Regarding Refund of duty paid on goods cleared for in-house testing.

PJ/CASE LAW/2016-17/3191

Case-COMMISSIONER OF CENTRAL EXCISE, INDORE Versus BRIDGE STONE INDIA PVT. LTD.

Citation-2016 (337) E.L.T. 286 (Tri. - Del)

Brief Facts-Revenue has filed the above appeal challenging the impugned order which partly allowed the refund claim. The respondents are manufacturer of pneumatic tyres and inner tubes. They lodged a refund claim for Rs. 20,39,198/- dated 1-7-2003 for refund of duty paid on goods cleared for in-house testing for the period 1998 onwards. A show cause notice was issued proposing to reject the claim on the ground of being time barred as per Section 11B and also for the reason that respondent was not able to establish with sufficient documents the payment of duty. After adjudication the order dated 14-2-2006 was passed rejecting the claim of refund. The respondents filed appeal before the Commissioner (Appeals) who allowed refund of Rs. 1,97,115/-. Revenue is aggrieved by the grant of refund and is in appeal before us.

Appelants Contention-The learned DR Shri R.K. Mishra contended that the respondents have not established that the tyres were subjected to in-house testing. If the tyres were taken outside the premises of the factory for testing the respondents are liable to pay duty. This argument does not appear to be attractive or convincing. The Commissioner (Appeals) has considered the decision rendered by the CESTAT in J.K. Industries Ltd. v. CCE, Jaipur-II - 2003 (156)E.L.T.437 (Tri.-Del.). In the absence of testing the goods cannot be treated as marketable. The product has to undergo testing so as to be certified that it conforms to the required standard of quality.

Respondents Contention-The respondents are manufacturer of pneumatic tyres and inner tubes. They lodged a refund claim for Rs. 20,39,198/- dated 1-7-2003 for refund of duty paid on goods cleared for in-house testing for the period 1998 onwards.

Reasoning Of Judgement-The Commissioner (Appeals) has observed that in the monthly returns, the respondents have indicated the duty payment made by them on account of testing of tyres and tubes in the test area (of their factory) in each month and from this it can be inferred that no documents have been issued for clearance of such tyres. That therefore, testing has been carried out within the factory premises only. There is no allegation that respondents made clearances without payment of duty for testing. In the impugned order the Commissioner (Appeals) has allowed only the amount which is not barred by limitation. In such score, taking into consideration the facts, evidence and submissions made, the tribunal is of the view that there is no infirmity in the order passed by the Commissioner (Appeals).In the result, tribunal dismiss the appeal filed by the Revenue.

Decision-Appeal dismissed

Comment-Since in the given case monthly returns of the assessee are indicating duty payment on goods removed within factory area for in-house testing of tyres and tubes whereas on such in house testing no excise duty is require to be paid because the excise duty would be paid only on the removal of goods from the factory. And, also there is no allegation that the assessee made clearances without payment of duty for testing. Therefore, the denial of refund is not tenable.

Prepared By-Neelam Jain

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PJ/CASE LAW/2016-17/3191

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