2004 (4) TMI 374 - AT - Central Excise

Summary

Issues:
Rejection of application for refund of duty paid on reprocessed goods.

Analysis:
The appeal before the Appellate Tribunal CESTAT, Mumbai arose from the order of the Commissioner (Appeals) concerning the rejection of an application for refund of duty paid on reprocessed goods. The case involved the appellants manufacturing and clearing hydroquinone photographic grade material to a company, which later rejected a portion of the goods and returned them to the appellants' factory. The appellants reprocessed the returned goods, paid duty again, and cleared them. The dispute centered around the refund claim related to the duty paid for the reprocessed goods.

The Commissioner (Appeals) upheld the lower authority's decision to reject the claim based on several grounds. Firstly, the claimant failed to produce the original gate pass under which the goods were initially cleared. Secondly, the appellants did not provide the invoice issued by the recipient when returning the rejected goods, as it was allegedly lost in transit. Additionally, the rejection was based on the alleged non-compliance with Rule 173L. However, the appellants contended that they had informed the department about the return of goods, an officer verified the receipt, and they maintained a separate account of the rejected goods.

The Tribunal analyzed Rule 173L of the Central Excise Rules, which allows for duty refund on returned goods cleared after reprocessing. The lower authority's rejection primarily relied on the absence of the original gate pass and the invoice for the returned goods. Despite these documental shortcomings, it was acknowledged that duty was paid on the reprocessed goods, and the appellants had informed the department about the return of goods through a D3 declaration, which was verified by a Central Excise officer. The Tribunal noted that the appellants' compliance with the rule was evident as they reprocessed and cleared the returned goods after paying duty.

The Tribunal emphasized that the appellants had paid duty on the total quantity of goods initially cleared, and the return of a portion of the goods was substantiated by the D3 declaration and verification by an officer. The recipient's acknowledgment of receiving the goods was also supported by the Bin Card maintained by them. The Tribunal criticized the lower authority for not considering this evidence, highlighting that rejecting a valid claim based on documental technicalities would lead to a miscarriage of justice. Consequently, the Tribunal allowed the appeal, granting the appellants the entitlement to a refund and directing the issuance of consequential relief in accordance with the law.