ORDER
R. Jayaraman, Member (T)
1. Appeal No. E/314/88 Bom is directed against the order of the Collector (Appeals) bearing No R-780/BD-175/87 dated 30-6-1988.
2. Appeal No. E/41/89 Bom is directed against the order of the Collector (Appeals) bearing No. GSM-67/BD-275/88 dt 02-12-1988.
3. Both the cases involve the same issue, namely the rejection of the refund claim in respect of defective goods returned for reprocessing and cleared again on payment of duty after re-processing.
4. Shri Prakash Shah, the Ld. Advocate, on behalf of the appellants, pleaded that in both the cases, the goods were returned being defective and on their arrival D-3 intimations given and taken into the prescribed register and they were also duly reprocessed within the period of six months and the re-processed goods were cleared on payment of duty. He gave the facts in each case as below:
Details Date
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Appeal No. Appeal No.
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314/88 41/89
Goods returned 19-12-85 16-6-86
D-3 Declaration given 20-12-85 16-6-86
Goods taken for processing Dec-Mar 86 July 86
Refund claim filed 12-3-86 15-10-86
Reprocessed goods sent on 7-8-86 31-7-86
payment of duty
After giving the aforesaid position, he argued that in all the cases defective goods received have been taken into the prescribed account and also re-processed and the claims have been filed, as per the provisions of Rule 173L of the Central Excise Rules. The only ground on which the Assistant Collector rejected the refund claim is that the account of re-processing was rendered after the prescribed period of six months as laid down under sub-Rule (3) of Rule 173L. The Collector (Appeals) in the case of appeal No. E/41/89 took totally a different ground, which was not the one on which the claim was rejected by the A.C. The Collector (Appeals) has taken that the gate passes were not originally produced and hence the materials could not be co-related. This was not the ground alleged by the Assistant Collector. Even this ground taken by the Collector (Appeals) was not factually correct, since they have traced out the gate passes and also sent the same to the Supdt. subsequently under their letter dated 24-6-1986. He, therefore, requested for allowing their appeals so that the refund claims can be considered on merits. He also produced the original records to show that the defective materials have been taken into the prescribed account and the reprocessing particulars also showed therein.
5. Shri C.P. Arya, the Ld. SDR, on the other hand, contended that the gate pass numbers indicated is 533 in their letter, whereas in the record, it is mentioned as 553, which is also taken by the Collector (Appeals). He, therefore, felt that the records have not been properly maintained. He also contended that admittedly there is a delay of more than six months in rendering accounts. Hence the authorities are justified in rejecting the refund claims, since the provision of Rule 173L have not been complied with.
6. After hearing both the sides, we find that the only issue to be decided is whether on account of non-furnishing the extracts of the accounts maintained under sub-rule (2) of Rule 173L within a period of six months of the return of the goods to the factory, the refund claim under Rule 173L can be rejected. The provisions of sub-rules (2) and (3) of Rule 173L are reproduced as below:
“(2) The Assessee shall maintain a detailed account of the returned goods and the processes to which they are subjected, after their return to the factory in the proper form.”
“3. No refund under sub-rule (1) shall be paid until the processes mentioned therein, have been completed and an account under sub-rule (2) having been rendered to the satisfaction of the Collector within six months of the return of the goods to the factory. No refund shall be admissible in respect of the duty paid….
From the above, it can be seen that the assessee is required to maintain an account of the returned goods and the process to which they are subject to after their return in the proper form. It appears to us as seen from the original register produced before us that such an account has been maintained, in respect of the two items. Hence the provisions of sub-rule (2) of Rule 173L can be taken to have been complied with. In so far as sub-rule (3) is concerned, what is required to be ensured is that the reprocessing should be completed and the account thereof should be rendered to the concerned authorities within six months from the date of return of the goods to the factory. In this case, reprocessing is found to have taken place within six months and an account is also found to have been maintained to that effect. The only thing is that if they had furnished the extract of the reprocessing register alongwith the refund claim they could be taken to have complied with even this requirement. In this case, so long as the account has been maintained and they are available for inspection and the reprocessing has been done within six months from the date of return of the goods, it has to be taken that substantial provisions of sub-rules (2) and (3) of Rule 173L have been complied with. We are also strengthened in this view by looking into the provision of Section 11B of the CESA. This is the mandatory provision, whereas the procedures prescribed under Rules for grant of refund are not mandatory but they are directory and are procedural nature. As per the provisions of Section 11B in the case of goods returned for being remade, refined, reconditioned or subjected to any other processes, the date of entry into the factory for the purpose is the relevant date and if from this relevant date, the refund claim has been filed within six months, the claim has to be entertained without the time limit being raised against the assessee. In this case, the refund claims have been filed within the period of six months from the date of entry of the goods. When this substantial provision is complied with and also when we observe that the goods have been taken for re-processing within six months stipulated under sub-rule (3) and also the accounts maintained thereof, we see no justification in rejecting the claim on the ground of late submission of the extracts of the accounts. We, therefore, set aside the orders and remand the case back to the Assistant Collector for consideration of the refund claims on merits, expeditiously, in accordance with the law.