Rule 173H return of duty-paid goods after transit theft did not require separate permission where sub-rule (2) applied.

Duty-paid goods returned to the factory after theft in transit and release by the Magistrate were treated as covered by Rule 173H(2) of the Central Excise Rules, 1944. The goods were recovered by police, released against bank guarantee, received back on department intimation, and entered in the prescribed register. The listed circumstances in Rule 173H(2)(D) were treated as illustrative, so the return fell within sub-rule (2). Rule 173H(3) applied only to duty-paid goods outside sub-rule (2) and therefore no separate permission was required. The departmental appeal failed and the order in favour of the respondent was maintained.

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Issues: Whether duty-paid goods returned to the factory after theft in transit and subsequent release by the Magistrate were covered by Rule 173H(2) of the Central Excise Rules, 1944 so that no permission under Rule 173H(3) was required.

Analysis: The returned goods were stolen in transit, recovered by the police, and released against bank guarantee. They were received back in the factory under intimation to the department and accounted for in the prescribed register. The circumstances for return fell within Rule 173H(2)(D), and the situations mentioned therein were treated as illustrative and not exhaustive. Rule 173H(3) applied only to duty-paid goods not covered by sub-rule (2), and therefore had no application to the present facts.

Conclusion: The return of goods was rightly treated as covered by Rule 173H(2), and no permission under Rule 173H(3) was required.

Final Conclusion: The departmental appeal failed, and the order in favour of the respondent was maintained.

Ratio Decidendi: Where duty-paid goods are returned to the factory because of circumstances beyond the assessee's control and the case falls within Rule 173H(2), permission under Rule 173H(3) is not required.

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