No, because even if they're not sold as new (which as others have commented is often not the case), they're still competing with you for sales. Someone who would have paid full price for a new one instead gets a version with a slight issue at 25% off. That's fine if you're the one selling it at a discount, but here you've lost money on the production and are now losing even more money because you've lost a sale of a full price unit.

I think the spirit of that regulation is so you as the producer see this as an incentive to better manage production so there is no need to discard/burn 10% of everything.