2002 (3) TMI 383 - AT - Central Excise

Summary

Issues:
Refund claim under Rule 173L of Central Excise Rules, 1944 for repacking of goods.

Analysis:
The appellants manufactured 'Malted Food' under the Horlicks brand and repacked it in 500 gms pouches. The goods were initially found sub-standard/damaged, returned to the factory, repacked, and cleared again on payment of duty. The appellants claimed a refund of the duty paid under Rule 173L. However, a show cause notice was issued by the Assistant Commissioner, stating that repacking does not qualify as a process for refund under Rule 173L. The Assistant Commissioner rejected the refund claim, which was upheld by the Commissioner (Appeals).

Upon appeal, the issue was whether the repacking of goods qualifies for a refund under Rule 173L. The appellants argued that repacking constitutes 're-making' or 'reconditioning,' covered under the rule. They also cited Chapter Note 3 of Chapter 19 of the Tariff, stating that activities like repacking to render the product marketable amount to manufacture. The appellants relied on previous decisions to support their contention.

The Tribunal considered the submissions and found that repacking the goods after they were returned due to sub-standard packaging falls under 're-made' or 'any other similar process in the factory' as per Rule 173L(1). The Tribunal disagreed with the original authority's belief that the goods were non-marketable in unpacked condition without conducting any market enquiry. Citing a previous case, the Tribunal concluded that the lower authorities' denial of the refund claim was not sustainable and set it aside, allowing the appeal with consequential relief to the appellants.