Judgment:
1. We find that the question for consideration in this appeal is settled by the decision of this Tribunal and therefore proceeded to take up the appeal for disposal after waiving the deposit.
2. Appellant manufactures Acrylonitrite Betadiene Styrene (ABS) resin.
Some consignments of the goods which it cleared on payment of duty and supplied to customers were returned as not meeting the specifications of the buyers. These goods were returned for reprocessing. It is contended that considerations of technology and economy require the such reprocessing to be in large quantity and therefore these goods had to be mixed with other such material. In view of this requirement the appellant chose not to follow the provisions of Rule 173U which require identification of the goods which are returned for reprocessing.
Instead it declared in its 57G declaration ABS moulding powder different grades in natural and colour as an input for the manufacture of ABS moulding powder and accordingly took credit of the duty paid on these goods when they were returned to customers.
3. The Department issued notice proposing denial of the credit on the ground that the final product could not be the input. The appellant contended that the goods were in the process for the manufacture of ABS and therefore were inputs. The Asst. Commissioner, in his order, or the Commissioner (Appeals) confirming the finding of the Assistant Commissioner did not address himself this issue. Each of them found that the Department was not informed of the receipt of the goods, the description of the goods in duty paying documents not incomplete, or such documents too produced. They therefore, denied the credit.
4. We have heard both sides. Departmental Representative supports the impugned order.
5. The grounds on which credit has been denied were none of them mentioned in the notice. Therefore, the reason for denying the credit cannot be upheld. The ground on the basis of which notices proposed demand is also not sustainable. It is now settled law that goods cleared by a manufacturer and returned as being defective can be considered to be inputs when taken up for reprocessing so as to produce goods of the same kind free of such defects. It for example he held that in Udasee Stamping Pvt. Ltd. v. C.C.E. 1997 (93) E.L.T. 283 that defective electrical stamping sent back by the buyer can be inputs for the manufacture of such stampings.
6. Departmental Representative contends that the decision required reconsideration in view of the finding in it that provisions of Rule 173H and Rule 173L cannot apply to goods which are to be manufactured from the defective goods. She says Rule 173U permitting clearance without payment of goods brought into such factory for purposes specified in Sub-rule (1) where the processes undertakes do not amount to manufacture and the provisions of Rule 173L for grant of refund where the processes amount to manufacture themselves show that processes amounting manufacture within the scope of 173U. We see the correctness of this argument. However, the decision rested on two grounds of which one was that Rule 173H would not apply the other being that the defective goods would have to be considered to be input under Rule 57A. It is settled law that where more than one benefit is available, to an assessee he can avail of either. There is therefore no ground for denial of credit. We accordingly allow the appeal and set aside the impugned order with consequential relief.