1991 (2) TMI 275 - AT - Central Excise

Tribunal Overturns Decision on Excise Rules, Emphasizes Comprehensive Review

MADRAS WIRE FABRICATORS Versus COLLECTOR OF CENTRAL EXCISE

The Tribunal set aside the lower authority's rejection of permission under Rule 57F(2) of the Central Excise Rules, emphasizing a comprehensive review ... MODVAT Credit Issues:Appeal against rejection of permission under Rule 57F(2) of the Central Excise Rules, 1944 for movement of steel wires outside the factory for further processing.Detailed Analysis:The appellant, a S.S.I. Unit manufacturing welded wire fabrications, sought permission under Rule 57F(2) to move steel wires outside the factory for cutting and welding. The authorities rejected the permission, stating that Rule 57F(2) covers only movement of Modvat inputs, not intermediary goods like steel wires. The lower appellate authority considered the wire mesh as finished goods even at the job worker's premises, denying the benefit of Rule 57F(2) for further processing at the appellant's factory. The appellant argued that welding the wire mesh does not result in a final product, and essential processes like end trimming and oil spraying at the appellant's factory complete the manufacture of wire mesh. The Department contended that since the wire mesh is a finished product at the job worker's premises, Rule 57F(2) does not apply.The Tribunal examined Rule 57F(2) which allows manufacturers to remove inputs for further processing or manufacture of intermediate products. The appellant's manufacturing process involves converting steel wire rods into wires, which are sent to a job worker for forming wire mesh returned to the appellant's factory for trimming and painting. The steel wires and wire mesh are separate excisable commodities. The appellant sought Rule 57F(2) facility for dispatching wires to the job worker, claiming the product at the job worker's premises is not a finished excisable product. The Tribunal noted that the lower authority did not consider the total scheme of Rule 57F(2) with Notification 214/86, which exempts goods manufactured at job worker's premises under the MODVAT Scheme. The Tribunal found the lower authority's order inadequate and set it aside, directing a fresh examination considering all aspects and Notification 214/86. The Tribunal emphasized assessing whether the product at the job worker's premises is a marketable commodity subject to Central Excise duty and qualifies as finished excisable goods under Rule 57A and Notification 214/86. The appeal was allowed for remand to the lower appellate authority for a comprehensive review.This judgment highlights the interpretation of Rule 57F(2) in the context of manufacturing processes involving intermediary goods and the application of relevant notifications like 214/86. It underscores the importance of considering the total scheme of rules and notifications while determining eligibility for benefits under the Central Excise Rules. The Tribunal's decision to remand the matter for a fresh examination emphasizes the need for a thorough assessment of all relevant factors and legal provisions in such cases.