Customs, Excise and Gold Tribunal - Tamil Nadu
Commissioner Of C. Ex. vs Vanagaram Refractory Works on 15 December, 1998
Equivalent citations: 1999(111)ELT890(TRI-CHENNAI)
ORDER V.K. Ashtana, Member (T)
1. This is a Revenue appeal against Order-in-Appeal No. 213/97 (M) dated 15-10-1997 wherein the Assistant Commissioner's Order-in-Original rejecting the present respondent's claim for refund under Rule 173L was set aside and the present respondent's appeal before the Commissioner (Appeals) had been allowed.
2. Briefly, the issue concerns receipt of refractory fire bricks in the respondent's factory under Rule 173L as the same had been rejected on the ground of quality by the buyer namely M/s. Graphite India Limited. The buyer had said that the iron contained therein was 3.2% whereas it should have been 2.5% or less. The goods after receipt into the respondent's factory were crushed and fire bricks were remade out of this crushed material. Revenue holds that since the goods were found defective, when they were returned, their value became less than the duty paid thereon at the time of clearance, therefore the Clause (v) of Rule 173L(3) was attracted. Revenue also contends that what was returned was in effect scrap or Grog. Since the respondents purchased separately this kind of grog at about Rs. 700/- per MT, therefore the returned defective bricks should also be valued accordingly and therefore the said clause noted above is attracted and the facility under Rule 173L was correctly denied by the lower original authority.
3. Heard Shri S. Kannan, learned JDR who reiterated the grounds of appeal and forcibly submitted since the goods on return to the respondent's factory were crushed therefore they were the same as grog and therefore Clause (v) of Rule 173L (3) is attracted.
4. Heard Shri P.V. Mohan, learned Chartered Accountant for the respondents. He submitted that it is not correct that the value of returned goods was lower than the duty paid. A note to this effect had been submitted even at the first appellate stage and the learned Commissioner (Appeals) was satisfied on this ground. Hence, their appeal had been allowed. He again submits a note on the value and says that in it has been worked out that value of the returned goods was Rs. 1,22,757 when it was consumed in the process of re-manufacture. Learned Chartered Accountant further says that Revenue erred in their appeal in giving the status of grog to these defective bricks rejected and received in their factory premises because these were not used at all. Except for a mere testing, no other process was carried upon by them. They were not used. They were simply rejected as being of a quality not acceptable to the buyer. Therefore what was received by them were actually returned. There cannot be any change in the value of the goods received from the goods cleared on payment of duty because the nature of the goods did not change at all. He further submits that in the trade parlance Grog is a mixture of used/unused damaged bricks which are only used as a scrap material in the manufacturing process of fresh bricks. The goods received back wore not at all grog because they were neither used nor broken.
5. I have carefully considered the submissions on both sides and the records of the case. I find that the Revenue appeal is on the ground that the goods were (a) scrap and therefore (b) the value had depreciated to be equal to the value of scrap normally bought from the open market by the appellants at Rs. 700/- per MT. Therefore, the clause noted above was attracted.
6. After careful consideration. I find myself unable to agree to this position for the following reasons :-
(a) It is not disputed that the goods cleared on payment of duty were fully manufactured in prime condition and were refractory bricks.
(b) It is not disputed that the said refractory bricks without being broken or used or in any other way damaged were received back under Rule 173L. Therefore, I cannot subscribe to the view that what was received back was scrap. If every defective goods received back are viewed to be scrap then such a interpretation under Rule 173L would render the provision of Rule 173L itself otiose.
(c) While on the one hand, learned Chartered Accountant has filed even at the first appellate stage a detailed statement regarding the value of the actual goods received back under Rule 173L, the Revenue in this appeal has not led evidence or calculations to controvert the same. As against this, they have merely proceeded on the assumption that what was received was scrap and have therefore applied wrongly the value of scrap available in the local market. This assumption would have had some weight had the Revenue led evidence to show that before it was returned the prime goods cleared by the appellants had undergone some process or use so as to convert them into scrap. No such evidence is on record and the goods have been returned only on the ground of being of lower quality than what is acceptable to the buyer. This by no stretch of imagination can make these goods as scrap.
7. In view of the aforesaid findings, I find no infirmity in the Order-in-Appeal which compels me to interfere with the same. The Revenue appeal is therefore dismissed.