1984 (8) TMI 315 - AT - Central Excise

Summary

Issues Involved:
1. Refund claim under Rule 173-L of the Central Excise Rules, 1944.
2. Applicability of excise duty on defective goods.
3. Interpretation of Rule 173-L regarding destruction of goods.
4. Remand of the case for reconsideration.

Detailed Analysis:

1. Refund Claim under Rule 173-L of the Central Excise Rules, 1944:
The respondent, a manufacturer of excisable goods, filed a claim for a refund of Rs. 11,303.02, paid as Central Excise duty on goods that were rejected and returned to their factory under Rule 173-L. The Assistant Collector issued a show cause notice and subsequently rejected the refund claim, leading the respondent to appeal to the Collector (Appeals), who allowed the refund. The Revenue then appealed this decision.

2. Applicability of Excise Duty on Defective Goods:
The respondent contended that the defective goods, being unfit for marketing, should not attract excise duty. The Collector (Appeals) agreed, holding that defective articles which cannot be sold are not goods and thus not subject to excise duty. The Revenue argued that excise duty is a tax on the manufacture of goods, irrespective of whether the goods are sold or salable, citing the Calcutta High Court judgment in Union Carbide v. Asstt. Collector.

3. Interpretation of Rule 173-L Regarding Destruction of Goods:
The Tribunal examined Rule 173-L, which allows for a refund of duty on goods returned to the factory for remaking, refining, reconditioning, or similar processes. The Tribunal concluded that the destruction of goods is not covered by Rule 173-L, as it does not fall under any of the specified processes. The Tribunal noted that excise duty is levied on the manufacture or production of goods, not on their sale or usability, referencing multiple judgments including Union Carbide v. Asstt. Collector and Inchek Tyres Ltd. v. Asstt. Collector.

4. Remand of the Case for Reconsideration:
The respondent's advocate argued for a remand, citing decisions where appellate orders not addressing all points were set aside for reconsideration. The Tribunal, however, found no merit in remanding the case, asserting that the destruction of goods is not covered under Rule 173-L and there are no corresponding provisions under the Central Excises and Salt Act, 1944, or the Central Excise Rules, 1944.

Conclusion:
The Tribunal held that the destruction of goods is not covered by Rule 173-L and excise duty is a tax on the manufacture of goods, not contingent on their sale or usability. The appeal by the Revenue was accepted, quashing the order of the Collector (Appeals) and restoring the order of the Assistant Collector.