Central Excise - Provisions of Rules 173H and 173L - Clarification regarding - Central Excise - 54/88

Central Excise - Provisions of Rules 173H and 173L - Clarification regarding Circular No. 54/88 Dated 1-10-1988 [From F. No. 261/27/1/86-CX.8] Government of India Ministry of Finance (Department of Revenue) New Delhi Subject : Central Excise - Provisions of Rules 173H and 173L - Clarification regarding. Reference is invited to Board's letter F. No. 212/2/86-CX.6, dated the 16th May, 1986 wherein it has been clarified that since under Rules 173H and 173L there are no specific provisions for making any deduction towards processing losses, no such deduction should be made. In other words it has been clarified that under Rule 173H the exact quantity/quantum of the goods received for re-processing etc. not amounting to manufacture may be allowed to be cleared without payment of duty and without making any deduction towards any quantity lost or likely to be lost during the re-processing etc. Similarly it was also clarified that under Rule 173L refund of full duty paid on original consignment is to be made without making any deduction towards the quantity lost during the re-processing etc. The matter has been examined by the Board again. Under Rule 173H, the goods after reprocessing are allowed to be cleared without payment of duty because the re-processing does not amount to manufacture and the goods had already paid duty. Therefore, whatever quantity is finally obtained after re-processing can only be allowed to be cleared without payment of duty under Rule 173H. In case of Rule 173L, the re-processing etc. does amount to manufacture and therefore the entire duty paid on the goods brought back under Rule 173L is to be refinded irrespective of losses that may occur during the re-processing etc. because there is no specific provision under this rule for making any deduction. Board has accordingly re-considered its decision and has directed to regulate the clearance of goods without payment of duty under Rule 173H and refund of duty under Rule 173L as under :- (i) the actual quantity of goods obtained after re-processing of duty paid goods brought back should only be allowed to be cleared under Rule 173H; (ii) The refund of full duty paid on the original consignment should be made under Rule 173L without making any deduction towards the quantity lost during re-processing etc. The above instructions may be brought to the notice of the field formations. Suitable trade notice for the information of trade may also be issued.