1998 (9) TMI 252 - AT - Central Excise

Supreme Court Upholds Decision on Central Excise Rule 173H Eligibility for Remaking Copper Rods

COMMISSIONER OF C. EX. & CUSTOMS, PUNE Versus STERLITE INDUSTRIES (I) LTD.

COMMISSIONER OF C. EX. & CUSTOMS, PUNE Versus STERLITE INDUSTRIES (I) LTD. - 1999 (107) E.L.T. 73 (Tribunal) Issues:1. Whether the process of remaking copper rods amounts to manufacture under Rule 173H of Central Excise Rules.2. Applicability of previous Tribunal decisions and Government instructions.3. Interpretation of Supreme Court judgments regarding the binding nature of departmental circulars.Analysis:1. The appeal involved a dispute regarding the process of remaking copper rods by the respondent after receiving rejected rods from customers. The Collector of Central Excise contended that the remaking process amounted to manufacture as rejected goods were mixed with fresh raw materials and new rods were manufactured. The Assistant Commissioner confirmed the demand and imposed a penalty. However, the Commissioner (Appeals) held that the defects in the rods could only be rectified by melting and not otherwise, concluding that the respondent did not bring into existence any new product. The appeal was allowed based on the Tribunal decision in another case and a Collectorate Trade Notice, affirming the eligibility of the respondent for the facility under Rule 173H.2. The Departmental Representative argued that the Collector (Appeals) erred in considering the respondent eligible for the facility under Rule 173H, as the process undertaken amounted to manufacture of new rods. The DR also highlighted that the Tribunal decision relied upon was challenged before the Allahabad High Court and cited a previous Tribunal decision regarding remelting and remaking of pistons. On the other hand, the respondent's counsel distinguished the previous decisions and relied on a different Tribunal decision and Government instructions under Rule 173H, emphasizing that the process of remelting and remanufacturing of copper rods aligned with the rule's provisions.3. The learned Counsel for the respondent cited Supreme Court judgments to support the binding nature of departmental circulars on subordinate authorities, emphasizing that the circulars issued under Rule 173H were crucial in determining the eligibility of the respondent for the facility. The Tribunal, in its decision, recognized the necessity of remaking rejected goods and reiterated that the process did not result in the creation of a new product, aligning with the Trade Notice provisions and previous Tribunal decisions. The Collector (Appeals) was upheld in his decision, emphasizing that the remade copper rods were cleared in the same form as received and that the Tribunal decision under challenge did not prevent it from being a precedent unless stayed by the High Court.In conclusion, the judgment upheld the decision of the Collector (Appeals) and rejected the appeal, affirming the eligibility of the respondent for the facility under Rule 173H of the Central Excise Rules for remaking copper rods received back for rectification.