1995 (1) TMI 83 - HC - Central Excise

Tribunal rules cutting stainless steel wire not manufacturing under excise law, quashes duty evasion prosecution.

The Central Excise Tribunal overturned the Additional Collector's decision, ruling that the process of straightening and cutting stainless steel wire into ... Prosecution for evasion of payment of duty Issues:1. Quashing of criminal prosecution under Section 9 of the Central Excises and Salt Act, 1944.2. Determination of whether the process of straightening and cutting stainless steel wire into filler wire amounts to manufacture under Section 2(f) of the Act.3. Appeal against the order of the Additional Collector and subsequent decision by the Central Excise Tribunal.4. Prosecution initiated for alleged duty evasion and subsequent quashing of proceedings.Analysis:The petitioners sought to quash the criminal prosecution pending in the Court of Addl. Chief Judicial Magistrate under Section 9 of the Central Excises and Salt Act, 1944. The case arose from the seizure of stainless steel wires, with the contention that converting them into filler wire constituted manufacture, thus attracting excise duty. The Additional Collector had ruled in favor of duty imposition, leading to a penalty on the petitioners. Subsequently, the respondent initiated prosecution alleging duty evasion, prompting an appeal to the Central Excise Tribunal.The Central Excise Tribunal overturned the Additional Collector's decision, emphasizing that the processes of straightening and cutting stainless steel wire did not amount to manufacture under Section 2(f) of the Act. The Tribunal held that no new product emerged from the process, and the stainless steel wire retained its original nature despite being termed as filler wire by the appellants. As a result, no excise duty was chargeable on the filler wire under the relevant tariff item.With the Tribunal's decision setting aside the Additional Collector's order, the foundation for the prosecution alleging duty evasion crumbled. The Court noted that since the order had attained finality and the petitioners were not found to have evaded payment of duty, the prosecution under Section 9 of the Act could not be sustained. Consequently, the Court allowed the application, quashing all proceedings against the petitioners in the Economic Offences Court.In conclusion, the judgment centered on the interpretation of the manufacturing process under the Central Excises and Salt Act, determining that the conversion of stainless steel wire into filler wire did not constitute manufacture for excise duty purposes. The decision by the Central Excise Tribunal played a pivotal role in nullifying the prosecution against the petitioners, highlighting the importance of legal interpretation and due process in matters of taxation and duty imposition.