Customs, Excise and Gold Tribunal - Delhi
Samtel India Ltd. vs Collector Of Central Excise on 16 April, 1996
Equivalent citations: 1996(86)ELT596(TRI-DEL)
ORDER K.S. Venkataramani, Member (T)
1. These appeals involve common issue of eligibility for refund under Rule 173L of Central Excise Rules. The appeals arise out of three orders of the Commissioner of Central Excise (Appeals), New Delhi namely a common order in appeal dated 20-8-1991, another common order dated 25-10-1991 and a separate order dated 12-9-1991. The Assistant Commissioner of Customs and Central Excise, Jaipur by his various orders rejected the refund claim of the appellants herein preferred under Rule 173L of the Central Excise Rules. This Rule says that the Commissioner may grant refund of the duty paid on the excisable goods cleared from the factory for home-consumption, 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 provided that such goods are returned to the factory within one year of the date of payment of duty and prior intimation is given in prescribed Form D-3 regarding the re-entry of each consignment and there is also the requirement that the assessee should store the said goods separately pending their being remade, reconditioned or reprocess. The Rule also prescribed that the assessee should maintain a detailed account of the goods and the processes to which they are subjected, after their return to the factory in proper Form which is Form-V. Sub-Rule (3) lays down. "No refund under this Rule shall be paid untill the process mentioned therein have been completed and an account in Form-V has been rendered to the satisfaction of the Commissioner within six months of the return of the goods to the factory. The Rule further stipulate that no refund shall be admissible in respect of duty paid inter alia on goods which are disposed of in any manner other than for production of goods of the same class. The Assistant Commissioner took the view that the appellants had failed to furnish evidence to show that the goods returned have been issued from the stock room to production process and their subsequent return on the production slip to the stock room in the absence of which the Assistant Commissioner found it not ascertainable as to whether the impugned goods have been re-processed or cleared as such. The other reason given by the Assistant Commissioner was that at the time of initial clearances of the goods the Box number and Batch number were shown on the Gate passes and at the time of re-entry and the D-3 number is entered into the Register Form-V. Thereafter, material inward note is prepared. At the time of issue of the goods for re-processing material requisition slips are issued but the Assistant Commissioner found that on them neither the box number nor the batch number is mentioned. Nor even a reference to D-3 intimation and inward note. The batch mentioned in the production slips maintained by the assessee were not found to tally with the batch number of the goods brought into the factory for processing. Therefore, Assistant Commissioner concluded that it is not possible to co-relate the goods cleared second time as being the same which were originally brought into factory for re-processing. The Commissioner (Appeals) in all the impugned orders upheld the Assistant Commissioner's orders.
2. Shri S. Madhvan, the learned Chartered Accountant appearing for the appellants submitted that under a warranty Scheme defective television tubes manufactured and cleared by them could be returned to the factory for re-processing and referred to the steps taken during the re-processing by way of the Flow Chart which is on record. The re-processing is simpler for the category tubes described O.K. tubes and it is little more detailed in the other category of not O.K. tubes. The ground taken by the lower authorities for denying the refund by saying that the goods cleared a second time were not relatable to the original goods brought back into the factory is not a valid ground because there is no such requirement in the Rule 173L which is wide enough to cover even re-manufacture. The appellants herein have given D-3 intimation of the receipts of the goods brought back in their factory. There is no dispute that the original clearance was on payment of duty. The learned Chartered Accountant pointed out that with reference to the entry in the Form-V account maintained by the appellants that they have given a complete quantity reconcilation regarding the re-processed goods. Since they have maintained the account in the proper form which has been also verified by the officers there has been no violation of Sub-rules (2) and (3) of Rule 173L by the appellants. The learned Counsel relied upon the case law reported in 1990 (50) E.L.T. 130 (Tribunal) in the case of Orissa Cement Ltd. v. Collector of Central Excise & Customs, 1991 (53) E.L.T. 435 (Tribunal) in the case of Bharat Aluminium Co. Ltd. v. Collector of Central Excise to say that there was no requirement under Rule 173L for the very same goods to be cleared on re-processing and the decisions recognised the position that original identity of the goods is not possible to be retained. It has been held [sic] that where technological necessity requires mixing of other ingredients during the re-processing it will not disentitle the refund under Rule 173L under the loss of original identity will not be a bar to such refund. The learned Chartered Accountant also cited case law to say that the returned goods need not to be processed separately. The appellants have stored the returned goods separately and the goods have been issued for re-processing the batch number could not be the same because there is no separate stream of processing of the returned goods. It was pleaded since there has been substantial compliance that the requirement of Rule 173L and in the light of the case law the appellants will be entitled for the [sic] refund under Rule 173L. Shri P. Das, the learned Senior Departmental Representative contended that the provisions of Rule 173L is designed to avoid double taxation and identity of the goods cleared a second time on payment of duty with those goods returned to the factory has necessarily to be established, for the refund to be granted under the Rule the essential conditions prescribed for the purposes have to be strictly complied with. The learned Senior Departmental Representative pointed out that the details of the process has not been indicated by the appellants herein in the relevant column in Form-V. There was no accounting of the returned goods issued for re-processing. The learned Senior Departmental Representative relied upon the Tribunal decision reported in 1992 (57) E.L.T. 671 (Tribunal) in the case of International Computers Indian Mfg. Limited v. Collector of Central Excise, Pune which has emphasised the return that the goods received back must be reissued after reprocessing.
