Market value for returned goods must be proved by reliable evidence; storage at buyers' premises may still qualify under refund rules.

Refund under Rule 97 depended on the Collector being satisfied, on tangible and acceptable material, that returned goods had a market value not less than the duty originally paid. In the cigarettes matter, credit-note reimbursement and audit-based valuation were treated as unreliable substitutes for actual market evidence, so the market-value condition failed. The rule was also construed to allow deterioration at buyers' premises to count as storage, provided the goods remained identifiable, intact, and returned within time. That reading did not alter the result, because the value requirement was still not met.

---

---

Issues: (i) whether the value of the returned cigarettes at the time of re-entry satisfied the market-value condition under Rule 97(1)(vi); and (ii) whether deterioration occurring at the buyers' premises and the return of the goods for reprocessing satisfied Rule 97(1)(ix).

Issue (i): whether the value of the returned cigarettes at the time of re-entry satisfied the market-value condition under Rule 97(1)(vi).

Analysis: Rule 97(1)(vi) required the Collector to be satisfied that the value of the returned goods was not less than the duty originally paid, and the explanation treated value as market value. The basis furnished by the appellants, including the departmental audit formula and credit-note reimbursement, was not treated as a reliable or acceptable measure of market value. The returned cigarettes were damaged and no tangible market quotations or comparable sale data were produced to show that the goods, as returned, would fetch a price at least equal to the duty paid.

Conclusion: The condition under Rule 97(1)(vi) was not satisfied, and this issue was decided against the assessee.

Issue (ii): whether deterioration occurring at the buyers' premises and the return of the goods for reprocessing satisfied Rule 97(1)(ix).

Analysis: Rule 97(1)(ix) required proof to the Collector's satisfaction that the defect or deterioration resulted from defective manufacture, storage, or transit accident, and that the goods had not been used except for trial. The term "storage" was construed broadly enough to include storage at the buyers' premises, provided the returned goods were identifiable, intact, and returned within time. On that footing, the clause was not rejected merely because deterioration occurred after clearance from the factory.

Conclusion: Rule 97(1)(ix) was held to be capable of covering storage at buyers' premises, subject to identity and time requirements, but this did not assist the assessee because the market-value condition still failed.

Final Conclusion: The refund claims could not succeed because the appellants failed to establish a satisfactory market value exceeding the duty paid, even though the storage condition was interpreted in their favour.

Ratio Decidendi: Refund under Rule 97 depended on the Collector's satisfaction, on the basis of tangible and acceptable material, that the returned goods had a market value not less than the duty paid and complied with the relevant return and identity conditions.

---