Rule 173L refund applies to reprocessed damaged pan masala when remade into marketable goods after Department intimation.

Rule 173L of the Central Excise Rules, 1944 allows refund where damaged pan masala is returned to the factory, duly intimated to the Department, and reprocessed with fresh material into marketable goods. The Tribunal noted that prior decisions had already accepted remixing of defective or damaged pan masala as consistent with the rule. In the absence of contrary evidence from the Department, objections based on the commercial value of the returned goods or the quantity cleared after reprocessing could not defeat admissibility of the refund claim.

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Issues: Whether refund of duty was admissible under Rule 173L of the Central Excise Rules, 1944 in respect of damaged pan masala returned to the factory and reprocessed by mixing with fresh material.

Analysis: The returned pan masala had been received back after due intimation to the Department and was subjected to reprocessing before being cleared on payment of duty. The Tribunal noted that the earlier decisions in the same line of dispute had already held that remixing damaged or defective pan masala with fresh material, so as to make it marketable again, is not excluded by Rule 173L. It was also observed that, in the absence of evidence from the Department, the objections regarding commercial value of the returned goods and the quantity cleared after reprocessing could not defeat the claim.

Conclusion: Refund was admissible to the assessee under Rule 173L of the Central Excise Rules, 1944, and the Revenue's appeal was rejected.

Ratio Decidendi: Rule 173L permits refund where damaged goods returned to the factory are remade or reprocessed into marketable goods, and the Department must adduce evidence to displace the claim of admissibility.

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