1991 (6) TMI 140 - AT - Central Excise

Summary

Issues:
- Appeal against rejection of refund claim under Rule 173L of the Central Excise Rules based on mixing of returned goods with other goods during re-processing.

Analysis:
The appeal before the Appellate Tribunal CEGAT, Bombay was against the rejection of a refund claim under Rule 173L of the Central Excise Rules. The appellant had filed refund claims stating that goods were received back for re-processing, proper declarations were made, and after reprocessing, the goods were sent out after paying appropriate duty. The authorities rejected the claim citing non-compliance with sub-rule (2) of Rule 173L due to the mixing of duty-paid goods with another lot without maintaining separate accounts. However, it was acknowledged that the reprocessed goods were of the same class.

During the hearing, the appellant's consultant argued that Rule 173L did not require account maintenance during the re-manufacturing process and that they had produced relevant accounts up to the reprocessing stage. The consultant also presented statements submitted to the authorities. On the other hand, the JDR supported the order, emphasizing the mandatory nature of complying with sub-rule (2) of Rule 173L for refund claims.

The key issue for determination was whether mixing returned goods with other goods during re-processing would disentitle the appellant from claiming a refund solely based on the lack of proper correlation. The Tribunal analyzed the provisions of Rule 173L, specifically Proviso 3 of sub-rule (1) and sub-rule (2), which require maintaining separate accounts until goods are remade or subjected to similar processes. The Tribunal referred to a similar case precedent where it was held that mixing returned goods with raw materials does not preclude a refund if other conditions are met and goods of the same class are manufactured.

The Tribunal concluded that Rule 173L does not mandate a separate manufacturing process or maintaining separate accounts in a 1:1 ratio for reprocessed goods. Therefore, the authorities' rejection of the refund claim based on mixing goods during re-manufacturing was deemed incorrect. The Tribunal set aside the lower authorities' orders and allowed the appeal, directing the Asstt. Collector to review the refund claims on merit and sanction them if found admissible under the law.