Refund of duty on returned excisable goods barred where evidence showed scrap value below duty paid at clearance.

Refund of duty on returned excisable goods was denied because the returned items were treated on the evidence as plastic furniture scrap rather than usable defective chairs, and that factual finding was not shown to be unsupported. The court also held that refund was barred under Rule 173L(3)(v) where the Commissioner's opinion, based on market surveys and surrounding material, established that the value of the returned goods was less than the duty originally paid at clearance. Later treatment under Rule 16 of the CENVAT Credit Rules, 2002 did not govern the earlier regime. The refund rejection was sustained.

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Issues: (i) Whether the returned goods were scrap or defective moulded plastic chairs, and whether the finding on their character suffered from want of evidence. (ii) Whether the value of the returned goods was proved to be less than the duty originally paid so as to bar refund under Rule 173L(3)(v).

Issue (i): Whether the returned goods were scrap or defective moulded plastic chairs, and whether the finding on their character suffered from want of evidence.

Analysis: The refund claim turned on the nature and condition of the goods received back by the manufacturer. The authorities had examined the process of return, the certificates produced, the market survey material, and the manner in which the goods were reused after grinding and mixing with fresh raw material. On that material, the returned goods were treated as plastic furniture scrap and the assessee failed to show that the finding was unsupported by evidence or vitiated by any legal error.

Conclusion: The finding that the returned goods were plastic furniture scrap was upheld, against the assessee.

Issue (ii): Whether the value of the returned goods was proved to be less than the duty originally paid so as to bar refund under Rule 173L(3)(v).

Analysis: Under Rule 173L(3)(v), refund is not admissible if, in the Commissioner's opinion based on material, the value of the returned goods is less than the duty originally paid. The Court held that such opinion must rest on relevant material and that the departmental market surveys, together with the surrounding evidence, established that the market value of the returned goods was below the duty paid at clearance. The assessee did not successfully displace that material, and later refund treatment under Rule 16 of the CENVAT Credit Rules, 2002 did not govern the earlier regime under Rule 173L.

Conclusion: The condition barring refund under Rule 173L(3)(v) was satisfied, against the assessee.

Final Conclusion: The reference was answered in favour of the Department, and the Tribunal's order rejecting the refund claim was sustained.

Ratio Decidendi: For refund of duty on returned excisable goods, the Commissioner's opinion under Rule 173L(3)(v) must be founded on relevant material, and refund is barred where the market value of the returned goods is found to be less than the duty originally paid at clearance.

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