1995 (11) TMI 176 - AT - Central Excise

Summary

Issues Involved:
1. Eligibility for refund of excise duty.
2. Compliance with procedural formalities under Rule 173L and Rule 173H.
3. Application of Section 11B of the Central Excises and Salt Act, 1944.
4. Limitation period for refund claims.

Detailed Analysis:

1. Eligibility for Refund of Excise Duty:
The appellant sought a refund of Rs. 89,511.50, arguing that the same goods should not be taxed twice. The goods, initially cleared on payment of duty under Gate Pass No. 7 dated 28-8-1992, were brought back to the factory for re-processing on 22-9-1992. The appellant filed a D-3 intimation and declared that the goods would be re-processed within 8 to 12 months. Despite the re-processing taking longer than six months, the Assistant Collector extended the time twice. The appellant cleared the re-manufactured laminations on payment of duty and subsequently filed for a refund.

2. Compliance with Procedural Formalities under Rule 173L and Rule 173H:
The appellant contended that they had adhered to all procedural formalities under Rule 173L. However, the refund claim was rejected on the grounds of non-compliance with procedural requirements. The respondent argued that the appellant initially sought a refund under Rule 173H, which allows goods to be cleared after re-processing without payment of duty. Since the re-processing amounted to manufacture, the appellant cleared the goods under Rule 173L, which necessitates the completion of processes and submission of an account within six months.

3. Application of Section 11B of the Central Excises and Salt Act, 1944:
The appellant argued that their right to a refund under Section 11B is a substantive right, not to be negated by procedural infractions. The Calcutta High Court in I.T.C. Limited v. Union of India held that the right to refund under Section 11B is independent. The appellant contended that their refund claim was within the time limit, as the goods were brought back for re-processing on 22-9-1992, cleared after re-processing with departmental permission, and the refund claim was made on 17-2-1993.

4. Limitation Period for Refund Claims:
Section 11B allows for a refund subject to a six-month limitation period, except in cases of protest or goods returned for re-processing. The six months are reckoned from the date of entry of the goods into the factory. The appellant argued that their claim was within this period. The respondent suggested remanding the matter for fresh consideration, citing the need to verify compliance with procedural requirements.

Conclusion:
The Tribunal considered the submissions and found that the appellant's right to a refund under Section 11B was a substantive right, not negated by procedural infractions. The Tribunal noted that the show cause notice did not specify the procedural non-compliance under Rule 173L. The Tribunal emphasized that substantive compliance with machinery provisions suffices and that the same goods should not suffer duty twice. The Tribunal set aside the impugned order and allowed the appeal, concluding that remanding the matter would serve no constructive purpose. The ruling in the case of Jyoti Ltd. was distinguished based on the facts of the present case.