Collector of Central Ex. Vs. Senapathy Whitelay Ltd. - Court Judgment

Excerpt:
1. this appeal is by the revenue against the order of the collector of central excise (appeals), madras. the appellant-collector is aggrieved by the learned lower appellate authority's order allowing refund of duty under section 173l in respect of the goods which were received by the respondents for re-making and re-processing.2. the learned appellant-collector in the memorandum of appeal has urged the following grounds : "(1) the impugned order-in-appeal erred in appreciating the real provisions of rule 173l of central excise rules, 1944, wherein it is laid down that any goods received for reprocessing/reconditioning, an intimation to the department within 24 hours of receipt of goods is necessary, which in this case, the party has not followed. abo rule 173l(3) requires that no refund shall be paid until the procedure mentioned in rule 173l is complied with. the plain reading of rule 173l does not cover rejected goods. (2) further the oia ignored the fact that the material received for reprocessing under delivery challan, where the width of the press paper (i.e. description of the goods) were declared, but the same description was not shown in any documents at the time of return after reprocessing. the identity of goods with reference to original gate passes is essential for considering the refund claim and has not been established beyond doubt, as also the movement of the goods from bhiwandi to nasik is not established. (3) the central excise officer, nasik has confirmed that the goods were rejected accordingly the goods have not been returned for reprocessing purposes. further goods in equal quantity/dimensions have not been delivered to the same buyer as intended under rule 173l of central excise rules, 1944. (4) all the points discussed in the statement of facts, clearly show that the asstt. collector was correct in rejecting the refund claim. collector (appeals), madras is incorrect in stating that they have followed the provisions under rule 173l, when information about the receipt of goods have not been informed within 24 hours it means contravention of rule l73l." 3. the learned consultant for the appellant pleaded that the register in which the necessary entries for the return of the goods have been made bears an endorsement made by the inspector for having verified the returned goods as per the d. 3 intimation on 25-8-1988 and pleaded that so far as form d. 3 is concerned, although the date of filing is shown as 26-8-1988, there appears to be correction of '6' to '5' and so also there is a correction in the date appended on this form by the inspector.5. i have considered the submissions made before me and gone through the records. it is observed that so far as the intimation to the department is concerned the same is required to be given within 24 hours. the learned appellant-collector ... that there is a delay of a few hours beyond 24 hours as stipulated in rule 173l. it is seen in the narrative form the inspector has recorded as under: from the above it would appear that so far as the inspector is concerned he 'has verified the goods on 25-8-1988 and what appears is that the form may have been filed later. in any case in view of the delay of only a few hours in filing d. 3 intimation, it has to be considered a breach if any of procedural in nature and for this the appellant cannot be denied the refund claim. there has been substantial compliance with the requirements of rule 173l in this regard. the other ground of the appellant-collector is that after the return of the goods their identity was not established with reference to gate passes. it is observed that the inspector has verified the goods after return with reference to the d. 3 intimation filed under rule 173l and it has to be presumed that the said verification is in the context of rule 173l and no discrepancy was noticed. as it is the learned appellant-collector has not stated as to whether there was in fact any discrepancy between the goods returned and those covered by the gate passes. regarding the third ground, the appellant-collector has stated that the goods were rejected and the same have not been returned for re-processing purposes. it is to be seen that when the goods are rejected by a buyer the same are sent back to the supplier with the only rejection memo and it is for the assessee to decide whether the same can be re-processed or not. in this case the plea taken by the respondent is that the goods were re-made in the respondent's factory and that there is no dispute in this regard. in that view of the matter it has to be held that the respondents are entitled to the benefit of re-processing as set out under rule 173l. the learned jdr has mentioned that the goods after re-making were not sent back to the same buyer. i observe there is no requirement under rule 173l that the goods should be sent back to the same buyer. in view of the above, i hold there is no force in the pleas of the revenue and, therefore, dismiss the appeal.

