1985 (5) TMI 54 - SC - Central Excise

Properzi rods classified as aluminium wire rods under Entry No. 27(a)(ii) of First Schedule; manufacturing process or use irrelevant

INDIAN ALUMINIUM CABLES LTD. Versus UNION OF INDIA

SC held that Properzi rods are a species of aluminium wire rods falling within Entry No. 27(a)(ii) of the First Schedule to the Central Excises and Salt ... Classification of Properzi Rods - Whether 'Properzi Rods' manufactured and cleared by the appellant, the Indian Aluminium Cables Ltd., fall within Entry No. 27(a)(ii) of the First Schedule to the Central Excises and Salt Act, 1 of 1944 and, if so, under which category of the articles mentioned therein? Held that:- After the remand, the appellant contended once again before the Appellate Collector of Central Excise and Customs, New Delhi, that Properzi Rods are not 'goods' within the meaning of the Central Excise Act since they are neither marketed as such nor are marketable. Commercial parlance assumes importance when goods are marketable. It is therefore not possible to hold that the goods in question are not wire rods. There is prepondering evidence on record to show that they are nothing but a species of wire rods despite the special method of their manufacture and the use to which they are put. We may also add that the statements contained in the affidavits of Jashwantrao Gangadas Mehta and Shamseer Singh Parmar cannot be accepted at their face value. Both of them appear to be dealers in sales and distribution of wire rods. Their affidavits do not show any familiarity with dealings in Properzi Rods. The knowledge claimed by them does not stem from their personal experience but is in the nature of hearsay. The process of manufacture of a product and the end use to which it is put, cannot necessarily be determinative of the classification of that product under a fiscal Schedule like the Central Excise Tariff. What is more important is whether the broad description of the article fits in with the expression used in the Tariff. The aluminium wire rods, whether obtained by the extrusion process, the conventional process or by Properzi process, are still aluminium wire rods. The process of manufacture is bound to undergo transformation with the advancement in science and technology. The name of the end-product may, by reason of new technological processes, change but, the basic nature and quality of the article may still answer the same description. On the basis of the material before us, it is not possible to record a positive finding that Properzi rods and wire rods are treated as distinct items in commercial parlance. Properzi Rod is a wire rod subjected to the properzi process and is used for transmission of high voltage electric current - confirm the judgment of the High Court - appeal dismissed. Issues Involved:1. Classification of Properzi Rods under the Central Excises and Salt Act, 1944.2. Determination of whether Properzi Rods fall under Entry No. 27(a)(ii) or the residuary Entry 68.3. Commercial and technical distinctions between Properzi Rods and wire rods.Issue-wise Detailed Analysis:1. Classification of Properzi Rods under the Central Excises and Salt Act, 1944:The primary issue in these appeals was whether Properzi Rods manufactured by the appellant fall within Entry No. 27(a)(ii) of the First Schedule to the Central Excises and Salt Act, 1944. The Government of India argued that Properzi Rods should be classified under this entry, while the appellant contended that they fall under the residuary Entry 68.2. Determination of whether Properzi Rods fall under Entry No. 27(a)(ii) or the residuary Entry 68:Entry No. 27(a)(ii) reads: 'Aluminium - (a)(ii) wire bars, wire rods and castings, not otherwise specified.' The appellant was directed by the Superintendent of Central Excise to clear Properzi Rods under this entry. The appellant's appeals and revisions were dismissed by various authorities, leading to the current Supreme Court appeals. The appellant argued that Properzi Rods should be classified under the residuary Entry 68, presenting several points to support this claim, including commercial distinctions and manufacturing processes.3. Commercial and technical distinctions between Properzi Rods and wire rods:The appellant presented several arguments to differentiate Properzi Rods from wire rods:1. Commercial Recognition: Properzi Rods are not known as wire rods in the trade.2. Usage: Properzi Rods are used for aluminium conductors and cables, while wire rods are used for nuts, bolts, and rivets.3. Length and Form: Properzi Rods are available in continuous coils, unlike wire rods which are shorter.4. Manufacturing Capacity: Manufacturers of wire rods cannot produce Properzi Rods.5. Specifications: Different specifications by the Indian Standards Institution and Cost Accounting Record rules.The Supreme Court examined expert opinions and affidavits from academics and industry professionals. The affidavits highlighted the differences in manufacturing processes and commercial recognition. However, the Court found that these differences did not preclude Properzi Rods from being classified as wire rods. The Court noted that the appellant itself obtained a licence to manufacture 'aluminium wire rods' and described the goods as such in official documents.The Court also considered the Aluminium Control Order and Circulars from the Cable and Conductors Manufacturers Association, which referred to Properzi Rods as 'Wire Rods.' The Court concluded that the process of manufacture and end-use could not solely determine classification under a fiscal schedule. The broad description of the article as 'wire rods' fit within the expression used in the Tariff.Conclusion:The Supreme Court affirmed that Properzi Rods fall under Entry No. 27(a)(ii) as 'wire rods.' The Court dismissed the appeals, confirming the judgment of the High Court and the order passed by the Government of India. The process of manufacture and end-use were not determinative; instead, the broad description of the article in the Tariff Schedule was crucial. The appeals were dismissed with costs.