to be much more which were not likely to be re-processable/repairable; that further, if the defects were as mentioned by the Appellants there was no need to mix the defective pieces with the fresh ones as minor defects can be done easily by segregating; that if the so-called defective goods are mixed or lost, these will be newly manufactured goods and duty will be leviable afresh. He also emphasized the finding that the Appellants had not....
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....h the sides. As the Appellants have not contested the confirmation of demand of duty of Rs. 1,09,957/- in respect of the shortage of goods, the same is upheld. As far as the excisable goods found in excess of the recorded balance are concerned, we find that the defence put forth by the Appellant is that the goods had not been cleared by the Quality Control Department. No supporting evidence/material has been brought on record. At the time of seizure of the said goods on 23-2-99, no explanation was given also by Shri JSS Rao, General Manager. Accordingly, we uphold the impugned Order to the extent that the said goods were liable for confiscation. However, we reduce the redemption fine from Rs. Three lakhs to Rs. One lakh only. 7. Com....
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....e. In view of this, we are of the view that the Revenue has not succeeded in establishing the charge that the Appellants have removed the excisable goods in the guise of repaired goods. However, we agree with the learned Departmental Representative that if the parts were replaced in the returned goods, the Appellants are liable to pay Central Excise duty thereon, if manufactured by them or they are required to reverse the Modvat credit if the bought out inputs were used in respect of which Modvat credit had been taken earlier. For this purpose, the matter is remanded to the Adjudicating Authority. 8. A penalty is imposable on the Appellant Company in respect of shortage and excesses found in the stock of the excisable goods. The end....