By TIOL News Service

CHENNAI, SEPT 16, 2015 : THE dispute pertains to erstwhile Rule 173L of the Central Excise Rules, 1944. As per the said Rule, the assessee is eligible for refund of duty paid on goods returned for being re-made, refined, reconditioned or subjected to any other similar process in the factory. But, as per the proviso, such goods are returned to the factory within one year of the date of payment of duty or within such further period or periods not exceeding one year, in the aggregate, as the Commissioner may, on sufficient cause being shown, permit in any particular case.

In this case, the goods were received back after more than one year from the date of clearance from the factory and hence the refund was rejected. The rejection order was also upheld by the Tribunal. Hence, the assessee is before the Tribunal.

After hearing both sides, the High Court held:

• There is no dispute on fact that at least within two years, which happens to be the extended period as per proviso (i) of sub-rule (1) of Rule 173L, the appellant has made a claim. As every assessee would like, the appellant is not interested in resolving the conflict between the rules and the statute, but interested only in getting their money back. Therefore, whatever way the department understands, they are liable to refund the money to the appellant.
  
• We are not even going so far as to resolve any apparent conflict between Explanation (B) to Section 11B and proviso (i) to Rule 173L. Under the proviso (i) to Rule 173L, the Commissioner is given the discretion to extend the period of one year stipulated therein by a further period not exceeding one more year. In other words, the Commissioner has the power and discretion under proviso (i) to Rule 173L to entertain an application within a total period of two years. This is a case where the Commissioner should have at least exercised the said discretion in favour of the assessee.
  
• The civil miscellaneous appeal is allowed answering the question of law in favour of the appellant/assessee. The respondents are directed to make a refund within a period of two months from the date of receipt of a copy of this order.

(See 2015-TIOL-2144-HC-MAD-CX)