Jyoti Balasundaram, Member (J)

1. The issue for determination in the above appeal relates to the eligibility of the appellants to Modvat Credit on rejected goods received back by them in terms of the procedure prescribed in Rule 57F(1)(ii).

2. The appellants herein are inter alia engaged in the manufacture of Copper and Copper Alloy products 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(1)(ii) after payment of duty under proper gate passes. On receipt of these goods which were originally cleared by them on payment of d