Duty-free return of LPG cylinders under Rule 173H cannot be denied on technical non-compliance where duty-paid status is undisputed.

Duty-free clearance of returned LPG cylinders under Rule 173H could not be denied merely because accompanying duty-payment documents were not produced and the cylinders were received beyond the stipulated period, where their duty-paid character was undisputed. The note explains that Rule 173H was aimed at preventing non-duty-paid goods from being cleared as duty-paid goods, and the assessee had filed D-3 declarations and maintained records. It further notes that the Collector's power to relax the conditions supported a flexible application in the same factual setting. In the absence of any allegation or material of clandestine clearance of non-duty-paid stock, the demand was treated as unsustainable.

---

---

Issues: Whether duty-free clearances of returned LPG cylinders under Rule 173H of the Central Excise Rules could be denied for want of accompanying duty payment documents and for receipt beyond the stipulated period, despite the cylinders being duty-paid goods and the Collector having granted relaxation for similar conditions.

Analysis: The duty-paid nature of the cylinders was not disputed and the object of Rule 173H was to prevent non-duty-paid goods from being cleared in the guise of duty-paid goods. The assessee had filed D-3 declarations and maintained records, and the rule itself contemplated relaxation of the conditions by the Collector. In the absence of any allegation or material that the cylinders were clandestinely cleared non-duty-paid stock, and in view of the relaxation subsequently granted in the same factual setting, the conditions could not be rigidly enforced to sustain the demand for the disputed period.

Conclusion: The demand was not sustainable and the appeal was allowed.

---