1983 (3) TMI 278 - AT - Central Excise

Summary

Issues: Appeal for refund of Central Excise duty paid twice; Interpretation of Rule 9A of the Central Excise Rules, 1944; Excisability of goods upon return to the factory; Validity of duty payment upon second removal of goods.

Analysis:
The appellants filed an appeal seeking a refund of Rs. 1,09,600/-, representing Central Excise duty paid twice on goods. The appeal was made against the Order-in-appeal No. 153/82(B) of the Appellate Collector of Central Excise, Madras, which upheld the rejection of the refund claim by the Assistant Collector of Central Excise, Bangalore East Division. The Assistant Collector rejected the claim based on the observation that duty was paid correctly on the second removal of goods as per Rule 9A of the Central Excise Rules, 1944. The Appellate Collector concurred with this decision and emphasized that there was no provision allowing clearance for home consumption without payment of duty, even if the claim seemed well-founded on equity. The key contention revolved around the excisability of goods upon their return to the factory and subsequent removal, leading to the rejection of the refund claim by the lower authorities.

The factual background of the case revealed that a Haulpak Dumper was initially cleared from the factory in 1975, with duty paid at 1% ad valorem. Upon its return to India and subsequent sale in 1979, duty was paid at 8% under the Central Excise Tariff. The appellants sought a refund of the duty paid in 1979, arguing that the goods were not liable for excise duty upon the second removal. The Assistant Collector justified the duty payment under Rule 9A(2), stating that duty is payable on second removal unless there is a specific provision exempting such clearance from duty payment. The Appellate Collector echoed this stance, highlighting that pursuing the initial refund claim would have been more appropriate, as the law did not permit seeking a refund for duty paid at a higher rate subsequently.

In the appeal, the appellants contended that excisability of goods arises upon their first removal from the factory, and subsequent events like return to the factory do not alter this excisability. The argument emphasized that the goods were not subject to duty upon the 1979 removal, as they were already excisable since the first clearance. The Tribunal agreed with this interpretation, stating that any manipulation of goods post their initial removal does not create a new excisable product liable for duty payment again. Notably, the Department did not assert that the returned goods underwent processes constituting manufacture, which could have justified a second duty payment. Consequently, the Tribunal allowed the appeal, granting the appellants the requested refund and ordering consequential relief based on the excisability principles outlined in the Central Excises Act and Rules.