1993 (12) TMI 150 - AT - Central Excise

Summary

Issues:
1. Interpretation of Rule 173L of the Central Excise Rules regarding refund claim for reprocessed goods.
2. Treatment of goods returned by M/s. Kelvinator as inputs sold as such.
3. Compliance with procedural requirements of Rule 173L for refund claim.
4. Admissibility of Modvat benefit on reprocessed goods.

Detailed Analysis:
1. The appeal before the Appellate Tribunal CEGAT, Bombay involved the interpretation of Rule 173L of the Central Excise Rules concerning a refund claim for reprocessed goods. The Collector (A) had allowed the appeal of the respondents, holding that the procedural requirements of Rule 173L had been complied with as the goods were returned within one year of despatch from the respondents' factory and received under D-3 declaration. The Asstt. Collector had rejected the refund claim on the grounds that the goods returned by M/s. Kelvinator were treated as inputs sold, making Rule 173L inapplicable. The Tribunal upheld the Collector (A)'s decision, emphasizing that the respondents had not taken Modvat credit for the duty paid by M/s. Kelvinator, indicating the goods were received for reprocessing, not for sale as inputs.

2. The issue of whether the goods returned by M/s. Kelvinator should be considered as inputs sold as such was addressed by the Tribunal. The Asstt. Collector argued that since M/s. Kelvinator cleared the goods on debit of duty in their Modvat account, the goods should be treated as inputs sold. However, the Tribunal disagreed, stating that the respondents had not taken credit for the duty paid by M/s. Kelvinator, establishing the intent for reprocessing. The Tribunal highlighted that the goods were received for further processing and remaking of sheets, not for direct sale as inputs, supporting the Collector (A)'s decision to allow the refund claim under Rule 173L.

3. The Tribunal examined the compliance with procedural requirements of Rule 173L for the refund claim. It was noted that the respondents had filed a refund claim under Rule 173L for reprocessed goods cleared from their factory within one year of their initial clearance. The Collector (A) had found that the goods were received under D-3 declaration and procedural requirements were met. The Tribunal concurred with this finding, emphasizing that the identity of the returned goods was established with the original clearance by the respondents, warranting the refund under Rule 173L.

4. In considering the admissibility of Modvat benefit on reprocessed goods, the Tribunal emphasized that the respondents had not taken credit for the duty paid by M/s. Kelvinator, indicating the goods were intended for reprocessing. The Tribunal referred to a Trade Notice by the Bombay-I Collectorate, which allowed the removal of defective inputs on payment of duty under Rule 57F(3)(ii) and subsequent clearance of reprocessed goods under Rule 173L. The Tribunal concluded that the refund claim under Rule 173L was valid, directing the Asstt. Collector to consider and sanction the refund in accordance with the law.