Customs, Excise and Gold Tribunal - Delhi
Taylor Instrument Co. (I) Ltd. vs Collector Of C. Ex. on 16 January, 1995
Equivalent citations: 1995ECR311(TRI.-DELHI), 1995(77)ELT149(TRI-DEL)
ORDER S.L. Peeran, Member (J)
1. This appeal arises from Order dt. 3MO-1990 passed by the Collector (Appeals), New Delhi rejecting the refund claim filed by the appellant under Rule 173L of Central Excise Rules, 1944.
2. It is the case of the appellant that they are manufacturers of Pneumatic and Electronic Industrial Process Control Instruments. The instruments are highly sophisticated and sensitive. Sometimes it happens that a customer to whom these goods are supplied do not take delivery by accepting the sale documents from the Bank. Therefore, the goods are returned to the factory in original packed condition under the provisions of Rule 173L, as such, goods would need to be sold to other customers only after proper refining and reconditioning etc. as required in the rule. It is submitted by the appellants that they had carried out such process of retesting, rechecking and recaliberation of the instruments before it is sold at a higher price after paying appropriate rate of duty. Therefore, they filed refund application under Rule 173L in respect of the earlier clearances, on which duty had been paid and where the customer had not accepted the goods and which, they had been returned to the factory. The lower authority had rejected the claim on the ground that such process of retesting, rechecking and recaliberation do not come within the terms 'remade, refined, reconditioned' as stipulated in Sub-rule (1) of Rule 173L.
3. We have heard the Id. advocate, Shri Satya Sheel for the appellant and Id. JDR, Shri J.P. Singh for the respondents in this case.
4. The refund claim has been rejected on a very short ground by the lower authorities that the process of retesting, rechecking and recaliberation do not fall within the terms as stated in Rule 173L. The Assistant Collector has held that the goods had not been returned for the purpose of "remaking, refining, reconditioning or subjecting to any other process under which refund of duty paid on manufacture of excisable goods for home consumption and returned to the factory can be granted." He has held that "the goods had not been returned for the aforesaid purposes and that the rule contemplates the situation as stated under which the excisable goods despatched or found to be defective or not upto the mark and the consignee returns the same for remaking, refining or reconditioning". Therefore, he has held that the return of the goods on the grounds stated as in the present case do not fall within the purview of Rule 173L. The Id. Collector has also concurred with the findings of the Id. Assistant Collector.
5. On a careful consideration of the finding given by the lower authorities, we are of the considered opinion that the same is not sustainable. Rule 173L (1) reads as for the following reasons :
"RULE 173L. Refund of duty on goods returned to factory:- (1) The Collector may grant refund of the 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, reconditioned or subjected to any other similar process in the factory:
Provided that:-..."
The above rule clearly grants the power to the Collector to grant refund of the duty paid on manufactured excisable goods for home consumption from the factory, which are returned to the same or any other factory, for being remade, refined, reconditioned or subjected to any other similar process in the factory. There are several proviso to this rule, which presently we are not concerned with, as the department has not invoked any of the proviso to sub-rules of Rule 173L. The other sub-rules deal with procedural aspects and the appellants had submitted before us that they have followed the procedure with regard to the maintainance of registers etc. as required under this sub-rules and that the same has also not been questioned by the lower authorities. Only point raised by the lower authorities is that the goods which have come back undelivered to the customer and which have undergone a process of retesting, rechecking and recaliberation does not come within the processes indicated in Sub-rule (1) of Rule 173L. As can be noticed from the Sub-rule (1) of Rule 173L, the fully manufactured goods issued for home consumption from the factory, which are returned back for the stated purposes, are eligible for refund of duty. The processes indicated in Sub-rule (1) also includes "any other similar processes." Now it has to be seen as to whether the processes as carried out by the appellants can be considered as coming within "any other similar process in the factory". In this case the goods have been returned to the manufacturer. It is contended that the nature of the goods which are sold to one particular customer are as per their requirement and if it is required to be re-sold then it is required to be again retested, rechecked and recaliberated for the use of any other customer, whose needs and requirements are different. It is stated that said processes have added to the value of the goods and the appellants have re-sold the goods on added value by paying the duty. Therefore, the processes undertaken by the appellants are in the nature of "remade, refined, and reconditioned". The processes indicated in the Sub-rule (1) are for making the goods re-usable and for re-sale. The processes in this case are also to make the goods fit for sale to the customer. Therefore, these processes do fall within the category of "any other similar process in the factory". In that event of the matter the appellants are entitled for refund as claimed by them and therefore, the appeals are allowed with consequential relief.