1990 (11) TMI 221 - AT - Central Excise

Summary

Issues:
- Interpretation of Rule 97 for refund of duty on goods returned to the factory.
- Determination of refund amount for goods brought back and re-processed.
- Application of provisos in Rule 97 for refund eligibility.
- Impact of subsequent rule amendment on refund claims.

Analysis:
The judgment pertains to an appeal against the order of the Collector (Appeals) concerning the refund of duty on goods returned to the factory for re-processing. The main issue revolves around whether the entire refund claimed on all goods brought back after re-processing should be granted or if the refund should be limited to the amount sanctioned by the department based on the quality of the re-processed goods.

The appellant argued that the refund should cover the duty paid on all goods subjected to re-processing, including waste material generated during the process. They relied on Rule 97 and contended that the refund should be based on the entire quantity of goods returned for re-processing. However, the department emphasized the sub-provisions of Rule 97, stating that no refund is admissible for goods disposed of in a manner different from the original category, including waste material.

The Tribunal analyzed Rule 97 and its provisos, noting that the refund is specifically for the duty paid on the returned goods themselves, irrespective of the processing outcome. Proviso 9 prohibits refund for goods disposed of other than for goods of the same class, without distinguishing between prime quality material and waste. The term "classes" was highlighted, indicating goods of the same type rather than specific items in the tariff.

The judgment emphasized that waste, unless deemed as goods by legal fiction, does not affect the eligibility for refund. Goods of the same class were interpreted as goods of the same type as the returned goods, making the manufacturer eligible for a refund of duty paid on the entire quantity of returned goods. The Tribunal rejected the department's reliance on a subsequent rule amendment, clarifying that the amendment did not apply retrospectively to cases before its enactment.

Ultimately, the Tribunal accepted the appeal, ruling in favor of the appellant and directing the refund of the entire duty paid on the goods returned for re-processing, in line with the provisions of Rule 97 and its provisos.