TaxTMI 
TaxTMI 
2010 (5) TMI 467
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....inst the appellants. The Commissioner (Appeals) by the impugned order reduced the penalty to the extent of Rs. 1 lac in total, as also approved the reversal of credit to the extent of Rs. 88,271/- while observing that there is no need to recover the same again. 3. The appellants under the miscellaneous application has sought to raise additional ground in the appeal namely that the process undertaken by the appellants as described in the show cause notice as well as in the impugned order, does not amount to manufacture within the meaning of the said expression under the Central Excise Act, 1944 (hereinafter called as "the said Act") and hence the allegation of clandestine removal and imposing the duty on that count is uncalled for. The attempt on the part of the appellants to raise additional ground is objected to by the respondent. 4. The appellants were registered as SSI unit and were having their factory premises at Varanasi and were engaged in manufacture of Super Enameled Copper Wire classifiable under sub-heading 8544.00 of the First Schedule to the Central Excise Tariff Act, 1985. The appellants were availing exemption under Notification No. 1/93 dated 29-2-....
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....ge of having any judicial pronouncement on the said issue till the Apex Court had decided the same in Technoweld Industries case. He further submitted that mere reference to the show cause notice and the impugned order would disclose that the process undertaken by the appellants does not involve any manufacturing process within the meaning of the said expression under the said Act, and therefore, while considering whether the appellants are entitled to raise the additional grounds or not, it is not necessary for the Tribunal to take into account any additional fact as such and same can be decided on the basis of the materials already on record and hence there should be no difficulty in allowing the appellants to raise the said additional ground. 8. On the other hand, learned DR drawing our attention to the decision in Metlex (I) Pvt. Ltd. v. Commissioner of C. Ex. New Delhi reported in 2004 (165) E.L.T. 129 (S.C.) and of the Tribunal in the matter of Bharatbhai B. Gala v. Commissioner of C. Ex. Ahmedabad-I reported in 2007 (214) E.L.T. 419 (Tri. - Ahmd.), submitted that the process as described from the materials on record does disclose that the product which was bought ou....
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....e the final product to meet the required standard. The enameled wire after manufacture was wound up on bobbins and than packed. The packed coils were then accounted for in the RG-1 register. 13. Referring to the said description of the process undertaken by the appellants, learned Advocate for the appellants submitted that the same cannot be said to amount to manufacture as it does not bring out any different product as such. The wire rods merely because they are reduced in gauge, they do not cease to be wire rods. Therefore, applying the law laid down by the Apex Court in Technoweld Industries and Metlex (I) Pvt. Ltd. cases, the entire process cannot be held to be amounting to manufacture within the meaning of the said expression under the said Act. 14. On the other hand, learned DR submitted that the decision of the Apex Court in Technoweld Industries case will have no application to the case in hand as in Technoweld Industries case it was a matter of mere change in gauge of the product without changing the nature of the product as well as that it was a mere drawing by way of cold drawing process, whereas in the case in hand the process as described by the appel....
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....ained a film from start to end and thus there was no new distinct product which had came into existence even after lamination or metallization and therefore it could not have been said that such process had undergone a manufacturing process. In Tega India Limited case, the Apex Court held that mere fixing rubber lining on paper, tanks and other such articles did not amount to manufacture. 18. Learned DR however has referred to Bharatbhai B. Gala case wherein the process of annealing has been described with reference to the meaning thereof as disclosed in "Practical Metallurgy and Materials of Industry" by John E. Neely. The term anneal has been described to mean to heat and then cool "as steel", usually for softening and making the metal less brittle. It also refers to treatments intended to alter the mechanical or physical properties to produce a definite microstrucutre. 19. Perusal of the decision of the Apex Court in Technoweld Industries and Metlex (I) Pvt. Ltd. cases would clearly reveal that merely because some activities are carried out in relation to the product in question that itself would not amount to manufacture within the meaning of the said expressi....
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....that if by a process a different identity comes into existence then it can be said to be manufacture. 23. In Empire Industries Ltd. & Others v. Union of India & Others reported in (1985) 2 SCC 314 = 1985 (20) E.L.T. 179 it was held that the manufacture is complete as soon as by the application of one or more processes, the said material undergoes some change and a new article is brought into existence having a distinct name and character. It was specifically held that the question of whether a particular process is a process of manufacture or not, has to be determined having regard to the facts and circumstances of each case and that the transportation of a product to the extent that it becomes commercially different commodity in respect to attract levy of Excise duty. 24. Bearing in mind the law laid down by the Apex Court on the subject matter, while considering whether the process in question amounts to manufacture or not it would be necessary to see whether the combined process of drawing of wire and lacquering the product with enamel to meet the required standard would amount to manufacture or not and simultaneously it would also be necessary to see as to whe....
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....ication of surface faults. There seems little doubt that processes such as the following will be increasingly used in the drive for higher-quality wire :- (a) pickling in oxidising acid (b) Rough annealing in normal atmosphere (c) Rough annealing in atmosphere which gives accelerated oxidation (d) Shaving of the surface to remove 6% by weight from the rods". 27. Perusal of the orders passed by the adjudicating authority as well as by the Commissioner (Appeals) discloses that the quantification of the duty liability on the allegation of clandestine removal of the goods has been made on the basis of difference in weight in raw material and that of the final product. Undisputedly, the inputs received by the appellants during the period from April 1994 to January 4th January 1995 were 28029.850 Kgs. whereas the weight of the final product was 23743.085 Kgs., the difference being 4286.775 kgs. It is the contention on behalf of the appellants that apart from this calculation, no other material was available for the department to justify the allegation of clandestine remova....