Customs, Excise and Gold Tribunal - Delhi
Cce vs Bansal High Carbon P. Ltd. And Emvee Wire ... on 10 September, 2002
Equivalent citations: 2002(84)ECC507
ORDER G.R. Sharma, Member (T)
1. The Appeals filed by Revenue though arising out of different orders yet the issue being the same were heard together and are being disposed of by this common order. The issue for decision in these two appeals is whether drawing of wire from wire rods amounts to manufacture or not for purpose of levy of duty.
2. The facts of the case briefly stated are that the respondent are engaged in the manufacture of non-alloy steel wires. They surrendered their registration No. stating that drawing of wire from wire rods does not amount to manufacture. Department alleged that drawing of wire from wire rods amounts to manufacture and therefore, duty is payable.
3. Smt. Nita Lai Bhutalia, learned SDR for Revenue submits that learned Commissioner (Appeals) has relied on the Order No.1839/2000-B dated 20.10.2000in the case of Mis Vishvaman Industries v. C.C.E., Delhi-I; that this order of the C.E.G.A.T. has not been accepted by the Department and that an appeal has been filed; that the Tribunal held that the raw material that is wire rods were purchased by the respondents herein in coil form and that this point has not been rebutted by the Department; that this contention of the Tribunal was not correct as the goods were described as wire rods Tata C-12-Max' in the invoices and were classified under Chapter sub-heading No. 7213.90; that the product 'wire rods' when drawn for reducing the gauge, a new product 'wire of iron or non-alloy steel' comes into existence which is covered in a different sub-heading 72.17. It was contended by the learned SDR that a new product is formed and since a new product is formed the process amounts to manufacture for purpose of levy of Central Excise duty.
4. Chapter Note (L) of Chapter 72 defines Bars and Rods, Hot-Rolled in irregularly wound coils where Note 1 (o) of Chapter 72 defines wire; that GPI/invoice issued by S.A.I.L. were received by the respondents herein under sub-heading No. 7213.90 confirms that these are rods which are placed in coil forms for the convenience of handling and transportation.
5. Learned SDR submitted that this Tribunal had relied on the Judgment of Jyoti Engineering Corporation v. CCE stating that this decision has been approved by the Hon'ble Supreme Court. It was submitted by her that this decision of the Tribunal was effective prior to 1985 when the items 'bars, rods and wires' were classified under single Chapter Heading 26AA. It was submitted that when bars, rods and wires are classified separately under different heading the judgment of the Supreme Court is not applicable.
6. Learned SDR further submitted that Central Excise Tariff Act, 1985 was introduced w.e.f. February 1986 and, therefore, the position with regard to classification of excisable goods had changed completely vis-a-vis the old Central Excise Tariff. It was further submitted that Central Excise Chapter on metal was completely aligned with HSN only in 1988 and before that HSN was not fully applicable to the Central Excise Tariff. Learned SDR submitted that dismissal of Appeal/SLP by Supreme Court at admission stage cannot be relied upon as binding precedence as held by the Apex Court in the case of Sun Export Corporation v. CCE, Bombay . It was submitted by her that conversion of grey woollen yarn into dyed woollen yarn amounted to manufacture. The fact that grey yarn and dyed yarn were covered by two tariff entries with different rates of duty itself recognized them as two different goods. In support of this contention the learned SDR relied on the judgment of the Apex Court in the case of Lal Woollen Silk Mills Pvt. Ltd. v. CCE, Chandigarh . Learned SDR referred to the decision of this Tribunal in the case of CCE, Bombay v. Bamcee Ltd. wherein it was held that where after slitting and shearing the resultant product remained classifiable under the same tariff heading the activity would not amount to manufacture but where the tariff sub-heading changed it would amount to manufacture. Learned SDR submitted that in the instant cases after drawing the product wire classifiable under different tariff heading from that wire rods and hence the activity of drawing of wire from wire rods shall tantamount to manufacture. Learned DR also referred to the case of Technoweld Industries v. CCE, Jaipur stating that the Apex Court had admitted the Civil Appeal filed by the Commissioner in this case. Learned DR, therefore, submitted that in view of the above submissions the appeals may be allowed.
