Rule 173H(2) relief for returned duty-paid goods survives delayed invoice production when identity is proved by collateral evidence.

Rule 173H(2) of the Central Excise Rules permits return of duty-paid excisable goods for remaking or reprocessing on the basis of duty-paying documents, and its proviso allows relaxation where collateral evidence establishes identity of the goods. On the stated facts, the buyer returned the goods, the assessee promptly filed the D-3 declaration, produced its own invoice copy, and later furnished the buyer's copy as well. As identity and duty-paid character were established from the documents and surrounding evidence, a procedural delay in producing the buyer's copy did not justify denial of the rule benefit, and the resulting duty demand and penalty were not sustainable.

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Issues: Whether duty demand and penalty were sustainable when duty-paid goods returned for reprocessing were covered by D-3 return and other supporting documents, but the buyer's copy of the duty-paying invoice was produced later and exemption from production of such document was sought subsequently.

Analysis: Rule 173H(2) of the Central Excise Rules permits receipt of excisable goods for remaking or reprocessing with duty-paying documents, and its proviso empowers relaxation where the Commissioner is satisfied from collateral evidence that the identity of the goods can be established. The goods were returned by the purchaser, the appellant promptly filed the D-3 declaration, the department raised no immediate objection to the absence of the buyer's copy, the appellant produced its own copy of the invoice, and the buyer's copy was also furnished later. In these circumstances, the identity of the goods and the duty-paid character of the goods stood established, and mere delay in producing the buyer's copy did not justify denial of the rule benefit.

Conclusion: The denial of benefit under Rule 173H(2) was unsustainable and the duty demand and penalty were not justified. The finding is in favour of the assessee.

Ratio Decidendi: Where the identity of returned duty-paid goods is established by D-3 return and collateral evidence, procedural delay in producing duty-paying documents does not defeat the substantive benefit under Rule 173H(2) of the Central Excise Rules.

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