Rule 173L refund denied where returned excisable parts were used in goods of a different tariff class.

Refund under Rule 173L of the Central Excise Rules, 1944 is available only when returned excisable goods are re-made, reconditioned or similarly processed and are then used to produce goods of the same class. Here, parts returned under one tariff heading were fitted into a machine falling under a different heading, so the statutory condition of sameness of class was not met. The claim failed on that ground, and the plea that duty had been paid twice on replacement components did not override the express limitation in the rule. The refund was therefore not admissible.

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Issues: (i) Whether refund under Rule 173L of the Central Excise Rules, 1944 was admissible when returned goods falling under one tariff heading were reconditioned and used in the production of goods falling under a different tariff heading. (ii) Whether duty paid twice on components returned for replacement and later fitted in another machine entitled the assessee to refund.

Issue (i): Whether refund under Rule 173L of the Central Excise Rules, 1944 was admissible when returned goods falling under one tariff heading were reconditioned and used in the production of goods falling under a different tariff heading.

Analysis: Rule 173L permits refund only when manufactured excisable goods returned to the factory are re-made, refined, reconditioned, or similarly processed and are disposed of for production of goods of the same class. The returned items here were parts falling under sub-heading 8448.90, while the machine into which they were fitted fell under sub-heading 8447.00. As the returned goods and the resulting machine were not of the same class, the statutory condition was not satisfied.

Conclusion: The refund was not admissible on this ground and the finding was against the assessee.

Issue (ii): Whether duty paid twice on components returned for replacement and later fitted in another machine entitled the assessee to refund.

Analysis: The mere fact that replacement components suffered duty more than once did not override the express limitation in Rule 173L. The provision makes refund contingent on the returned goods being used for production of goods of the same class and being cleared after the prescribed process. Since that requirement was not met, the claim for refund could not succeed.

Conclusion: The assessee was not entitled to refund despite the plea of double duty.

Final Conclusion: The statutory precondition for refund of duty on returned goods was not satisfied because the returned parts were used in producing goods of a different class, so the rejection of the refund claim was upheld.

Ratio Decidendi: Refund under Rule 173L is available only where returned excisable goods, after reconditioning or similar process, are used in producing goods of the same class and are cleared accordingly; use in a different tariff class bars refund.

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