Returned refractory bricks not scrap where unused and undamaged; scrap-value rule inapplicable, refund denial unsustainable.

Refractory bricks cleared on duty and later returned under Rule 173L could not be treated as scrap where they remained prime bricks, were not used, broken, or otherwise damaged, and were rejected only for lower quality. On those facts, Rule 173L(3)(v) did not apply because there was no proof that the returned goods had lost their character as goods originally cleared or had depreciated to scrap value. Reliance on assumed scrap value and local market rates, without rebutting the assessee's valuation evidence, was insufficient. The denial of refund was therefore unsustainable and the assessee succeeded.

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Issues: Whether refractory bricks returned to the factory under Rule 173L could be treated as scrap so as to deny refund, and whether Rule 173L(3)(v) was attracted on the footing that the returned goods had depreciated to scrap value.

Analysis: The goods cleared on payment of duty were admittedly prime refractory bricks and were returned without being used, broken, or otherwise damaged. Their rejection was only on the ground of lower quality, and no evidence was produced to show that they had undergone any process or use converting them into scrap or grog. The Revenue relied only on an assumption and on local market value of scrap, without controverting the respondent's valuation statement or proving that the returned goods had lost their character as goods originally cleared.

Conclusion: Rule 173L(3)(v) was not attracted and the returned bricks could not be treated as scrap. The denial of refund was unsustainable, and the assessee succeeded.

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