1984 (6) TMI 243 - AT - Central Excise

Summary

Issues:
1. Rejection of refund claims by the Assistant Collector of Central Excise.
2. Interpretation of rule 173M regarding the classification of goods.
3. Applicability of rule 173M to the situation of repacking tea.
4. Compliance with rule 173M for refund eligibility.
5. Lack of representation by the Department.

Analysis:
The judgment pertains to an appeal by M/s. Tata Finlay Limited against the rejection of their refund claims by the Appellate Collector of Central Excise, which originated from the Assistant Collector's decision. The Assistant Collector rejected the refund claims amounting to Rs. 59,455.23 and Rs. 26,256.29, citing inadmissibility under rule 173M, sub-rule (2)(iii) of the Central Excise Rules, 1944. The dispute arose when package tea, intended for export but returned to the factory and repacked into loose tea, was the subject of the refund claims.

The crux of the matter lies in the interpretation of rule 173M, specifically whether the repacking of tea qualifies for a refund under the said rule. The Assistant Collector and the Appellate Collector both reasoned that loose tea and package tea are distinct commercially and are classified differently under Central Excise Law. The Appellate Collector emphasized that the conversion of package tea into loose tea resulted in a change of tariff head, making it ineligible for a refund as goods were not used for the production of goods of the same class.

The tribunal considered the provisions of rule 173M, which allow for goods cleared for export to be returned to the factory for certain processes like remaking, refining, or reconditioning. However, repacking does not fall under these specified processes. Sub-rule (2) of rule 173M mandates that no refund shall be paid until the processes mentioned in sub-rule (1) are completed and an account is rendered to the satisfaction of the Collector within six months of the return of goods to the factory. Since the repacking process did not align with the processes outlined in sub-rule (1), the tribunal deemed the refund inadmissible under rule 173M.

Furthermore, the tribunal noted that M/s. Tata Finlay did not adhere to the provisions of rule 173M and merely sought a refund based on the repacking of tea, which is not a recognized basis for refund under the law. Despite the absence of representation by the Department, the tribunal rejected the appeal on the grounds that the refund claim did not meet the requirements stipulated in rule 173M.