Refund on returned duty-paid goods was admissible; captive consumption exemption could not defeat relief against double taxation.

Rule 173L permitted refund where duty-paid goods were returned to the factory after rejection, then unpacked, inspected, straightened, cleaned and repacked before being cleared again. The provision, read with Rule 173H, was designed to allow remaking or reconditioning without repeated levy on the same goods, so the earlier duty could not be retained when the goods had already borne duty on original removal and again on re-clearance. Denial of refund on the ground that the goods were cleared for captive consumption was not justified, because an assessee could either claim exemption or pay duty on captive consumption. Refund was therefore admissible and double taxation was avoided.

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Issues: Whether refund of duty was admissible under Rule 173L of the Central Excise Rules, 1944 in respect of goods returned to the factory, repacked and subjected to further processes, and whether denial of refund on the ground of captive consumption exemption was justified.

Analysis: The goods had been returned after rejection by the buyer and were subjected to unpacking, inspection, straightening, cleaning and repacking before being cleared again for captive consumption on payment of duty. The refund claim arose only because duty had already been paid on the original removal and again on the subsequent clearance, resulting in double payment on the same goods. The scheme of Rule 173L and the allied provision in Rule 173H is to permit return of duty-paid goods for remaking or reconditioning and to prevent repeated levy on the same goods. The fact that goods cleared for captive consumption could have been exempted did not justify refusal of refund, since an assessee may either claim exemption or pay duty on captive consumption.

Conclusion: Refund under Rule 173L was admissible and the objection based on captive consumption exemption was rejected.

Ratio Decidendi: Duty already paid on goods returned for remaking or reconditioning cannot be retained again on their subsequent clearance when the statute es refund to prevent double taxation of the same goods.

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