1994 (11) TMI 258 - AT - Central Excise

Summary

Issues:
- Appeal against Order-in-Appeal No. GSM/263/BD-356/88
- Refund claim for sub-standard consignments
- Interpretation of Rule 173L of Central Excise Rules
- Classification of returned and reprocessed goods
- Burden of proof on department
- Definition of "same class" under Rule 173L(3)
- Challenge to Collector (Appeals) order
- Admissibility of refund claim

Analysis:
The judgment involved an appeal against Order-in-Appeal No. GSM/263/BD-356/88, challenging the rejection of a refund claim for sub-standard consignments. The appellants had manufactured and cleared two consignments, which were later found sub-standard and returned for reprocessing. The issue revolved around the interpretation of Rule 173L of the Central Excise Rules regarding the classification of returned and reprocessed goods.

The appellants followed the prescribed procedure under Rule 173L, filed necessary declarations, and used the reprocessed material in manufacturing another product. The jurisdictional Superintendent advised that duty should be paid if the reprocessed material was used for manufacturing specific goods. The appellants complied, paid duty, and filed a refund claim, which was initially sanctioned by the Assistant Collector but later challenged by the department.

The Collector (Appeals) rejected the refund claim, stating that the returned goods and goods cleared subsequently did not belong to the same class, as required by Rule 173L(3). The appellants argued that both items fell within the same Tariff Entry and, therefore, should be considered the same class. The department contended that the goods were of different classes as one was an intermediate product and the other a final product.

The tribunal analyzed the term "same class" under Rule 173L(3) and referred to previous decisions to interpret it. It was established that goods falling within the same Tariff Heading should be considered as goods of the same class. Since both the returned and cleared items fell within the same Tariff Entry, the tribunal held that they belonged to the same class.

The tribunal noted that the department failed to provide evidence showing the items had different characteristics or attributes to justify a different classification. As a result, the Collector (Appeals) order was deemed unsustainable, and the appeal was allowed with consequential relief, setting aside the Collector (Appeals) decision and upholding the refund claim.