2022 (9) TMI 269 - SC - Central Excise

Refund of the excise duty on goods returned to factory - rejected goods, returned to it by its distributors, for which it had issued credit notes to the parties - Section 173L (v) of the Central Excise Act - HELD THAT - At the outset, it is required to be noted that after giving an opportunity to the assessee on the value of the returned goods and considering the material on record including the market survey report the Department determined the value of returned goods at Rs. 8 to 10 per kg. No cogent evidence was led by the assessee on the value of the returned goods. The assessee only produced the invoices with respect to secondary market. However, it is required to be noted that the value of the returned goods depend on the defects found in the manufactured goods which are returned. It varies considering the defects. In some returned goods the defect might be 5% and in some goods the defect might be 80% to 90%. Therefore, the assessee has to lead the evidence with respect to each consignment of the returned goods, which the assessee failed to prove in the present case. The Department heavily relied upon the market survey report and thereafter determined the value of the returned goods as Scrap at the rate of Rs.8 to 10 per kg. The assessee participated in the proceedings before the Deputy Commissioner. The assessee neither asked for copy of the market survey report nor asked for any crossexamination on the market survey report and/or led any cogent evidence on the value of the returned goods. Considering the value for refund under Section 173L what is required to be considered is the value of the returned goods. As per explanation to clause (v) of Section 173L, value means the market value of the excisable goods and not the exduty value thereof. Therefore, the submission on behalf of the assessee that the returned goods may be treated as a raw material and therefore the value of the raw material can be considered for the purpose of value while determining the refund under Section 173L cannot be accepted - As the value of the returned goods determined by the Deputy Commissioner at Rs.8 to 10 per kg is found to be less than the amount of duty already paid, the appellant is rightly denied the refund of the excise duty paid. Denial of the refund is in consonance of Section 173L (v) of the Central Excise Act. There are concurrent findings recorded by the adjudicating authority, the Tribunal and the High Court on the value of the returned goods which are not required to be interfered with by this Court in the present proceeding more particularly when the same was determined by the Deputy Commissioner/Assessing Authority after giving opportunity to the assessee. The present Appeal fails and the same deserves to be dismissed and is accordingly dismissed.

Summary

Issues:
1. Refund claim of excise duty on returned goods.
2. Determination of value for refund under Section 173L of the Central Excise Act.
3. Alleged breach of principles of natural justice.
4. Applicability of market value for refund determination.
5. Non-supply of market survey report and its impact on the case.

Issue 1: Refund claim of excise duty on returned goods:
The appellant, a manufacturer of plastic moulded furniture, claimed a refund of excise duty based on accepting rejected goods returned by distributors. The Deputy Commissioner valued the returned goods at Rs.8 to 10 per kg, treating them as scrap. The appellant challenged this denial of refund, arguing that the value should be based on the market value of secondhand goods or as raw material. The High Court upheld the denial, stating that the value determination was based on evidence and not challenged by the appellant.

Issue 2: Determination of value for refund under Section 173L of the Central Excise Act:
The Court examined Section 173L, which requires considering the market value of returned goods for refund determination. The appellant's argument that the raw material value should be considered was rejected as not supported by the Act. Since the determined value was less than the duty paid, the refund was rightly denied under Section 173L (v).

Issue 3: Alleged breach of principles of natural justice:
The appellant claimed a breach of natural justice due to non-supply of the market survey report. However, as the report was considered during proceedings, and the appellant did not challenge it or request a copy, the Court found no merit in this argument.

Issue 4: Applicability of market value for refund determination:
The Court emphasized that the market value of returned goods is crucial for refund calculation under Section 173L. The appellant's attempt to use raw material value was deemed inconsistent with the Act's provisions.

Issue 5: Non-supply of market survey report and its impact on the case:
Despite the appellant's contention regarding the market survey report, the Court noted that the appellant did not raise this issue before the Tribunal. As the report was relied upon in determining the value, the Court found the appellant's subsequent objection invalid.

In conclusion, the Court dismissed the appeal, affirming the decisions of the lower authorities. The appellant failed to provide sufficient evidence on the value of returned goods, and the denial of the refund was deemed appropriate under Section 173L of the Central Excise Act.