Commissioner of Central Excise vs M/s. Lakshmi Machine Works Ltd.

K.B.K. Vasuki, J.—This Civil Miscellaneous Appeal is filed by the Revenue as against the order of the Customs, Excise and Service Tax

Appellate Tribunal dated 03.05.2004 made in Final Order No. 697/2005 and the same was admitted on the following substantial question of law:

Whether the Appellate Tribunal is correct in holding that the respondent is eligible for refund of duty on the reprocessed goods when the process

of goods have been completed and presentation of accounts only after six months of return of goods to the factory, ignoring the stipulation of

completion of process and submission of accounts within six months under sub-rule (3) of Rule 173L of the erstwhile Central Excise Rules, 1944?

This appeal arises out of the refund claim made by the assessee under Rule 173L(3) of the Central Excise Rules, 1944 in respect of goods

(castings) which were received back for making certain repair and which were cleared again on payment of duty after making necessary re-work.

The assessee claimed refund of sum of Rs. 2,07,360/-, remitted towards payment of excess duty at the time of clearing the castings after necessary

re-work. The Assessing Authority, though found that the subject goods were received for repair within one year from the date of clearance and the

refund claim was also filed within the time limit of one year, rejected the refund claim on the ground that the assessee contravened the provisions of

sub rule (3) of Rule 173L of the Central Excise Rules by making clearance of the goods after processing after the limitation of six months from the

date of re-entry of the said goods.

Aggrieved against the same, the assessee preferred an appeal before the Commissioner of Customs & Central Excise (Appeals). The lower

Appellate Authority upheld the order passed by the Assessing Authority, but on a different ground that the assessee completed the processes

mentioned under sub rule (1) and rendered the accounts in terms of sub rule (2) to the satisfaction of the Commissioner within six months, but the

goods were returned to the same customer only after six months from the date of return, which is in contravention of sub rule (3) of Rule 173L and

the assessee is, hence, disentitled to the refund.

Again, the assessee went on further appeal before the Appellate Tribunal. The Appellate Tribunal set aside the order of the lower Authorities on

different ground that the appellant had fulfilled the requirement of Rule 173L(3) and that Rule 173L(3) does not contain any mandatory

requirement to despatch the goods after re-work to the same customer within six months; as such, the reason on which the refund claim was

rejected by the lower authorities was not in accordance with Rule 173L. Hence this appeal by the Revenue before us.

Here is a case wherein it is not in dispute that the assessee had reported the return and after re-processing, cleared the goods and had

maintained proper accounts for the same. The categorical finding given by the Authorities concerned for rejecting the claim for refund is that the

assessee had cleared the goods after a lapse six months from the date of re-entry of the same, whereas, the Rule does not contain any such

requirement for allowing any refund claim. For better appreciation, Rule 173L(3) of the Central Excise Rules 1944 is extracted below:

Rule 173L Refund of duty on goods returned in factory.-

(1)...

(2)...

(3) No refund under sub-rule (1) shall be paid until the processes mentioned therein, have been completed and an account under sub-rule (2)

having been rendered to the satisfaction of the Collector within six months of the return of the goods to the factory. No refund shall be admissible in

respect of the duty paid, -

(i) in respect of opened packages containing goods with concessional rates of duty or partial exemption for the small or cottage sector, as set forth

in the Schedule to the Central Excise Tariff Act, 1985 (5 of 1986), or by a notification issued under rule 8 or section 5A of the Act;

(ii) if the amount of refund payable on the goods is less than rupees fifty;

(iii) on goods which are disposed of in any manner other than for production of goods of the same class;

(iv) on the unmanufactured tobacco from which cigars, cheroots and cigarettes so returned to the factory have been produced;

(v) if the value of the goods at the time of their return to the factory is, in the opinion of the Collector, less than the amount of duty originally paid

upon them at the time of their clearance from the factory.

Explanation. -- In this clause, ""value"" means the market value of the excisable goods and not the ex-duty value thereof.

(4)...

(5)...

A plain reading of the above Sub Rule reveals that the same specifies the time limit only for processing and for rendering the accounts before the

authority concerned and not for clearance of the goods. That being the factual and legal position, the reason for rejection of the claim by the lower

authorities has no legal basis, as rightly decided by the Tribunal. Thus, we do not find any justification to interfere with the factual finding of the

Tribunal and the order of the Tribunal warrants no interference.

In the result, the Civil Miscellaneous Appeal stands dismissed. No costs.