Customs, Excise and Gold Tribunal - Mumbai
The Commissioner Of Central Excise vs Ballarpur Industries Ltd. on 26 February, 2004
ORDER K.D. Mankar, Member (T)
1. This is revenue's appeal against the order-in-appeal passed by the Commissioner (Appeals), whereby the respondent's appeal against the order-in-original rejecting their refund claim was allowed. The respondents had claimed a refund of Rs. 1,18,952/- in terms of provisions contained in Rule 173L of the Central Excise Rules 1944, (Central Excise Rules) being the duty paid on the MICR cheque paper, which was cleared initially on payment of duty but was returned to the factory consequent to rejection by the buyer. This returned rejected paper was used in admixture with other raw material and the paper made out of such reprocessing was cleared on payment of duty. Hence the claim for aforesaid amount was made, which was equivalent to proportionate duty paid on the returned quantity. The facts of return, reprocessing and subsequent clearance on payment of duty are not in dispute. The claim has been rejected on the ground that, in terms of Sub-rule (3) (v) of Rule 173 L if the "value" of the goods at the time of their return to the factory, in the opinion of the Commissioner, is less than the amount of duty originally paid at the time of their clearance, then no refund shall be admissible. In the impugned order-in-original, it has been concluded that, based on the enquiry conducted to ascertain the value of returned goods the value was Rs.400/- PMT, which for the returned quantity of 23.8449 MTS, works but to Rs.95,379.60, which is 67% of the duty originally paid. The claim was therefore rejected, without affording any opportunity to the respondents to present their case. The Commissioner (Appeals) set aside the order, being in violation of principles of natural justice. The revenue's appeal seeks restoration of the order-in-original by netting aside the order-in-appeal.
2. Heard both sides.
3. In the grounds of appeal, it is stated that, instead of allowing the appeal, the Commissioner (Appeals) ought to have furnished the market value as readily available on the records, to the assessee and decided the matter, after giving an opportunity for representation and hearing to the assessee. Secondly allowing the claim on proportionate basis is also questioned claiming that, there is no provision in the rule or Act to allow the claim on proportionate basis.
4. In this regard I note that, none of the grounds mentioned above have any merits. As regards the first ground, I observe that, an order, passed without following the principles of natural justice is required to be held illegal ab initio. Besides, the method adopted to ascertain the market value is also revealed to be questionable. The MICR paper was returned by the customer as being discoloured though it was otherwise of prime quality and not a broke paper or waste paper for which the buyers quoted the price, since the prospective buyers could not have used the material except for selling it as a waste paper, It is a fact that, the returned quantity of 23.8449 MT was used in the manufacture of 199.30 Mt of Pink Printing/White Poster paper. Other possible valuation therefore could have been to equate the value of returned paper with that of the other material, with which the same was mixed during reprocessing.
5. The next ground relates to proportionate quantification of duty paid on the quantity of 23.8449 MT of returned material, out of total quantity of 27.7192 MT of the MICR cheque paper. While this objection has been raised, in the appeal, it is not stated as to how the duty payment on this quantity is required to be calculated, in case the refund is otherwise held eligible. After all, the rule does not envisage that the entire quantity cleared originally must be returned and only then the refund will be sanctioned. Besides this is totally a new grant, not figuring in the order-in-original.
6. Hence I hold that, the revenue's appeal is without any merits and the same is accordingly rejected.
(Pronounced in open Court)