2004 (2) TMI 434 - AT - Central Excise

Summary

Issues:
Demand of duty on despatch of consignments initially received as defective, lack of space leading to diversion to new customers, compliance with Rule 173H, evidence required for duty demand.

Analysis:
The appeal before the Appellate Tribunal CESTAT, Mumbai pertained to a demand of duty raised against the appellants concerning consignments initially received from original customers as defective. Some customers had refused delivery due to lack of space, prompting the appellants to find new customers and divert the consignments after intimation to the factory or Range Superintendent about cancellation of the original invoice and issuance of a fresh one. The appellants highlighted the absence of an alternate procedure post the termination of invoice endorsement facility, leading to a representation to the Board resulting in a Circular accommodating such situations.

Upon hearing both sides, the Tribunal observed that lower authorities confirmed the duty demand due to a significant time gap between original and subsequent clearances, alleging non-compliance with Rule 173H. However, the appellants consistently notified the receipt of re-entered goods on each occasion, with subsequent invoice numbers referenced on the original cancelled invoices. The Tribunal emphasized the necessity of strong contradictory evidence to support the claim that subsequent goods required duty payment as new, rather than being the returned goods as asserted by the appellants. In the absence of such evidence, the duty demand was deemed unsustainable.

Consequently, the appeal succeeded, and the Tribunal allowed it with any consequential reliefs. The impugned orders confirming the duty demand were set aside, providing a favorable outcome for the appellants in this case.