Bhor Industries Vs. Commissioner of Central Excise

1. the appellants are manufacturers of pvc, insulation tapes. the central excise officer gathered intelligence that huge stock of the said goods were lying in the appellants factory ready for dispatch without payment of duty. they visited the factory and found 259315 reels of pvc insulated tapes not accounted in r.g.1. the officers seized the goods. the panchanama says that the seized goods are defective/deformed reels. it is the contention of the appellants that the defective reels were not received in rg 1 as they were not marketable unless a salvage operation is done. it has been their practice that they sent the defective reels for salvaging under rule 57f (3), to an outside party, get back the salvage tape along with the waste, pack the one that is marketable, enter it in rg1 and remove it on payment of duty.2. the commissioner confiscated the seized goods on the ground that the goods were not accounted in rg.1. she rejected the plea of the appellant that the reason for not accounting the said goods in rg.1 is that they are not fit for marketing as their quality control department has not cleared them and that the fact the seized goods are defective is reflected in the panchanama itself. the commissioner rejected the plea that the seized goods are defective on the ground that the fact the seized goods were lying in the factory showed that they are not defective.4. the appellants have established that the seized goods are defective.the panchanama shows this fact clearly. the commissioner's argument that because the goods were lying in the factory for six months, they cannot be defective has to be rejected. the appellants have given a valid reason as to why the goods cannot be entered in rg1. the department has not established that the defective goods are meant for sale/removal without payment of duty.