Rule 173L refund on returned goods and closed-office delay in D-3 intimation do not defeat relief

Rule 173L permits refund where goods are returned to the same factory for remaking, refining or reconditioning after rejection by the consignee, and the return need not be to the original consignee. A shortage arising during reprocessing does not by itself defeat the claim if the returned quantity and resultant products are properly accounted for. Procedural delay in filing D-3 intimation may also be excluded from computation where the relevant office was closed on the due dates, applying the principle reflected in Section 10 of the General Clauses Act. On these principles, relief was extended to the consignments covered by the relevant gate passes.

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Issues: (i) Whether refund under Rule 173L was admissible where the goods were outrightly rejected by the consignee and were brought back to the factory for remaking, refining or reconditioning, including where some loss occurred in the course of reprocessing; (ii) Whether delay in filing the D-3 intimation in respect of one consignment could be ignored where the office remained closed on the relevant days.

Issue (i): Whether refund under Rule 173L was admissible where the goods were outrightly rejected by the consignee and were brought back to the factory for remaking, refining or reconditioning, including where some loss occurred in the course of reprocessing?

Analysis: Rule 173L contemplates return of goods to the same factory for being remade, refined, reconditioned or subjected to a similar process. The return need not mean that the reprocessed goods must go back to the original consignee. The rejection by the consignee and acceptance of the goods back by the consignor satisfied the requirement of return. The rule also did not require that the identical quantity should emerge after reprocessing. Loss in the course of reprocessing did not by itself defeat the claim, once return of a specified quantity and accounting of the resultant products were shown.

Conclusion: Refund under Rule 173L was admissible for the consignments covered by Gate Passes Nos. 130 and 131, and the shortage after reprocessing did not disentitle the claim.

Issue (ii): Whether delay in filing the D-3 intimation in respect of one consignment could be ignored where the office remained closed on the relevant days?

Analysis: The purpose of the intimation was to enable verification by the proper officer within the prescribed time. Applying the general principle reflected in Section 10 of the General Clauses Act, and taking note of the office closure and the trade notice relied upon, the time spent during the closed days was excluded from computation. The delay in intimation was therefore not treated as fatal.

Conclusion: The delayed intimation did not bar relief for the consignment covered by Gate Pass No. 129.

Final Conclusion: The benefit of Rule 173L was extended to all three consignments, the assessee's appeal succeeded, and the departmental appeal failed.

Ratio Decidendi: Under Rule 173L, refund is available when goods are returned to the factory for reprocessing even if they were originally rejected by the consignee, and procedural delay in intimation may be excluded where the office was closed and the delay falls to be computed on the underlying statutory principle of timely filing.

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