Value Of Returned Goods Is To Be Considered For Determining Value For Refund Under Section 173­L Central Excise Act: Supreme Court

The Supreme Court observed that the value of the returned goods is to be considered for the purpose of determining the value for refund under Section 173­L of the Central Excise Act.

The bench comprising Justices MR Shah and Krishna Murari rejected the contention 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.

In this case, 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. Assessing Officer/Deputy Commissioner valued the returned goods at Rs.8 to 10 per kg treating the same as scrap. 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). This order was upheld by the Tribunal and later by the High Court.

Advocate Puneet Jain with Advocate Christi Jain, who appeared for the appellants contended 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.

Rejecting this contention, the bench observed:

"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."

Dismissing the appeal, the bench observed that denial of the refund is in consonance of Section 173­L (v) of the Central Excise Act.

Case details

Peacock Industries Ltd. vs Union of India | 2022 LiveLaw (SC) 740 | CA 6144 of 2010 | 5 September 2022 | Justices MR Shah and Krishna Murari

Headnotes

Central Excise Act, 1944 ; Section 173­L - 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 - "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. (Para 5)

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