Judgment:
1. This appeal is by the Revenue against the order of the Collector of Central Excise (Appeals), Madras. The appellant-Collector is aggrieved by the learned lower appellate authority's order allowing refund of duty under Section 173L in respect of the goods which were received by the respondents for re-making and re-processing.

2. The learned appellant-Collector in the Memorandum of appeal has urged the following grounds : "(1) The impugned Order-in-Appeal erred in appreciating the real provisions of Rule 173L of Central Excise Rules, 1944, wherein it is laid down that any goods received for reprocessing/reconditioning, an intimation to the Department within 24 Hours of receipt of goods is necessary, which in this case, the party has not followed. Abo Rule 173L(3) requires that no refund shall be paid until the procedure mentioned in Rule 173L is complied with. The plain reading of Rule 173L does not cover rejected goods.

(2) Further the OIA ignored the fact that the material received for reprocessing under delivery Challan, where the width of the press paper (i.e. description of the goods) were declared, but the same description was not shown in any documents at the time of return after reprocessing. The identity of goods with reference to original gate passes is essential for considering the refund claim and has not been established beyond doubt, as also the movement of the goods from Bhiwandi to Nasik is not established.

(3) The Central Excise Officer, Nasik has confirmed that the goods were rejected accordingly the goods have not been returned for reprocessing purposes. Further goods in equal quantity/dimensions have not been delivered to the same buyer as intended under Rule 173L of Central Excise Rules, 1944.

(4) All the points discussed in the statement of facts, clearly show that the Asstt. Collector was correct in rejecting the Refund Claim.

Collector (Appeals), Madras is incorrect in stating that they have followed the provisions under Rule 173L, when information about the receipt of goods have not been informed within 24 hours it means contravention of Rule l73L." 3. The learned Consultant for the appellant pleaded that the register in which the necessary entries for the return of the goods have been made bears an endorsement made by the Inspector for having verified the returned goods as per the D. 3 intimation on 25-8-1988 and pleaded that so far as Form D. 3 is concerned, although the date of filing is shown as 26-8-1988, there appears to be correction of '6' to '5' and so also there is a correction in the date appended on this form by the Inspector.

5. I have considered the submissions made before me and gone through the records. It is observed that so far as the intimation to the Department is concerned the same is required to be given within 24 hours. The learned appellant-Collector ... that there is a delay of a few hours beyond 24 hours as stipulated in Rule 173L. It is seen in the narrative form the Inspector has recorded as under: From the above it would appear that so far as the Inspector is concerned he 'has verified the goods on 25-8-1988 and what appears is that the form may have been filed later. In any case in view of the delay of only a few hours in filing D. 3 intimation, it has to be considered a breach if any of procedural in nature and for this the appellant cannot be denied the refund claim. There has been substantial compliance with the requirements of Rule 173L in this regard. The other ground of the appellant-Collector is that after the return of the goods their identity was not established with reference to gate passes. It is observed that the Inspector has verified the goods after return with reference to the D. 3 intimation filed under Rule 173L and it has to be presumed that the said verification is in the context of Rule 173L and no discrepancy was noticed. As it is the learned appellant-Collector has not stated as to whether there was in fact any discrepancy between the goods returned and those covered by the gate passes. Regarding the third ground, the appellant-Collector has stated that the goods were rejected and the same have not been returned for re-processing purposes. It is to be seen that when the goods are rejected by a buyer the same are sent back to the supplier with the only rejection memo and it is for the assessee to decide whether the same can be re-processed or not. In this case the plea taken by the respondent is that the goods were re-made in the respondent's factory and that there is no dispute in this regard. In that view of the matter it has to be held that the respondents are entitled to the benefit of re-processing as set out under Rule 173L. The learned JDR has mentioned that the goods after re-making were not sent back to the same buyer. I observe there is no requirement under Rule 173L that the goods should be sent back to the same buyer. In view of the above, I hold there is no force in the pleas of the Revenue and, therefore, dismiss the appeal.