2004 (10) TMI 399 - AT - Central Excise

Summary

Issues:
1. Refund under Rule 173L for goods rejected by buyer
2. Interpretation of "re-made" under Rule 173L
3. Double payment of duty on the same goods

Analysis:
1. The appellant, a manufacturer of cylinder head gaskets, cleared goods to a buyer who later rejected them. The goods were brought back to the factory, and a refund of duty paid was sought under Rule 173L. A show-cause notice was issued questioning the eligibility for refund, as the goods were not remade or subjected to necessary processes. The appellant argued that processes like unpacking, inspection, and repacking were undertaken, and cited precedent to support that repacking falls under the term "re-made." The contention was that duty should not be paid twice on the same goods.

2. The impugned order rejected the refund application, stating it did not meet Rule 173L requirements. However, the appellant maintained that they had claimed under Rule 173L from the beginning, and the goods required repacking and other processes to be suitable for sale after rejection. The tribunal observed that the law does not allow double payment of duty on the same goods and that Rule 173L provides for refund when goods are remade or reconditioned, ensuring duty is not paid twice. The exemption for captively consumed goods does not negate the right to claim a refund.

3. The tribunal found that the appellant had indeed paid duty twice on the same goods due to the dispute over the interpretation of "remaking." Rule 173L allows for a refund of duty originally paid to avoid such double payments. It was clarified that captively consumed goods are subject to duty unless exempted, and the choice lies with the assessee to avail exemption or pay duty. The impugned order was deemed unsustainable, and the appeal was allowed, directing a prompt refund of the excess duty paid without further delay.