7. Shri J.S. Agrawal, learned Counsel, appearing for the respondents herein submitted that there is a catena of judgments of this Tribunal wherein it has been held that drawing of wires is not a process of manufacture. Learned Counsel referred to the judgment of this Tribunal in the case of Jyoti Engineering Corporation v. CCE . He submitted that this decision of the Tribunal has been approved by the Supreme Court inasmuch as the appeal filed against this decision of the Tribunal before the Apex Court was dismissed by the Apex Court.
8. Learned Counsel also referred to the judgment of this Tribunal in the case of CCE, Calcutta v. Indian Pin Manufacturing Co. 1999 (34) RLT 321 wherein this Tribunal held that wire drawn out of thicker wire does not amount to manufacture and that Revenue in its appeal memo have pleaded that Jyoti Engineering Corporation decision does not apply to the facts of the instant cases inasmuch as in that case it was concluded that drawing the wires of lesser gauge from wires of higher gauge does not amount to manufacture because in the instant case the wire has been drawn from wire rods and not from wire gauge. The Tribunal then held--
We do not find this contention of the Revenue to be correct. The fact as narrated in Jyoti Engineering Corporation case clearly mentions that the appellants were engaged in the process of drawing wire from wire rods. As such we do not find any merits in the Department's appeal and following the Tribunal's decision uphold the Order of the Commissioner (Appeals)
9. Learned Counsel for the respondents herein submitted that there are a number of judgments on the issue whether drawing of wire from iron wire or reducing dimension of thick wire into wire of thinner dimension. In support of this contention learned Counsel referred to judgments of this Tribunal in the cases of Jyoti Engineering Corporation v. CCE 1987 (42) ELT 100, Resistance Alloys (I) Ltd. v. CCE , Narasari Processing Industries v. CCE , M/s Indian Pin Mfg. Co. 1999 (34) RLT 321, Mis Mithan Wires 1999(3) RLT 252, M/sPrakash Industries 1999 (35) RLT 803, M/s. Premier Winding & Conductors , Puran Mal Bansal 2002 (122) ELT 690, CCE, Delhi III v. Mahavir Metal Wires 2002 (40) RLT 698, Vigneshwar Steel Ind. v. CCE 2002(50) RLT 428, Vishvaman Industries v. CCE, Delhi 2000 (42) RLT 724. Learned Counsel submits that some of these decisions are on old tariff when there was single entry in the tariff for wire rods and iron wire whereas some decisions are on the new tariff when there are separate chapter headings for wire rods and irons wires. Learned Counsel submits that the case of M/s Vishvaman Industries contained in Final Order No.1839/2000-B dated 20th October-2000 went up to the Apex Court and the Apex Court ruled, "We are informed that connected appeal had been dismissed. Accordingly, this Revenue petition is also dismissed." In this case this Tribunal in the impugned order had held as under
4. We have considered the submissions of both the sides. It has not been rebutted by the Revenue that the raw material received by the Revenue (sic) was in coil form. The process adopted by the appellant is only to draw the wire by decreasing the sectional area. The Tribunal in Indian Pin Mfg, Co., supra has clearly held that the process of drawing of wires from wire rod does not amount to manufacture following the decision in Jyoti Engineering Corporation., supra, which has been confirmed by the Supreme Court as reported in 1990 (48) ELT A 24. There is no substance in the finding in the impugned order that under old Central Excise Tariff both wire and rods were falling under the same Tariff item. The excisability of a product depends on the fact whether the process undertaken by the assessee amounts to manufacture and not on the fact that both fall under the same Tariff Item. The Supreme Court has also confirmed the decision in Jyoti Engineering Corporation's case. We do not agree with learned DR that the matter be remanded, as the impugned order is (sic) a speaking order. Thus following the ratio of decisions relied upon by the learned Advocate for the appellants, we set aside the impugned order and allow the appeal.
Learned Counsel, therefore, submitted that the issue is entirely covered by the decision of the Tribunal in the case of Vishvaman Industries cited above. He submits that this decision is approved by the Apex Court as reported in 2002 (143) ELT A 262. Learned Counsel, therefore, prayed that the impugned order may be upheld and the appeal may be rejected.
