2002 (4) TMI 682 - AT - Central Excise

Summary

Issues:
1. Admissibility of refund claim subject to reversal of Modvat credit on damaged inputs.
2. Interpretation of Rule 173L of Central Excise Rules regarding refund claims for damaged goods.
3. Argument on whether remixing damaged pan masala with fresh material constitutes remaking under Rule 173L.
4. Comparison with previous Tribunal decisions regarding refund claims for damaged goods.
5. Decision on the admissibility of the refund claim and rejection of the Revenue's appeal.

Analysis:
1. The judgment dealt with the admissibility of a refund claim subject to the reversal of Modvat credit on damaged inputs. The Commissioner (Appeals) held that the refund claim was admissible, but the Modvat credit needed to be reversed before obtaining the refund from the department. The Revenue, being aggrieved by this decision, filed an appeal.

2. The case revolved around the interpretation of Rule 173L of the Central Excise Rules concerning refund claims for damaged goods. The respondents, engaged in the manufacture of Pan Masala, had filed a refund claim of Rs. 24,74,600 for damaged goods that were returned to them. The Deputy Commissioner rejected the refund claim, leading to an appeal before the Commissioner (Appeals).

3. The argument presented by the Revenue was that remixing damaged pan masala with fresh material did not fall under the definition of remaking, refining, or reconditioning as per Rule 173L. They contended that mixing reddish pan masala with fresh pan masala altered the quantity and constituted a manufacturing process, which should not qualify for a refund.

4. The respondents' Counsel relied on previous Tribunal decisions to support their case. They cited cases where the Tribunal had held that remixing damaged material with fresh material to make it acceptable for the market was permissible under Rule 173L. The Counsel highlighted that the Department had not provided evidence to support their claim that the returned goods had no commercial value.

5. After considering the arguments and case law cited, the Tribunal upheld the impugned order, stating that the refund claim was admissible to the respondents. The decision was based on the precedent set by previous Tribunal judgments, which supported the admissibility of the refund claim under Rule 173L. Consequently, the Revenue's appeal was rejected, affirming the admissibility of the refund claim for the damaged goods.