TMI Blog2014 (8) TMI 612X X X X Extracts X X X X X X X X Extracts X X X X ..... on the complaint, the defective parts viz., knitting head assembly and take down drive assembly which falls under sub-heading 8448.90, were returned and similar parts were supplied as replacement. The parts supplied as replacement suffered separate duty. The defective parts returned to the supplier was reconditioned and fitted in an another circular knitting machine and was supplied to another purchaser on which duty was paid. Since the defective parts returned for being reconditioned and subjected to similar process of manufacturing, the assessee claimed refund of duty under sub clause (1) of Rule 173 L. However, proviso (3)(iii) to Rule 173 L would stipulate that the goods (parts) disposed or re-used should be on the production of the goo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efund was claimed was disposed off in any manner, then the production of goods of the same class, ignoring the fact that the goods cleared from the factory before repair and after are machineries only? b) Whether the Tribunal is right in holding that the duty paid twice over by the manufacturer on the same goods cannot be allowed as refund by mere fact that the said goods were cleared as fitment of knitting machine? c) Whether the Tribunal is right in holding that the part of the machine refunded to the manufacturer for repair and its subsequent removal after fitment in any other machine for the same class will not be covered under the provisions of Rule 173L? 2. The appellant in this case is the manufacturer of textile machinery ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assembly and take down drive assembly were used in the manufacture of goods of different class, namely knitting machine, falling under sub-heading 8447.00. Aggrieved against the order of the Adjudicating Authority, the appellant preferred an appeal before the Commissioner of Central Excise (Appeals), who, by order dated 07.01.2004, upheld the order of the Adjudicating Authority. As against the same, the appellant preferred an appeal before the Tribunal. 4. By order dated 25.11.2005, the Tribunal relying upon the decisions of the Tribunal in the case of Indian Dyestuff Industries Ltd. V. CCE reported in (1995 (77) ELT 580 (Tribunal) and in the case of Dekka Chem Ltd. V. CCE reported in (2001) (130) ELT 935 (Tri - Mumbai) and interpreting ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tanding counsel appearing for the respondents and perused the materials placed before this Court. 7. The issue involved in this case revolves around Rule 173 L of the Central Excise Rules, 1944, which reads as follows: RULE 173L. Refund of duty on goods returned to factory - (1) The Commissioner may grant refund of the duty paid on manufactured excisable goods issued for home consumption from a factory, which are returned to the same or any other factory for being re-made, refined, reconditioned or subjected to any other similar process in the factory: Provided that - (i) ......... (ii) ......... (iii) ......... (iv) ......... (2) ......... (3) No refund under sub-rule (1) shall be paid until the processes mentio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Central Excise Rules, 1944 [Sic]. However, proviso (3)(iii) to Rule 173 L would stipulate that the goods (parts) disposed or re-used should be on the production of the goods of same class. Hence, the question arose as to whether the parts returned from a circular knitting machinery and incorporated in another knitting machinery would fall under same class. 9. The interpretation of Rule 173 L of the Central Excise Rules clearly provides answer to this question. Rule 173 L provides that refund of duty is admissible on the returned goods to the factory and no refund of duty is admissible in respect of the duty paid goods, which are disposed of in the manner other than for production of the goods of the same class. Therefore, sub-clause ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Tribunal in the case of Indian Dyestuff Industries Ltd. V. CCE reported in (1995 (77) ELT 580 (Tribunal) and in the case of Dekka Chem Ltd. V. CCE reported in (2001) (130) ELT 935 (Tri - Mumbai) held as follows: Yet another provision of Rule 173L is that the amount of refund payable shall in no case be in excess of duty payable on such goods after being remade, refined, reconditioned or the like. This provision presupposes that the second clearance of the goods must be after the process which is required to be undertaken in terms of the Rule. This condition also was not satisfied by the assessee . 12. Therefore, it is clear that whatever goods that have been returned should be subject to process and should be cleared as such. T ..... X X X X Extracts X X X X X X X X Extracts X X X X
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