2016 (6) TMI 1232 - AT - Central Excise

100% EOU - concessional rate of duty - N/N. 8/97, dated 1-3-1997 - rejected goods - it was alleged that in the guise of the price of rejected goods, the appellant had cleared fresh goods, in order to avail the concessional rate of duty - Held that - On perusal of the quality control certificate and the sample copies of invoices produced by the appellant, I find that the reference of quality control certificates have been mentioned in the concerned invoices and as per the requirement of the notification there is endorsement in the invoice that the goods in the form of rejects were removed/sold in the Domestic Tariff Area. Since, the correlation of the goods with the quality control certificate have been established, denial of concession provided under N/N. 8/97, dated 1-3-1997 to the appellant is not proper and justified - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Alleged clearance of fresh goods under the guise of rejected goods to avail concessional rate of duty.
2. Compliance with Notification No. 8/97-C.E. and Paragraph 9.22 of the Hand Book of Procedures.
3. Correlation of goods sold in the Domestic Tariff Area with quality control certificates and invoices.

Analysis:
1. The case involved an appellant, a 100% EOU engaged in manufacturing Staple Fibre, accused of selling finished products as rejects in the Domestic Tariff Area to avail concessional duty rates. The Central Excise Department alleged that fresh goods were cleared under the guise of rejected goods. The matter was adjudicated, leading to an Order-in-Appeal remanding the case back to the adjudicating authority for fresh consideration based on quality control certificates.

2. The appellant contended that goods sold in the Domestic Tariff Area were indeed rejects and provided records to support this claim. The appellant's advocate highlighted the submission of a letter and quality control certificate demonstrating the defective nature of the goods sold. However, the Department argued that the appellant had not fully complied with Notification No. 8/97-C.E. and Paragraph 9.22 of the Hand Book of Procedures, emphasizing the need for all relevant documents to establish the nature of goods sold.

3. Upon review, it was found that the appellant had submitted explanations and documents during the de novo adjudication proceedings, including a note detailing defects and a chart showing the clearance of rejected goods. The adjudicating authority raised concerns about the correlation between invoices issued and quality control certificates. However, the Tribunal observed that the invoices referenced quality control certificates, endorsing the removal of rejects to the Domestic Tariff Area. Consequently, the Tribunal concluded that the denial of duty concession to the appellant was unjustified, as the correlation between goods and quality control certificates had been established, leading to the appeal being allowed in favor of the appellant.