1987 (10) TMI 255 - AT - Central Excise

Classification of wires from wire rods; no duty on wire drawing; penalty set aside

JYOTI ENGG. CORPN. Versus COLLECTOR OF C. EX.

The Tribunal held that wires drawn from wire rods of varying thicknesses remained classified as wires under section 26AA, with a cross-sectional dimension ... Manufacture Issues Involved: Classification of excisable goods u/s 26AA, liability for duty on wire drawing operations, applicability of Notification 75/67-CE, interpretation of term 'wire'.Classification of Goods: The appellants operated a factory conducting wire-drawing operations, transforming wire rod into wire of lesser diameter. The department demanded duty asserting wire drawing constituted manufacture under T.I. 26AA(i-a), imposing a penalty subsequently.Liability for Duty: Despite confirmation of duty on appeal, the penalty was set aside. The appellants argued that since both wire rods and drawn wires fall under 'wires', they should be exempt from duty, citing a similar firm's benefit under Notification 75/67-CE.Interpretation of Term 'Wire': The department contended that wire rods and drawn wires are distinct, relying on precedents like M/s. Krishna Wires Industries and M/s. Guardian Plastic Coal Ltd., emphasizing that duty applies even if products fall under the same sub-items. The issue of whether drawing wires from wire-rods attracts duty was debated, with reference to the definition of 'wire' under 26AA.Judgment: The Tribunal analyzed the definition of 'wire' as per 26AA, defining it as products with a cross-sectional dimension not exceeding 13 mm. Considering wires drawn from rods of 6 mm to 8 mm thickness to 3 mm to 5 mm thickness, the Tribunal concluded that the products remained wires, not a distinct commercial product. The impugned order was deemed unsustainable, and the appeal was allowed, emphasizing the absence of manufacturing activity in the wire-drawing process.