Rule 173L refund cannot be denied when returned goods were intimated, reprocessed, and substantially compliant records were maintained.

Refund under Rule 173L cannot be denied where returned duty-paid goods were timely intimated to the Department through D-3 declarations, samples were taken, and the goods were reprocessed after notice. The Department's failure to carry out verification cannot be used to defeat the claim when the assessee has substantially complied with the rule by maintaining an authenticated record of receipt, reprocessing, and subsequent clearance on duty payment. Imperfect record-keeping, in these circumstances, is not enough to reject refund if the core statutory requirements of intimation and account maintenance are met.

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Issues: Whether refund under Rule 173L could be denied for alleged want of verification of returned goods and imperfect maintenance of records when D-3 intimations were filed and the goods were reprocessed after intimation to the Department.

Analysis: The returned goods were admittedly intimated to the Revenue through D-3 declarations within the prescribed time. The Department did not dispute receipt of those intimations and samples were also taken from the returned goods. In these circumstances, the obligation to verify the goods could not be shifted back to the assessee so as to defeat the refund claim on the ground that verification was not undertaken by the Department. The record maintained by the assessee, authenticated by the Revenue, evidenced receipt of the defective goods, reprocessing and subsequent clearance on duty payment. Rule 173L required notice of re-entry and maintenance of account of returned goods and processes, and the assessee had substantially complied with those requirements.

Conclusion: The refund claim could not be rejected on the grounds of lack of verification or improper record-keeping, and the denial of refund was unsustainable.

Ratio Decidendi: Where the assessee has duly intimated return of duty-paid goods, maintained an authenticated account of the goods and their reprocessing, and the Department fails to undertake the verification contemplated by Rule 173L, refund cannot be denied on that basis alone.

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