3. We have carefully considered the submissions made by both the sides. The scope of refund under Rule 173L has been gone into by the decisions cited before us. The Department's stand in this case that there has been lack of co-relation of the returned goods from the point of their issue for re-processing and, therefore, the Department feel that the identity of the goods cleared a second time with those returned to the appellants as defective has not been satisfactorily established so as to grant the refund claimed by the appellants under Rule 173L. However, we find that in the Orissa Cement Ltd. case (supra), the Tribunal has noted the precedent decision in the case of The Brittania Biscuit Co. Ltd., reported in 1980 (6) E.L.T. (J649) (G.O.I.) and 1982 (10) E.L.T. 495 (G.O.I.) in the case of Godfray Phillips India, Bombay which related to manufacture of biscuits of a variety different from the returned variety and also re-manufacture of different brand of cigarettes from that which was returned and in those it was held that refund under 173L was permissible. The Tribunal noted clarification issued by the Central Board of Excise and Customs under F. No. 261/23A/2/78/CX, dated, 21-2-1980 in which the return of goods under Rule 173L for remanufacture in respect of steel casting was considered and it was found that the original identity of the returned goods was not possible to be retained because after melting their identity is lost and they get mixed up with other raw-materials. The Board had clarified that the provisions of Rule 173L will not bar refund in such cases if the other conditions are fulfilled and the goods of the same class are manufactured. Thereafter, the Tribunal observed "these decisions and clarifications would rule out the validity of the objection that the returned goods should themselves be reprocessed or remanufactured into new goods without losing their identity". The Tribunal decision in the case of Bharat Aluminium Co. Ltd. v. Collector of Central Excise, reported in 1991 (53) E.L.T. 435 (Tribunal) followed the above such decision and in the case of Orissa Cement Ltd. and this decision also referred to the clarification of the Central Board of Excise and Customs and the other decision in the case of Brittania Biscuit and Godfray Phillips India Ltd., Bombay (supra). The Tribunal held in that case that following those precedents producing aluminium sections and extrusions from returned aluminium foils satisfies the requirement of Rule 173L including Sub-rule (3) (iii) thereof which touches the question of goods of same class and further decision of the Tribunal in the case of Mexin Medicaments Pvt. Ltd. v. Collector of Central Excise, Baroda, reported in 1995 (77) E.L.T. 392 (Tribunal) it has been held that Rule 173L does not require that the reprocessing of returned goods should be undertaken separately. What is contemplated in Rule is that the goods should be returned under proper intimation and should be accounted for in the prescribed record. Applying the ratio of these decisions in the present case, it is not in dispute that the receipt of the defective picture tubes back into appellant's factory has been duly intimated. The returned goods have been separately stored and accounted in Form-V has been maintained. As for the appellants not filling in the relevant Columns 7, 8 and 9 in Form-V with the common heading details of re-processing/repairs, it is found that the claim of the appellants is that they are not using any exciseable components in the reprocessing undertaken by them on the picture tubes and, therefore, the question of filling in Column 8 and 9 does not arise in their case. We further find that the department has no quarrel that upto the point of receipt and accounting in the separate store room, the appellants have complied with the procedures on the issue whether the identity should be established between the goods re-processed and cleared with those received back, the decisions cited above clearly bring out that such an identity is not an essential criterian., so long as both the goods received back and those cleared after reprocessing belong to the same class of goods. In this context, what the appellants received back and defective picture tubes and it is not disputed what they cleared after reprocessing is also T.V. picture tubes. The goods admittedly are of the same class. When this is so, the appellants' case is on better footing than those in some of the decisions cited (Supra), where there was a change in the commercial nomenclature of same of the goods involved. We also find the case law relied upon the learned Senior Departmental Representative in the case of International Computers Indian Mfg. Limited (supra) is not on all fours with the present case. That was a case where the assessee had received back computer material which assessee himself said that they have to be only destroyed and could not be put back on the market after reprocessing. Therefore, that was a case which could not be accommodated under the ambit of Rule 173L. In the result, since all these cases it is not in dispute that after the reprocessing of the returned picture tubes only picture tubes had been cleared again on payment of duty the basic requirement of both the goods falling under the same class of goods under Rule 173L is satisfied. The further fact that the other requirements of D-3 intimation and maintenance of accounts which would facilitate quantity reconcilation of the picture tubes were properly followed would also be a factor in favour of the appellants. Therefore, on the facts and in the circumstances of the case, the appellants are held eligible for refund under Rule 173L of the Central Excise Rules. The appellants will be entitled to consequential relief according to law. The appeals are disposed of in the above terms.