2004 (12) TMI 179 - AT - Central Excise

Tribunal Rules Wire Drawing Not Manufacturing; Appellants Exempt from Duty Recovery Under Central Excise Act.

The Tribunal concluded that Section 11D of the Central Excise Act did not apply to the appellants, as they were not manufacturers liable to pay duty. The ... Recovery of excise duty collected u/s 11D from customer alongwith, Interest and penalty - Applicability of Section 11D, to manufacturers drawing wires from wire rods - Process of drawing of wires from wire rods is constitute a manufacturer/producer? - HELD THAT:- Both the Appellants are drawing wire from wire rods, the activity which has been held not amounting to manufacture by the Supreme Court in the case of C.C.E. v. Technoweld Industries [2003 (3) TMI 123 - SUPREME COURT]. It has been held by the Supreme Court that initially the product was wire rod and ultimate product is also wire and 'all that is done is that the gauge of the rod is made thinner and the product is finished little better……… There is no manufacture of a new product.' Thus in view of the judgment of the Supreme Court both the Appellants are not manufacturers and not liable to pay Central Excise duty on wires drawn out of wire rods. The provisions of Section 11D are applicable to only those persons who are liable to pay duty under the Central Excise Act or the Rules made thereunder. Other requirements mentioned in Section 11D is that the persons who have collected an amount in excess of the duty assessed or determined and paid on any excisable goods under the Act or the Rules, from the buyers representing in any manner duty of Excise, are required to pay the said amount to the credit of the Central Government. Both the requirements for attracting the provisions of Section 11D are not satisfied in case of both the Appellants. Thus provisions of Section 11D are not attracted in the present matters. Accordingly both the appeals are allowed to this extent. Issues involved: Interpretation of Section 11D of the Central Excise Act regarding applicability to manufacturers drawing wires from wire rods.Summary:In the case involving M/s. Bajrang Wires Products (India) Pvt. Ltd. and M/s. Shree Krishna Industries, the issue revolved around the applicability of Section 11D of the Central Excise Act. Both appellants manufactured wires from wire rods falling under Chapter 72 of the Schedule to the Central Excise Tariff Act and availed Cenvat credit of duty paid on wire rods. Show cause notices were issued to disallow the Cenvat credit and recover Central Excise duty under Section 11D. The Commissioners disallowed Modvat Credit and ordered recovery of duty collected from customers. The appellants argued that as their activity did not amount to manufacture, they were not liable to pay duty under the Act, hence Section 11D did not apply.The advocates for the appellants contended that Section 11D applies only to those liable to pay duty under the Act, which the appellants were not, as per the Supreme Court's ruling that drawing wires from wire rods does not constitute manufacture. They further argued that since no duty was payable by them, the provision of collecting any amount in excess of duty assessed did not apply. The advocates also highlighted that an amendment to Section 11D made it applicable only to those liable to pay duty, excluding the appellants from its scope.After considering the submissions, the Tribunal noted that the Supreme Court had ruled the appellants were not manufacturers as the process did not result in a new product. As the appellants were not liable to pay duty under the Act, the requirements of Section 11D were not met. The Tribunal referenced a previous case and statutory amendments to support its decision that Section 11D did not apply to registered dealers like the appellants. Consequently, the Tribunal allowed both appeals, stating that Section 11D was not applicable in these cases.