2005 (8) TMI 488 - AT - Central Excise

Tribunal upholds ruling on refund claims for Horlicks duty payment, dismissing Revenue's appeal.

The Tribunal upheld the Commissioner (Appeals)'s ruling in favor of the Respondents in an appeal against the rejection of refund claims under Rule 173L ... Refund - Return of duty paid defective goods for reprocessing Issues:1. Appeal against rejection of refund claims under Rule 173L for duty paid Horlicks.2. Compliance with Rule 173L procedure for reprocessing goods.3. Dispute over duty payment and reprocessing of goods.4. Interpretation of Rule 173L regarding reuse of returned goods as inputs.5. Clarity on mandatory provisions for intimating central excise department about defects in goods sent for reprocessing.Analysis:The case involved an appeal against the rejection of refund claims by the Revenue under Rule 173L concerning duty paid Horlicks. The Respondents, as manufacturers of Horlicks, returned the goods to their factory for reprocessing and subsequently cleared them after paying duty. The Original Authority rejected the refund claims citing lack of intimation about defects in the returned products. However, the Commissioner (Appeals) overturned this decision after confirming that the Respondents had indeed followed the Rule 173L procedure. The Revenue challenged this decision on various grounds, including the absence of evidence regarding defective goods and the reuse of returned goods as inputs for a different product.During the proceedings, the Revenue reiterated their grounds of appeal, emphasizing the alleged non-compliance with Rule 173L by the Respondents. On the other hand, the Respondents contended that they had adhered to the rule and paid duty twice, justifying their eligibility for a refund. Upon careful examination of the case records, the Tribunal found that the Commissioner (Appeals) had correctly assessed the situation and concluded that the Rule 173L procedure had been duly followed. The Tribunal noted that the duty had indeed been paid twice on the reprocessed goods, highlighting the common practice in the food industry to reprocess items for human consumption if stored for an extended period.The Tribunal further clarified that there was no explicit requirement in the Central Excise Rules mandating the notification of defects in goods sent for reprocessing to the central excise department. Additionally, the factual aspects related to the dispatch, receipt of goods, and duty demands were not in dispute. Consequently, the Tribunal deemed the Original Authority's decision as legal and appropriate. Ultimately, the Tribunal dismissed the Revenue's appeal, emphasizing the lack of merit in their arguments and upholding the Commissioner (Appeals)'s ruling in favor of the Respondents. The judgment was delivered in open court at the conclusion of the hearing.