2009 (12) TMI 802 - AT - Central Excise

Refund in respect of defective goods received back - Rule 173H of the Central Excise Rules, 1944 - Confiscation - redemption fine - penalty

Summary

Issues:

1. Adjudication based on Tribunal's remand order.
2. Examination of defective goods under Rule 173H.
3. Maintenance of records by the appellants.
4. Duty payment for remade goods.
5. Demand for duty, interest, fine, and penalty.
6. Interpretation of Rules 173H and 173L.
7. Requirement of maintaining separate accounts.
8. Reliance on internal records by the appellants.
9. Department's failure to establish remanufacturing of goods.
10. Appellants' compliance with Rule 173H.
11. Set aside of confirmed demand.
12. Imposition of fine, penalty, and interest.

Detailed Analysis:

1. The appellant's counsel argued that the impugned order was a result of the Tribunal's remand order. However, he contended that the adjudicating Commissioner did not reexamine the matter but merely upheld the previous decision. The appellants received defective goods under Rule 173H for repair and remaking, on which duty was paid initially. They maintained records for remade goods where duty was paid again. For goods with minor repairs, no duty was paid as per Rule 173H. The appellant requested setting aside the duty, penalty, fine, and interest levied.

2. The Department's representative contended that the appellants did not maintain records for all repaired goods, except for those on which duty was paid. According to the Department, all goods received for repair under Rule 173H were dismantled, good parts separated for manufacturing new goods. The Department argued for sustaining the duty demand with interest, fine, and penalty.

3. The Tribunal observed that the adjudicating Commissioner merely confirmed the previous demand without examining the documents directed by the Tribunal. The statements provided by the Department were not relied upon in the Commissioner's order. The strict stipulation for keeping defective goods segregated under Rule 173L was not present in Rule 173H. The appellants' internal records showed details of remade goods with duty paid on new parts used.

4. The Tribunal found that the Department failed to prove that all goods received under Rule 173H were remanufactured. The appellants complied with Rule 173H by submitting necessary intimation. There was no requirement for separate records for goods repaired short of manufacturing. The Department did not direct any specific procedures or records to be maintained by the appellants.

5. Consequently, the demand was set aside except for the amount admitted and paid by the appellants. The appellants had paid Rs. 4,54,646 before the provision for interest payment was introduced. Therefore, no interest was payable on this amount. The imposition of fine, penalty, and interest based on the previous order without independent findings was set aside.

This detailed analysis covers the issues raised in the legal judgment, providing a comprehensive understanding of the arguments presented by both parties and the Tribunal's decision on each matter.