Rule 173L refund for repacked duty-paid goods upheld where repacking in factory was treated as a recognised processing activity.

Duty-paid goods returned to the factory for repacking in fresh pouches after the original pouches were damaged or sub-standard were treated as falling within "re-made" and "any other similar process in the factory" under Rule 173L(1). On that basis, refund of duty was held admissible, and the contrary view that repacking was outside the rule was rejected. The further refusal of refund on the ground that the returned goods had nil market value was also disapproved, because no test or market enquiry had been conducted to support that conclusion. The excise note relied on also supported repacking from bulk to retail packs as a recognised processing activity.

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Issues: Whether refund of duty under Rule 173L was admissible when duty-paid goods were returned to the factory for repacking in fresh pouches after the original pouches were found damaged or sub-standard, and whether the returned goods could be treated as having nil market value for denial of refund.

Analysis: The returned goods were brought back to the factory and repacked in fresh pouches before being cleared on payment of duty again. This activity was held to fall within the expressions "re-made" and "any other similar process in the factory" under Rule 173L(1). The rejection of refund on the premise that repacking was outside the rule was held unsustainable. The finding that the goods were non-marketable and therefore had nil value was also rejected, as no test or market enquiry had been undertaken to support that conclusion. The Chapter Note relied upon by the appellant reinforced the view that repacking from bulk to retail packs is a recognised processing activity in the excise context.

Conclusion: Refund under Rule 173L was admissible, and the denial of refund was set aside in favour of the assessee.

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