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TMI Blog2003 (2) TMI 410X X X X Extracts X X X X X X X X Extracts X X X X ..... their factory and business premises. During the course of search, some incriminating records and documents were seized, for further investigation. It was revealed that M/s. ABS Industries, Baroda had manufactured and cleared the excisable goods under Delivery Challans of different series namely RAN. SM, K, STC etc. It appeared that for clearing goods under challans of RN Series and SM Series, M/s. ABS Industries had neither paid Central Excise duty nor issued duty paying documents. The clearances under the respective delivery Challans were further co-related with the statements prepared by M/s. ABS for their internal utilization in respect of rejected materials received and free replacement provided to their customers which resulted in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mand raised on the goods cleared by the assessee as free samples. The Jurisdictional Assistant Commissioner was directed to quantify the demand on samples and it has been later quantified by the Assistant Commissioner which comes to Rs. 30,690/-. The Commissioner dropped the demand of Rs. 86,32,806/- which was raised on the alleged clearance of the received reprocessed rejected materials, by treating it as a procedural lapse on the part of M/s. ABS and thereby giving them the benefit of Rule 173H of the Rules, he has also imposed a penalty of Rs. 25,000/- on the assessee under Rule 173Q(1) of the Rules. He did not impose any penalty on Shri K.C. Joshi, Senior Executive of the assessee firm. 4. The order of the Commissioner is challenged i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Counsel. A careful reading of the show cause notice brings out the fact that duty of Rs. 86,63,496/- was raised for the reason that the procedure in respect of duty paid rejected goods was not followed by the Respondents and that the rejected goods were not re-processed exclusively and separately but were reprocessed by mixing the same along with other goods. The show cause notice alleges contravention of the provisions of Rule 51A, 173H and 173L inasmuch as the assessees did not obtain prior permission of the proper authority in respect of rejected materials received by them in their factory premises and reprocessed the said materials along with other goods and cleared the same without payment of duty. We find that the Commissioner has e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er in the extruder itself for mixing and remelting to give a uniform shade. In case of micro contamination 400 size mesh is also inserted within the extruder to remove contamination. Therefore, in the case of reprocessing the steps mentioned (a) to (d) in the above mentioned letter do not take place. (b) Rejected ABS resins and reprocessing ABS resins are in almost all cases in the same form i.e. granules. Sometimes rejected materials are also received in the form of shelling obtained after scrapping unsuccessfully moulded material. (c) No additives or chemical are added in reprocessing. However different batches of rejected material are mixed within themselves to remove shade variation. In case this is not possible the re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itioning of (i) shade variation (ii) dust contamination, there is no addition of any other chemicals or additives nor is there any change in the physical chemical properties. The reprocessing done as above does not result into any change in the name or characteristics of and use of the starting material i.e. duty paid rejected ABS resin. 7. We also find that the department had not disputed the character of duty paid rejected materials, which were reprocessed and redespatched. The statements of the officers of the respondents company are all to the effect that goods were received back for reprocessing, and that some quantity was received back along with duty paying documents while some quantity was received back without accompanying duty p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ds. No arguments have put fourth before us to fault this finding of the Commissioner. 8. The ground in the appeal that the transaction of reprocessing is not revealed in the Balance Sheet is a ground not raised in the show cause notice. Regarding non entry of receipt of rejected materials and replacement without duty payment in the RT 12 returns, we accept the submission of the respondents that entries were not made when rejected goods were returned without duty paying documents but entries were made of those quantities of rejected material returned along with duty paying documents for reprocessing. 9. In the light of the above, we reject the ground raised in the appeal before us that goods manufactured and cleared by the Respondents we ..... X X X X Extracts X X X X X X X X Extracts X X X X
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