2016 (10) TMI 1162 - AT - Central Excise

Tribunal rules galvanization of Black Wire not manufacturing; Circulars & rules key in excisability determination

The Tribunal ruled that subjecting duty paid Black Wire to galvanization and clearance does not amount to manufacture. They found the show cause notice ... Manufacture - whether the appellant procuring duty paid Black Wire and subjecting it to process of galvanization & clear the same, does it amount to manufacture? - Held that: - prior to 1-3-2005, both plated or coated wire with zinc and un-plated wire were listed in Heading 7217 and subsequent to March 1, 2005 under the 8 digit Tariff, Black wire was listed under Heading 7217 10 10 and G.I. Wire under Heading 7217 20 10 - the process of galvanization simplicitor does not amount to manufacture and accordingly the whole SCN is misconceived, demanding Central Excise duty from the appellant - appeal allowed - decided in favor of appellant. Issues:- Whether subjecting duty paid Black Wire to galvanization and clearance amounts to manufacture.Analysis:The appellant, a manufacturer of G.I. Wire, Drawn G.I. Wire, etc., appealed against an Order-in-Original passed by the Commissioner of Central Excise, Ghaziabad. The primary issue in this appeal was whether subjecting duty paid Black Wire to the process of galvanization and clearance constitutes manufacture. The appellant procured duty paid Drawn Black Wire/Wire rods, took Cenvat credit on them, and subjected them to various processes, including galvanization. The Revenue contended that galvanization of black wire amounts to manufacture, directing the appellant to pay differential Excise duty. The appellant argued that galvanization does not amount to manufacture, citing a circular to support their stance. The Revenue issued a show cause notice proposing recovery of Cenvat credit and penalty due to alleged short reversal of duty. The appellant contested the notice, but the demand was confirmed for both periods, leading to an appeal before the Tribunal.The appellant's counsel argued that galvanization alone does not amount to manufacture, emphasizing the absence of any averment in the show cause notice to that effect. They relied on judicial precedents to support their position, highlighting that a separate tariff entry does not automatically make galvanization dutiable. The counsel also pointed out that the show cause notice disregarded a circular stating that galvanization of black wire does not constitute manufacture. The Tribunal considered the historical tariff classifications and held that galvanization alone does not amount to manufacture. They found the show cause notice to be misconceived and ruled in favor of the appellant, stating that the appellant had correctly paid duty by reversing credit as per the relevant rules. The Tribunal set aside the impugned order, allowing the appeal with any consequential benefits for the appellant.In conclusion, the judgment clarified that subjecting duty paid Black Wire to galvanization and clearance does not amount to manufacture. The Tribunal emphasized the importance of following relevant circulars and rules in determining excisability, ultimately ruling in favor of the appellant and setting aside the demand for Central Excise duty.