2004 (2) TMI 598

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..... e that the respondents-assessee are engaged in the manufacture of polishes under the brand name Kiwi for footwear and toilet preparations under the brand name of Flush Kleen , falling under Chapters 34 and 33 respectively. They have purchased containers, and packing materials from outside, and have availed Modvat Credit on the same as input for use in relation to the manufacture of their final products. Some times these packing materials and containers are rejected as defective and returned to the supplier for repair, rectification and return along with Rule 57F(4) challans and some times, these are merely returned, as line rejections, to the supplier as rejected material or scrap and debit notes were raised for the same. These reject co .....

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..... line rejections i.e. inputs rejected after issue for manufacture under debit notes to the input supplier without payment of duty. (b) The facts and circumstances of this case have nothing to do with Rule 57D because in the instant case, the inputs had been cleared to the supplier as such by raising debit notes and the assessee ought to have followed Rule 57F(3) and cleared the inputs on payment of duty. (c) The inputs were actually cleared outside the factory to the supplier as per their delivery challans and not at all used in the factory for the manufacture of final products. 3. Shri A. Jayachandran, learned JDR for the Department reiterated the grounds of appeal and sought for allowing the appeal. 4. The assessees have .....

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..... ssessee-respondents are sustainable or not. The respondents before the original authority had taken the plea that the duty demanded is on line rejections , that is inputs rejected after issue for manufacture and hence the provisions of Rule 57D would be applicable and this argument was not found favour with the original authority. The lower appellate authority while rejecting the reasoning of the original authority has held that the department has not adduced any evidence in support of his (original authority s) findings as noted above. He has also held that rejections of the inputs were only line rejects and are squarely covered by Rule 57D and hence neither any duty is payable nor any credit ought to be reversed. Further I also find th .....

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