Full Judgment
which are specified in the said Rule. The purpose of return has to be one of the specified purposes and nothing beyond. If the purpose for return is different from for being re-made, re-conditioned etc., the provisions of Rule 173L will not be applicable. I do not agree with the appellants that there could be any distinction made between the initial purpose of return and final purpose of return as sought to be made by them. When the duty paid goods goes out of the factory, it is normally expected that these are not to be returned.
If these are to be returned, the purpose can be only one and cannot be subdivided. Once the consignee refuses to accept on the ground other than any ground that necessitates re-processing, remarking etc., as required under Rule 173L, the purpose of the return has to be something different from those specified in the said rule, no matter whether after the actual return of the goods to the factory, the said goods are subjected to some of these processes in order to make them suitable for sale to a new customer. Such processes are incidental to the original purpose of return and cannot be a substitute for the original purpose itself. It is also not material that the goods had paid duty twice. What is more important is that the provisions of Rule 173L were to be strictly complied with so that the refund of the duty paid becomes admissible. Once the conditions are not satisfied, the question of payment of refund under this rule will not arise. The Asstt. Collector has also pointed out to other procedural infirmities committed by the appellants under Rule 173L. Considering all these aspects, I find that the decision of the Asstt. Collector to reject the refund claims is justified in law and on facts. The two appeals accordingly fail and are hereby rejected." 2. Briefly stated the facts of the case are that M/s. Continental Devices filed 17 refund claims amounting to Rs. 99,008.1 under Rule 173L of the Central Excise Rules, 1944. On scrutiny of the refund claims, it was noticed that the refund claims were not admissible under Rule 173L in as much as refund under Rule 173L is granted of the duty paid on manufactured excisable goods issued for home consumption from a factory which were returned to the same factory or any other factory for being re-made, refined, reconditioned etc. whereas the present refund claims do not fulfil any of the requirements of Rule 173L in as much as no reason of return has been mentioned in Form V register and in most of the cases only repacking of the goods was undertaken in the factory on return and even this contention is not supported by any document like G.P. 1.
3. Shri Shiv Dass, the ld. Advocate appearing for the appellant in addition to making oral submissions submitted written submissions also.
It has been submitted by the appellants that the appellants are engaged in the manufacture of Transistors/Diodes; that these items are cleared on payment of duty; that some of the customers on finding the Transistors/Diodes not useful for their purpose, rejected the consignment; that these consignments are received back into the factory alongwith the original documents like Gate Pass, Invoices etc; that on receipt of these goods in the factory, D-3 intimation was filed with the Department; that on receipt of the D-3 intimation, the officers visited the factory and verified the goods; that on receipt of the rejected consignments necessary entries are made in Form V Register; that the following processes are carried out on the rejected goods received back in their factory :- (b) The leads of the Transistors/Diodes are then tinned with the aid of Dip Tinning/Barrel Tinning Baths.
(c) These devices are then tested in Device Tester for various electrical parameters.
that during the period 1988-89 and 1989-90, the appellants received back certain quantity of rejected Transistors/Diodes; that the processes mentioned above were carried out and the reconditioned goods were taken into RG-1 account and cleared on payment of duty; that the appellants filed 32 refund claims amounting to Rs. 1,49,821.12; that the refund claims have been rejected on the ground that the claims filed by the appellants were not eligible under Rule 173L; that the Collector (Appeals) in his order-in-appeal dated 28-1-1991 confirmed the order passed by the Asstt. Collector holding that the testing was not covered by the process mentioned in Rule 173L. The ld. counsel for the appellants submitted that there is a decision wherein it has been held that the Tribunal can take into consideration additional facts which have been brought to its notice even subsequently if they are relevant. The ld. counsel cited and relied upon the following decisions of the Tribunal:B. Prabhakara Rao v. D. Panakala Rao and Ors.
3. Atlas Cycle Industries v. Commissioner of Income Tax, Patiala -1982 ITR (133)231Billa Jagmohan Reddy and Anr. v. Billa Sanjeeva Reddy and Ors.
-1994 (3) SC 339 It was submitted by the appellants that the process of reconditioning done by them has great bearing on this case since at no point of time have they been considered by the lower authorities. It was also pointed out that the processing carried out by the appellants fully satisfies the conditions prescribed under Rule 173L. Summing up his arguments, the Id. counsel submitted that the impugned order may be set aside.
4. Shri M.M. Mathur, the ld. JCDR appearing for the Respondents submitted that Rule 173L applies only when the goods are returned for the purpose of being re-made, re-conditioned etc.; that the purpose of return in the instant case was different from being re-made, re-conditioned and therefore the provisions of Rule 173L will not be applicable in this case. The ld. JCDR submitted that the goods in this case were refused acceptance by the consignees on the ground other than the ground that necessitates re-processing, remaking etc.; that in a number of cases the purpose of receipt of the goods back in the factory as well as full description was not available in the records.
Reiterating the findings of the lower authorities, the ld. JCDR submitted that the goods have only been repacked before clearing to the next customer and that even for this there is no evidence in the Gate Passes to show that the goods were actually re-packed by indicating a different number of packages etc.
5. Heard the submissions of both sides. On careful consideration of the evidence on record and the arguments of both sides, I find that the short issue for decision before me is whether the process of opening the goods and repacking them can be termed as a process for the purpose of Rule 173L. For proper appreciation, Rule 173L is reproduced below :- (1) The Collector may grant refund of duty paid on manufactured excisable goods issued for home consumption from a factory, which are returned to the same or any other factory for being re-made, refined, re-conditioned or subjected to any other similar process in the factory : (i) such goods are returned to the factory within one year of the date of payment of duty or within such further period or periods not exceeding one year, in the aggregate as the Collector may, on sufficient cause being shown, permit in any particular case; (ii) the assessee gives information of the re-entry of each consignment of such excisable goods into the factory to the proper Officer in writing in the proper form within 24 hours of such re-entry.
From the provisions of the relevant Rule, I find that goods can be returned to the same or any other factory for being re-made, refined, re-conditioned or subjected to any other similar process in the factory. No doubt in their appeal, the appellants have stated that the goods received back in the factory had undergone certain processes.
However, the same plea does not appear to have been taken before the Asstt. Collector as is evident from the reply to the Show Cause Notice dated 10-10-1990. Even this plea that the goods were opened and then re-packed is not supported by the evidence on record as is held in the findings of the Asstt. Collector. In the grounds of appeal taken up before the Collector of Central Excise (Appeals), it has been stated that it is a fact that the goods came back in the original packing.
Since the goods are electronic components they had to be retested and thereafter repacked for resale to the new customers. From the above, I find that the goods were not received back for being remade, refined, re-conditioned or subjected to any other similar process and, therefore, were not covered by the provisions of Rule 173-L. However, the Asstt. Collector has rendered a definite finding that Gate Passes did not show even that the goods were repacked or packings of the goods were changed. From the above evidence on record, I find that the goods were received back in the factory in original packings and, therefore, the stipulations under Rule 173L were not fulfilled. Having regard to the fact that the goods were not received back in the factory for the purpose of being re-made, refined, re-conditioned or subject to any other similar process. Case law cited and relied upon by the appellants is not relevant to the facts of the present case and can, therefore, be easily distinguished. I do not see any reason to interfere with the findings of the lower authorities. The impugned order is, therefore, upheld and the appeals are rejected.