Full Judgment Text
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REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 6144 of 2010
M/s Peacock Industries Ltd. … Appellant
Versus
Union of India and Ors. … Respondents
J U D G M E N T
M. R. Shah, J.
1. Feeling aggrieved and dissatisfied with the impugned
judgment and order dated 06.02.2008 passed by the High
Court of Judicature for Rajasthan at Jodhpur in Tax Reference
Signature Not Verified
Digitally signed by
NIRMALA NEGI
Date: 2022.09.05
17:09:35 IST
Reason:
Civil No.26 of 2004, the dealer – assessee has filed the present
appeal.
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2. The facts leading to the present appeal in a nutshell are
as under:
2.1 That the appellant – assessee is a manufacturer of plastic
moulded furniture. The assessee submitted a claim for refund
of the excise duty, on the basis of its having accepted the
rejected goods, returned to it by its distributors, for which it
had issued credit notes to the parties.
2.2 It was the case on behalf of the assessee that the
assessee is entitled to the refund to the extent of the value of
the returned goods under Section 173L of the Central Excise
Act and the Rules, 1944 thereunder. It was the case on behalf
of the assessee that the value for the purpose of refund shall
be considered after considering the market value of goods
returned as secondhand goods. In the alternative, it was the
case on behalf of the assessee that as the returned goods can
be again reused as raw material the value of raw material can
be the value for the purpose of refund. A show cause notice
was issued by the Deputy Commissioner. Ample opportunity
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was given to the assessee on the value of the returned goods.
The assessee produced the invoices of the secondhand goods
but did not lead any evidence on the value of the goods
returned. However, considering the market survey report the
Assessing Officer/Deputy Commissioner valued the returned
goods at Rs.8 to 10 per kg treating the same as scrap.
Thereafter, it was found that the value of the returned goods
was to be less than the amount of duty originally paid at the
time of their clearance from the factory, the assessee shall not
be entitled for the refund considering Section 173L (v).
2.3 The assessee challenged the order passed by the Deputy
Commissioner denying the refund before the learned Tribunal.
The learned Tribunal dismissed the appeal. At the instance of
the assessee the reference was made to the High Court.
Before the High Court it was the case on behalf of the assessee
that the order passed by the Assessing Authority was in
breach of principles of natural justice as the copy of the
market survey report was not furnished to the assessee. It was
also the case on behalf of the assessee that the Department
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wrongly treated the returned goods as scrap and thereby
committed serious error in arriving at the value of the
returned goods at Rs.8 to 10 per kg and thereby denying the
refund to the assessee.
2.4 By the impugned judgment and order the High Court has
rejected the reference by observing that the value determined
by the Department at Rs.8 to 10 per kg was on appreciation of
evidence and after giving opportunity to the assessee and
relying upon the market survey report(s) which was neither
asked by the assessee nor challenged by the assessee and the
determination of the value at Rs.8 to 10 per kg can be said to
be the question on fact and the same is not required to be
interfered with in the reference.
2.5 The High court has also observed in the impugned
judgment and order that even before the Tribunal also, no
submission was made about copy of market survey report
having not been given and/or on the alleged violation of
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principles of natural justice. Thereafter by the impugned
judgment and order the High Court has rejected the Reference.
3. Having heard Shri Puneet Jain with Ms. Christi Jain,
learned counsel appearing on behalf of the appellant and Mr.
N. Venkatraman, learned ASG appearing on behalf of the
Revenue and considering the order passed by the Deputy
Commissioner/Assessing Officer and the findings recorded by
the Deputy Commissioner, we are of the opinion that neither
the Deputy Commissioner nor the Tribunal or even the High
Court have committed any error in rejecting the refund claim
of the assessee. At the outset, it is required to be noted that
after giving an opportunity to the assessee on the value of the
returned goods and considering the material on record
including the market survey report the Department
determined the value of returned goods at Rs.8 to 10 per kg.
No cogent evidence was led by the assessee on the value of the
returned goods. The assessee only produced the invoices with
respect to secondary market. However, it is required to be
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noted that the value of the returned goods depend on the
defects found in the manufactured goods which are returned.
It varies considering the defects. In some returned goods the
defect might be 5% and in some goods the defect might be
80% to 90%. Therefore, the assessee has to lead the evidence
with respect to each consignment of the returned goods, which
the assessee failed to prove in the present case. The
Department heavily relied upon the market survey report and
thereafter determined the value of the returned goods as Scrap
at the rate of Rs.8 to 10 per kg. The assessee participated in
the proceedings before the Deputy Commissioner. The
assessee neither asked for copy of the market survey report
nor asked for any crossexamination on the market survey
report and/or led any cogent evidence on the value of the
returned goods. Such a grievance of nonsupply of market
survey report was even not raised before the learned Tribunal.
Therefore, thereafter it is not open for the assessee to raise the
issue with respect to nonsupply of the market survey report
for the first time before the High Court.
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4. The submission on behalf of the assessee that as the
returned goods can be reusable for the manufacture of the
products and therefore the value of the raw material can be
considered for the purpose of determination of the value for
refund is concerned the same is not supported by any
statutory provision, more particularly Section 173L of the
Central Excise Act and/or even the Central Excise Rules.
Section 173L of the Central Excise Act reads as under:
"173L Refund of duty on goods returned to factory.
(I) The Collector may grant refund of the duty paid on
manufactured excisable goods issued for home
consumption from a factory, which are returned to the
same or any other factory for being remade, refined,
reconditioned or subjected to any other similar
processes in the factory.
Provided that:
XXX XXX XXX
(2) XXX XXX XXX
(3) No refund under subrule (1) shall be paid until the
process mentioned therein have been completed and an
account under subrule 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:
(i) to (iv) XXX XXX XXX
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(v) If the value of the goods at the time of their return to
the factory is, in the opinion of the collector, less than
the amount of duty originally paid upon them at the
time of their clearance from the factory,
Explanation in this clause, "value" means the market
value of the excisable goods and not the exduty value
thereof. "
4.1 Therefore, for the purpose of considering the value for
refund under Section 173L what is required to be considered
is the value of the returned goods. As per explanation to
clause (v) of Section 173L, “value” means the market value of
the excisable goods and not the exduty value thereof.
Therefore, the submission on behalf of the assessee that the
returned goods may be treated as a raw material and therefore
the “value” of the raw material can be considered for the
purpose of “value” while determining the refund under Section
173L cannot be accepted.
5. As the value of the returned goods determined by the
Deputy Commissioner at Rs.8 to 10 per kg is found to be less
than the amount of duty already paid, the appellant is rightly
denied the refund of the excise duty paid. Denial of the refund
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is in consonance of Section 173L (v) of the Central Excise Act.
There are concurrent findings recorded by the adjudicating
authority, the Tribunal and the High Court on the value of the
returned goods which are not required to be interfered with by
this Court in the present proceeding more particularly when
the same was determined by the Deputy
Commissioner/Assessing Authority after giving opportunity to
the assessee.
6. In view of the above and for the reasons stated above, the
present Appeal fails and the same deserves to be dismissed
and is accordingly dismissed.
However, in the facts and circumstances of the case there
shall be no order as to costs.
…………………………………J.
(M. R. SHAH)
…………………………………J.
(KRISHNA MURARI)
New Delhi,
September 5, 2022.
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