10. Arguing the case for Revenue Smt. Nita Lal Butalia, learned SDR submits that Central Excise Tariff got aligned fully with HSN in 1988. She submits that after the alignments of Central Excise Tariff with HSN there are two sub-headings now instead of one prior to 1988. She submits that after 1988 there were separate sub-headings for wire rods and iron wire. Learned SDR submits that the judgment in the case of Jyoti Engineering Corporation has been approved by the Apex Court and that in most of the judgments cited and relied upon by the respondents herein reliance has been placed on this judgment. She submits that this judgment pertains to the period prior to 1988 when there was only one Chapter heading both for wire rods as well as iron wires. She submits that thus with the alignment of Central Excise Tariff with effect from 1988 the position has greatly changed inasmuch as classification of wire rods and iron wire is concerned. Learned DR submits that judgment of the Tribunal in the case of Vishvaman Industries was not so far accepted by the Department; that the invoices, issued by TISCO, Jamshedpur, describing the goods as wire rods Tata C-12-Max' wire were classified under Chapter heading 7213.90; that this sub-heading is for wire rods. Learned DR submits that when wire rods are drawn a new product appears as wire of iron or non-alloy steel which is classifiable under Chapter heading 72.17. It was submitted by the learned DR that since a new product is generated the process, which brings this new product into existence, is a process of manufacture. Learned DR submits that process of manufacture is involved in the present case inasmuch as different commodity with distinct name, character and use emerges; that wire rods are classifiable under Chapter sub-heading 7213.90 whereas wire of iron is covered by Chapter heading 72.17. Since two different chapter headings are involved hence conversion of wire rods into wire amounts to manufacture. Learned DR submits that this view is supported by the decisions of the Hon'ble Supreme Court in the case of Siddarth Tubes v. CC 2000 (88) ECR 762. Learned DR submits, therefore, that since wire rods and wire are two different commodities classifiable under two different sub-headings therefore, the process to bring them into existence is a process of manufacture in terms of Section 2(f) of Central Excise Act, 1944. Learned DR, therefore, prays that appeals may be allowed.
11. We have heard the rival submissions. We have also perused the evidence as also the case law cited by both the sides. We find that there are a number of decisions on the issue. Some decisions were rendered prior to introduction of new Central Excise Tariff, 1986 whereas some decisions are on the new tariff but quite a few decisions are based on decision in the case of Jyoti Engineering Corporation. We find that the issue went up to the Apex Court again in the case of Vishvaman Industries and the Apex Court dismissed the review petition filed by the Commissioner of Central Excise Delhi.
12. The case of Vishvaman Industries pertains to the new Central Excise Tariff. The Tribunal had held that Revenue did not rebut that the raw material received was in coil form and the process adopted by the appellant is only to draw the wire by decreasing the sectional area. The Tribunal held that the excisability of a product depends on the fact whether the process undertaken by the assessee amounts to manufacture and not on the fact that both fall under the same Tariff item. The Supreme Court in this case ruled that the connected matter has been dismissed, accordingly, the review petition is also dismissed.
13. We find that the facts in the present case are identical to that in the case of Vishvaman Industries inasmuch as the raw material received by the assessee was described by the supplier as wire rod in coil and the final product was iron wire. The observation of the Tribunal that, "There is no substance in the finding in the impugned order that under the old Central Excise Tariff both wire and wire rods were falling under the same tariff item." This aspect was dealt with by the Tribunal in the case of Vishvaman Industries, which was approved by the Hon'ble Supreme Court. All these facts were available in the order of the Tribunal in the case of Vishvaman Industries review petition against which was dismissed by the Apex Court.
14.The facts in the present case and those in the case of Vishvaman Industries are identical. Following the ratio of the judgment of this Tribunal in the case of Vishvaman Industries which has been approved by the Apex Court we hold that the process of reducing sectional area in drawing of wire from wire rods does not amount to manufacture. In the circumstances, the appeals filed by Revenue are rejected.