1991 (7) TMI 222 - AT - Central Excise

Summary

Issues:
Refund claim under Rule 173L rejected due to alleged mixing of returned goods with non-duty paid goods and lack of separate reprocessing.

Analysis:
The appeal challenged the rejection of a refund claim under Rule 173L by the Collector (Appeals) based on the grounds that the appellants mixed the returned goods with non-duty paid goods and did not carry out separate reprocessing. The appellants, as manufacturers of medicaments, had removed crystallized medicines for reprocessing, resulting in a refund claim after reprocessing and clearance of certain bottles on payment of duty. The Asstt. Collector rejected the claim citing the lack of separate reprocessing of the returned goods. However, the appellants argued that Rule 173L does not mandate separate reprocessing but requires proper storage and accounting of the returned goods, which they claimed to have fulfilled by maintaining records of quantities returned, reprocessed, and final products batch numbers.

The Ld. advocate for the appellants contended that the only requirement under Rule 173L is to store the returned goods separately and maintain proper accounts, not necessarily to reprocess them separately. He presented relevant registers showing the quantity returned, reprocessed, and final batch numbers, asserting that proper accounting had been maintained. On the other hand, the Ld. SDR argued that once the returned goods are mixed with non-duty paid goods, proper accountal for reprocessing becomes impossible, thereby not fulfilling the conditions of Rule 173L.

In the absence of a specific requirement in Rule 173L for separate reprocessing of returned goods, the Tribunal found that the rejection of the refund claim solely based on the lack of separate reprocessing was unjustified. The Tribunal observed that the rule mandates proper intimation and accounting of returned goods, which the appellants had complied with by recording the receipt and reprocessing of the goods. Referring to a precedent, the Tribunal highlighted that there is no prohibition on adding fresh raw material to returned goods during the remanufacturing process. Consequently, the appeal was allowed, and the case was remanded to the Asstt. Collector for reconsideration of the refund claim and granting consequential relief.