1991 (8) TMI 222 - AT - Central Excise

Summary

Issues:
Appeal against rejection of refund claim under Rule 97 for remaking and refining cigarettes of different brands.

Detailed Analysis:
The appeal was against the rejection of a refund claim under Rule 97 for remaking and refining cigarettes of different brands. The appellants, as cigarette manufacturers, brought back cigarettes under the provisions of Rule 97 but cleared cigarettes of different brands after remaking. The refund claim was rejected on the grounds that the goods brought in were not utilized in the remaking of the same class of goods. The Collector (Appeals) upheld the rejection, leading to the appeal before the Tribunal.

The main contention of the appellants was that all cigarettes belong to the same class of goods, regardless of the brand. They argued that damaged cigarettes were refined and remade into cigarettes only, and it was not necessary for the remade cigarettes to be of the same brand. The Department, represented by the JDR, argued that each brand of cigarettes constitutes a different class of goods due to consumer preferences and varying duty amounts based on the brand. They contended that the decision of the Government of India (G.O.I.) was not binding on the Tribunal and that different brands of cigarettes should be considered distinct classes of goods for the purpose of Rule 97.

The Tribunal noted that the only point of dispute was whether different brands of cigarettes constituted the same class of goods or distinct classes for Rule 97 purposes. Rule 97 allows for a refund of duty paid on goods returned to the factory for remaking, subject to certain conditions. The key provision in question was that no refund shall be admissible for goods disposed of in any manner other than for the production of goods of the same class.

The Tribunal analyzed the term "same class" in the context of Rule 97 and concluded that, despite consumer preferences for specific brands, all cigarettes could be considered the same class of goods for the purpose of the rule. The Tribunal highlighted that even if the value changes due to remaking or refining, as long as the goods remain within the tariff classification for the levy of duty, they should be considered the same class. The Tribunal agreed with the approach in the G.O.I. decision, irrespective of its binding nature, and allowed the appeal, granting consequential relief to the appellants.

In conclusion, the Tribunal held that different brands of cigarettes could be considered the same class of goods under Rule 97, allowing for the refund of duty paid on remade and refined cigarettes of different brands.