RULE 97. Refund of duty on goods returned to factory

(1) The Commissioner 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 process in the factory:

Provided that -

(i) the 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;

(ii) at least 48 hours notice, or in exceptional circumstances beyond the control of the manufacturer, a shorter notice, of the re-entry of excisable goods into the factory is given to the proper officer before the goods are received into the factory:

Provided further that where the proper officer is not on duty at the time of the receipt of the goods into the factory, the manufacturer stores the goods separately and reports full details of the goods to the proper officer as soon as it is possible to do so;

(iii) the goods are presented, before they are taken into stock, to the proper officer for inspection, and if necessary , for taking samples;

(iv) the goods are identified to the satisfaction of the Commissioner;

(v) the majority of the unit or smallest packages, as the case may be, meant for retail sale are intact and unopened, and in the case of opened packages, the goods are identified, to the satisfaction of the Commissioner, on the basis of marking on the individual articles or containers and on other collateral evidence, if any:

Provided that opened packages shall not be admitted in respect of commodities with concessional rates of duty or partial exemption for the small or cottage sector as set forth in 1the Schedule to the Central Excise Tariff Act, 1985 (5 of 1986) or by a notification issued under Rule 8 1 or section 5A of the Act;

(vi) the value of the goods at the time of their return to the factory is in the opinion of the Commissioner not 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 ex-duty value thereof.

(vii) the amount of refund payable on the goods is not less than rupees fifty;

(viia) the amount of refund payable shall in no case be in excess of the duty payable on such goods after being re-made, refined, reconditioned or subjected to any other similar process in the factory;

(viii) a detailed account of the returned goods, and the processes to which they are subjected after their return to the factory ,.is kept in the factory records; and

(ix) the manufacturer proves to the satisfaction of the Commissioner that the defect or deterioration resulted from defective manufacture or storage or due to some accident while in transit, and that the goods have not been made use of in any manner except for trial purpose:

Provided further that no refund shall be admissible in respect of the duty paid-

(a) on goods which are disposed of in any manner other than for production of goods of the same class,

(b) on the unmanufactured tobacco from which cigars, cheroots, cigarettes, chewing tobacco, snuff of biris so re- turned to the factory have been produced.

(c) on cigarettes.

(2) No refund under sub-rule (1) shall be paid until the processes mentioned therein have been completed and an account under clause (viii) of the first proviso thereof has been rendered to the satisfaction of the Commissioner within six months of the return of the goods to the factory:

provided that the Central Government may, for reasons to be recorded in writing, relax the provisions of this rule for the purpose of admitting a claim for refund.

(3) The provisions of this rule shall not apply to excisable goods manufactured,-

(i) in a free trade zone and returned to a factory in any other place in India; or

(ii) by a hundred per cent export-oriented undertaking and returned to another factory in any place in India.