1993 (6) TMI 162

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..... like bars/rods, sections, wires, pipes and tubes etc., falling under Chapter 74 of the Schedule to the Central Excise Tariff Act, 1985. They cleared the goods on payment of appropriate duty under proper gate passes. The purchasers of the final products manufactured by the appellants are availing Modvat credit facility and hence are taking credit based on the gate passes issued by the appellants. In certain cases where the appellants have first cleared their final products, namely. Copper and Copper Alloy products as mentioned above, the purchasers returned them to the appellants on the ground that they were defective. The purchasers of the appellants removed these goods from their factory in terms of Rule 57F(l)(ii) after payment of duty u .....

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..... g that even though the goods were rejected by the customers of the appellants as defective, the same are final products and cannot be treated as inputs under Rule 57A. The Assistant Collector also held that if the goods were found to be defective and are not fit for use by their customers, such goods were to be received back only under Rule 173L or 173H and the procedures contained therein should have been followed. Accordingly the Assistant Collector ordered for the recovery of the total amount of duty demanded in the show cause notices, which was rejected by Order-in-Appeal dated 27-12-1991 on the ground that the appellants are manufacturers of the defective goods and hence the same cannot be treated as input. Hence this appeal. 5. We h .....

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..... nal in the case of Collector of Central Excise v. Indian Aluminium Co. Ltd. [1988 (38) E.L.T. 369]. The finding that only the provisions of Rule 173L or 173H would be applicable to this case is totally against the provisions of those Rules, since what is contemplated in these rules is that returned goods should not be subjected to a process which would amount to manufacture. In the present case the goods cleared by the customers of the appellants on payment of duty in terms of Rule 57F(l)(ii) are undisputedly subjected to process of manufacture of final products. The appellants, therefore, could not have followed the procedures laid down in Rule 173L or 173H. The procedure availed of by the appellants in taking the Modvat Credit of duty pai .....

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