2001 (1) TMI 146 - AT - Central Excise

Appeal rejected on refund claim for goods, found not resaleable. Market survey supports lower value.

The Tribunal dismissed the appeal against the rejection of a refund claim under Rule 173L by the Commissioner (Appeals). The dispute centered on whether ... Refund under Rule 173L - value of returned goods vis-a-vis excise duty paid - market survey as evidence of market value - re-saleability of returned goods (seconds) versus scrapRefund under Rule 173L - value of returned goods vis-a-vis excise duty paid - market survey as evidence of market value - re-saleability of returned goods (seconds) versus scrap - Whether the appellants were entitled to refund under Rule 173L in respect of goods returned as defective, when the value of the returned goods was found to be less than the excise duty originally paid. - HELD THAT: - The Tribunal upheld the factual finding that the goods returned to the appellants were plastic scrap rather than resaleable seconds. A market enquiry conducted at the request of the appellants established that the prevailing market rate for the broken/defective material was approximately Rs. 8-10 per kg, which was held to be less than the excise duty paid at clearance. The Tribunal distinguished the authorities relied upon by the appellants on factual grounds: in those cases there was no evidence that the returned goods' value was below the duty or the returned goods were intact and not scrap. Given the specific market survey evidence and the finding of fact on resaleability, the appeal court found no flaw in the adjudicating authority's rejection of the refund claim under Rule 173L.The finding that the returned goods were scrap with market value below the duty paid is maintained and the refund claim under Rule 173L is rejected.Final Conclusion: The appeal is dismissed; the rejection of the refund claim under Rule 173L was upheld on the factual finding, supported by a market survey, that the returned goods were scrap whose market value was less than the excise duty originally paid. Issues:Refund claim rejection based on value of returned goods compared to excise duty paid at clearance.Analysis:The appeal was filed against the rejection of a refund claim under Rule 173L by the Commissioner (Appeals) on the grounds that the value of the returned defective goods was less than the excise duty paid at the time of clearance. The appellants, engaged in manufacturing plastic moulded furniture, received defective goods, remade them, and cleared them again on payment of duty. The revenue contended that the returned goods were essentially plastic scrap valued at around Rs. 8 per kg, less than the duty paid. The appellants argued that the goods were seconds furniture capable of resale at a higher price, citing lack of evidence from the revenue to support their claim. They referenced Tribunal decisions to support their case.The revenue, on the other hand, maintained that a fresh market survey was conducted at the appellants' request, revealing that the value of broken/defective furniture in the market ranged from Rs. 8 to Rs. 10 per kg. The adjudicating authority concluded that the value of the returned goods fell within this range, justifying the rejection of the refund claim. Both sides presented their arguments, with the appellants emphasizing the resale value of the goods and the revenue relying on the market survey results to establish the lower value of the returned goods compared to the duty paid.The core issue revolved around whether the returned goods were defective furniture capable of resale at a higher price, as claimed by the appellants, or mere plastic scrap, as asserted by the revenue. The Tribunal noted that unlike the cases cited by the appellants, where no evidence existed to prove the value of the returned goods was less than the duty paid, in the present case, a market survey confirmed the lower value. Drawing a distinction from previous decisions where defective goods were received in a re-usable condition, the Tribunal upheld the rejection of the refund claim based on the specific finding that the appellants had received plastic scrap, not seconds furniture. Consequently, the appeal was dismissed, finding no fault in the order-in-appeal.