2001 (7) TMI 178 - AT - Central Excise

Summary

Issues:
1. Refund claim rejection under Rule 173L(3)(iii) of Central Excise Rules for returned/reprocessed goods.

Analysis:
The appeal involved a dispute regarding the rejection of a refund claim under Rule 173L(3)(iii) of the Central Excise Rules. The appellants had initially cleared semi-finished forged slabs under Chapter 72 to their customer, which were later rejected and returned. The appellants then reprocessed the slabs and cleared them again under a different duty amount. The refund claim for the duty originally paid was rejected by the Assistant Commissioner and the Commissioner (Appeals) based on the argument that the reprocessed goods were of a different class than the originally cleared goods. The key issue was whether the returned and reprocessed goods should be considered goods of the same class for the purpose of refund eligibility under Rule 173L(3)(iii).

The Commissioner (Appeals) held that for a refund under Rule 173L, the goods received back and subsequently cleared should be of the same class. The rejected slabs were initially under Chapter heading 7207.90, while the reprocessed goods were cleared under different headings. The authorities argued that since the goods were of different tariff headings, the refund claim was rightly rejected. However, the Tribunal noted that Rule 173L does not specify that the goods should fall under the same chapter or tariff heading, but rather be of the same class. The term 'the same class' was interpreted to mean that the goods received back and subsequently cleared should broadly conform to the same class and not be entirely different items.

In a similar precedent, the Tribunal had ruled that the expression 'of the same class' does not require the goods to be identical but should be broadly confirmed to the same class. The Tribunal emphasized that if the duty was paid twice for the same items, and there is documentary evidence establishing the identity of the returned goods and their subsequent clearance, a refund should not face legal impediments. Therefore, in this case, considering the facts and the interpretation of 'the same class,' the Tribunal set aside the lower authorities' decision and allowed the appeal, granting consequential relief to the appellants.