Refund under Rule 173L cannot be denied for lack of correlation when statutory verification of returned goods was not done.

Refund under Rule 173L could not be denied merely for want of correlation when the assessee had filed the D-3 declaration and supporting records and the Department failed to carry out the required physical verification of the returned goods. The verification procedure was intended to establish identity between the returned and re-cleared goods, and departmental omission could not defeat the substantive refund right under Rule 173L read with Section 11B of the Central Excise Act. The rejection on that ground was therefore unsustainable, and the refund claim was treated as admissible.

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Issues: Whether refund of duty was admissible under Rule 173L when the assessee had filed the D-3 declaration and supporting documents, but the Department failed to carry out the required physical verification of the returned goods and later rejected the claim for want of correlation.

Analysis: The assessee had intimated the Department through D-3 declaration that the returned machine was received for remaking, reconditioning or repair under Rule 173L and had produced the relevant clearance and return documents. The record showed that no Central Excise officer undertook the physical verification contemplated by the rule, although such verification was intended to establish the identity and correlation of the returned and subsequently cleared goods. The rejection of refund solely on the ground of lack of correlation could not be sustained when the Department itself failed to perform the statutory verification. The entitlement to refund under the rule, read with Section 11B of the Central Excise Act, was treated as a substantive right that could not be defeated by departmental omission.

Conclusion: The refund claim was admissible, and the rejection by the lower authorities was unsustainable; the assessee succeeded.

Final Conclusion: The appeal was allowed and refund of the duty amount was directed to be granted.

Ratio Decidendi: Where the statutory authority fails to conduct the verification required by the refund procedure, it cannot deny refund merely for want of correlation later sought to be inferred from records alone.

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