Judgment:
1. This appeal is directed against the order of the Collector of Customs and Central Excise (Appeals), Madras dated 29-2-1988 confirming the order of the Assistant Collector of Central Excise, Madras VII Division dated 18-8-1987 rejecting the permission sought for by the appellant under Rule 57F(2) of the Central Excise Rules, 1944. The appellant is a S.S.I. Unit manufacturing welded wire fabrications. They filed an application under Rule 57F(2) for movement of steel wires outside the appellant's factory for further processing such as cutting and welding and permission was not granted by the authorities below and aggrieved against the same the appellant has filed this appeal.
2. Shri A.Vijayaraghavan, Ld. Consultant for the appellant submitted that the appellant has filed the necessary declaration under Rule 57G declaring wire rods and wires as Modvat inputs and urged that the wire rods are subjected to the process of wire drawing resulting in thinner wires and the same would be cut into required lengths known as 'line wires' and 'cross wires' by necessary process in wire straightening and cutting machine to make it ready for welding. The appellant being a SSI Unit could not afford to have a welding machinery and, therefore, wanted to send the goods outside the factory for welding and sought permission in this regard in terms of Rule 57F(2). It was urged that the original authority took the view that Rule 57F(2) would cover only movement of Modvat input such as 'partially processed inputs' and not 'intermediary goods' such as steel wires. It was further held that the goods emerging at the job worker's premises happen to be final product in themselves and, therefore, no question of further processing would arise in terms of Rule 57F of the Rules. The Ld. Consultant further submitted that the lower appellate authority has taken the view that the wire mesh emerges as finished goods even at the hands of the job worker and even if it is brought back into the appellant's factory for the purpose of trimming the edges and spraying oil for the purpose of marketing, such process would not amount to manufacture and, therefore, the benefit of Rule 57F(2) cannot be extended to cover such situation.
The Ld. Consultant assailed the above reasonings of the authorities and urged that the view taken by the lower appellate authority is different from the one taken by the original authority. It was further urged that welding of the wire mesh does not bring about a final product and the manufacture of wire mesh would be complete only after it is brought to the appellant's factory for end trimming and oil spraying which are essential processes in the completion of the manufacture of wire mesh.
It was further urged that the Department does not stand to lose in any way by granting permission under Rule 57F(2) and Rule 57F will have to be liberally construed in the factual background of this case.
3. Shri Vedantham, the learned DR, urged that though the issue itself does not have any revenue implications so far as the Department is concerned, inasmuch as the finished product such as wire mesh is at the end of the job worker, Rule 57F(2) has no application.
4. We have carefully considered the submissions made before us. For the purpose of convenience we reproduce Rule 57F(2) which reads as under:- "(2) Notwithstanding anything contained in sub-rule (1), a manufacturer may with the permission of the Collector of Central Excise and subject to such terms and conditions and limitations as he may impose, remove the inputs as such, or after the inputs have been partially processed during the course of manufacture of final products, to a place outside the factory- (a) for the purpose of test, repairs, refining, reconditioning or carrying out any other operation necessary for the manufacture of the final products and return the same to his factory for further use in the manufacture of the final products or remove the same without payment of duty under bond for export, provided that the waste, if any arising in the course of such operations is also returned to the same factory; or (b) for the purpose of manufacture of intermediate products necessary for the manufacture of the final products and return the said intermediate products to his factory for further use in the manufacture of the final products or remove the same without payment of duty under bond for export, provided that the waste, if any, arising in the course of manufacture of such intermediate products is also returned to the said factory: Provided that the said waste need not be returned to the said factory if the appropriate duty of excise leviable thereon has been paid." We observe that the appellant's manufacturing process comprises of conversion of the input material viz. the steel wire rods into wires of required diameter and the said wires are later sent to the job worker's premises for being formed into a wire mesh and the wire mesh returned by the job worker to the appellant's factory is stated to be subjected to the process of trimming and painting. The steel wires obtained from the wire rods after processing thereof are a separate excisable commodity falling under Tariff Heading 7213.90 and the final product i.e. the wire mesh or wire fabrics as described by the appellant also emerges as a separate excisable product. The appellants have sought for the facility under Rule 57F(2) for removal of the wire which emerges as a separate identical excisable commodity from the wire rods for despatch to the job worker's premises for conversion of the same into welded wire fabric or wire mesh. The appellants' plea is that the product emerging at the hands of the job worker is not a finished excisable product and, therefore, in terms of Rule 57F(2) they are eligible for the benefit of the MODVAT credit. As seen from the learned lower authority's order, the benefit of Notification 214/86 under which the goods manufactured at the job worker's premises under the MODVAT Scheme have been exempted from payment of duty has also been considered. The learned Collector (Appeals), however, we find, has given findings only in the context of Rule 57F(2) without taking into consideration the total scheme of things in the context of Rule 57D, Rule 57F(2) read with Notification 214/86. We observe that under Notification 214/86 the scope of the term 'job worker' in the context of Rule 57F(2) has been considered and it was, therefore, incumbent on the part of the learned lower appellate authority to have given findings on the plea of the appellants for facility under Rule 57F(2) after taking into consideration the scope and terms of Notification 214/86. In this context it will also be relevant to go into the aspect of whether the product emerging at the hands of the job worker is a marketable commodity as such and could be considered as goods for the purpose of levy of Central Excise duty and, therefore, as finished excisable goods for the purpose of Rule 57A read with Rule 57F and Notification 214/86. We observe that the learned lower appellate authority has not examined the matter in all its aspects and we, therefore, hold that the learned lower appellate authority's order is not maintainable in law and is, therefore, set aside. We order that the learned lower appellate authority shall examine the matter de novo in the light of what we have stated above after giving an opportunity to the appellants of hearing. The appeal is thus allowed by remand.