1993 (1) TMI 182 - AT - Central Excise

Summary

Issues:
- Appeal against the order-in-appeal allowing refund of duty on glass vials under Rule 173L of Central Excise Rules.
- Dispute over the market value of the rejected goods affecting the refund claims.
- Permission granted under Rule 173L subject to specific conditions by the Collector.
- Interpretation of Rule 173L regarding the requirement of market value for sanctioning refunds.

Analysis:
The appeal before the Appellate Tribunal CEGAT, Bombay involved a dispute regarding the refund of duty paid on glass vials under Rule 173L of the Central Excise Rules. The respondents had claimed a refund, which was initially rejected due to the argument that the market value of the returned goods was less than the duty originally paid. The Collector (Appeals) had allowed the appeal of the respondents, leading to the revenue appealing against this decision. The key contention raised by the ld. SDR for the appellant was that the refund claim was not legally sustainable as the market value of the rejected goods was lower than the duty paid, as per Rule 173L(3)(v). The SDR emphasized the statutory requirement and cited a previous decision of the Bench for support.

On the other hand, the consultant for the respondents argued that the rejected goods had not entered the market stream due to issues with workers, necessitating the removal of the vials for inspection and testing outside the factory premises. The respondents had sought permission to operate under Rule 56B initially, but eventually, the Collector permitted operation under Rule 173L with specific conditions. The consultant highlighted the sequence of events and permissions granted by the Collector, indicating that the goods were intended for recycling and not for market circulation. The consultant contended that due to these circumstances, the question of determining market value for sanctioning the refund did not arise.

Upon considering the arguments presented, the Tribunal acknowledged the legal principle that the market value of returned goods should not be lower than the duty paid for refund under Rule 173L. However, in the specific context of the case where the rejected goods had not entered the market due to operational challenges within the factory, the Tribunal found that the Collector's permission under Rule 173L was granted with the understanding that the goods were meant for internal processing and not for commercial sale. Therefore, the Tribunal concluded that the objection raised regarding market value was not sustainable, given the unique circumstances of the case. Consequently, the Tribunal dismissed the appeal from the revenue, upholding the order of the Collector (Appeals) in favor of the respondents.