Returned rejected goods reprocessed without fresh manufacture cannot suffer a second excise levy; Rule 173H relief applied.

Reprocessing of duty-paid goods returned by buyers as rejected goods did not attract a second levy of central excise duty where the goods were only remade, repaired, reconditioned or further processed. The tribunal distinguished precedent on Chapter Note 11 and applied the settled principle that the same goods cannot be taxed twice unless the subsequent activity amounts to fresh manufacture in law. Rule 173H(2)(c) was held available on these facts, supported by the Board circular, so the duty demand was unsustainable and the order dropping the proceedings was upheld.

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Issues: Whether reprocessing of rejected duty-paid goods returned by buyers amounted to manufacture under Chapter Note 11 of Chapter 29, and whether the assessee was entitled to the benefit of Rule 173H(2)(c) of the Central Excise Rules, 1944.

Analysis: The goods in question had already suffered duty at the stage of original manufacture and were returned as rejected goods for remaking, reconditioning and further processing. The dispute was not one of initial manufacture under Chapter Note 11, but of whether duty could again be demanded on the reprocessed goods. The decision in the cited precedent on Chapter Note 11 was distinguished, and the reasoning in the earlier decisions on rejected goods was followed. The settled principle applied was that central excise duty cannot be levied twice on the same goods. The Board circular on the availability of Rule 173H was also relied upon as supporting the assessee's case.

Conclusion: Reprocessing of the returned rejected goods did not amount to manufacture for a second levy of duty, and the assessee was entitled to the benefit of Rule 173H(2)(c); the demand was unsustainable.

Final Conclusion: The appeal failed and the order dropping the proceedings was sustained.

Ratio Decidendi: Where duty-paid goods are returned as rejected goods and are only reprocessed, repaired, remade or reconditioned, no second levy of central excise duty can be imposed unless the subsequent activity amounts to a fresh manufacture in law.

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