Modvat credit on drawn wire upheld where retrospective rule change treated wire drawing as manufacture for the relevant period.

Modvat credit on aluminium wire and copper wire was held admissible where the suppliers' wire drawing activity was treated as manufacture under the settled legal position and the retrospective amendment to Rule 16 of the Central Excise Rules, 2002. The amendment treated wire drawing units as assessees and applied the manufacture character for the relevant period, so the denial of credit on the basis that drawing wire from rods was not manufacture was unsustainable.

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Issues: Whether Modvat credit on aluminium wire and copper wire was admissible where the wire drawing activity at the suppliers' end was treated as not amounting to manufacture.

Analysis: The dispute concerned the denial of credit on the premise that drawing of wire from rods did not amount to manufacture. The Tribunal noted that the legal position on wire drawing had already been settled by the Supreme Court and subsequent Tribunal decisions, and that the retrospective amendment to Rule 16 of the Central Excise Rules, 2002 treated wire drawing units as assessees and the activity as manufacture for the relevant period. The period in dispute was covered by that amended legal position.

Conclusion: Modvat credit was admissible and the denial of credit was unsustainable. The issue was decided in favour of the assessee.

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