2003 (12) TMI 349 - AT - Central Excise

Refund - Return of goods to appellants factory for repairs - Words and Phrases - Payable - Meaning of

Summary

Issues Involved:
1. Eligibility for refund claim under Rule 173L of the Central Excise Rules, 1944.
2. Interpretation of the term "payable" in proviso (iv) to Rule 173L(1).
3. Compliance with procedural requirements for claiming refund.

Issue-Wise Detailed Analysis:

1. Eligibility for Refund Claim under Rule 173L:
The appellants, engaged in the manufacture of Electric Horn Assembly, supplied goods to Maruti Udyog Limited (MUL). Upon rejection of 11,000 horns by MUL, the goods were returned for repair, and the appellants filed D-3 Declarations. The repaired goods were not immediately cleared on payment of duty, leading to the rejection of the refund claim by the Assistant Commissioner on the grounds that the appellants did not specify the refund amount as per proviso (iv) to Rule 173L(1). The lower appellate authority upheld this decision, stating that eligibility for refund arises only after payment of duty on the reprocessed goods.

2. Interpretation of the Term "Payable" in Proviso (iv) to Rule 173L(1):
The appellants argued that the term "payable" refers to a future contingency and not necessarily to the duty paid before filing the refund claim. The lower appellate authority misinterpreted this term, leading to the rejection of the refund claim. The Tribunal clarified that the term "payable" in the context of Rule 173L(1) refers to future action and not past payment. The rule emphasizes that the refund should not exceed the duty payable on the reprocessed goods, and it does not mandate that the reprocessed goods must be cleared on payment of duty before claiming a refund.

3. Compliance with Procedural Requirements for Claiming Refund:
The appellants complied with all procedural requirements under Rule 173L, including filing D-3 Declarations, storing goods separately, submitting details of repairs, and clearing reprocessed goods on payment of duty. The Tribunal noted that the original authority acknowledged compliance with all formalities except for the payment of duty on reprocessed goods before filing the refund claim. The Tribunal held that the refund claim could be kept pending until the payment of duty for the second time, aligning with the precedent set in similar cases.

Conclusion:
The Tribunal concluded that the appellants are entitled to a refund as they complied with all procedural requirements and the term "payable" refers to future duty liability. The Tribunal directed the refund claims to be settled within three months from the date of receipt of the order, setting aside the impugned order and the order-in-original, allowing the appeal with consequential relief.