Judgment:
Jyoti Balasundaram
The brief facts of the case are that the appellants herein are manufacturers of Bright Steel Bars of Alloy and Non-alloy steel. A show-cause notice dated. 5.7.99 was issued to them proposing recovery of duty on shortage of 5776 kgs. and 10,384 kgs. of finished products, noticed during stock verification and also proposing imposition of penalty for non-maintenance of statutory records. The notice was adjudicated by the Deputy Commissioner holding that the charge of shortage had been made out, and confirming a demand of Rs.88,296/- and imposing penalty of Rs.20,000/- under Rule 173Q of the Central Excise Rules, 1944. The lower appellate authority upheld the demand and penalty; hence this appeal.
2. The appellants have now filed their application for raising an additional ground that in the year 2004-05, Note 10 was inserted in Section XV of the Central Excise Tariff Act, 1985 to the effect that in relation to the products of this section, the process of drawing or redrawing a rod, wire or any other similar article, into wire shall amount to manufacture. The submission made on the basis of introduction of the above Note is that since the period in dispute is prior to the introduction of this Note on 9.7.2004, the activity carried out by the appellants did not amount to manufacture during the period prior to 9.7.04. The appellants have also relied upon CBECs Circular No. 720/36/2003-CX dated. 29.5.03 clarifying that drawing of wires from wire rods would not amount to manufacture in the light of the apex courts decision in CCE Vs Technoweld Industries, 2003 (155) ELT 209 (SC). They also rely upon order dated. 27.12.04 of the Additional Commissioner in their own case holding that process undertaken by them does not amount to manufacture.
3. On hearing both sides on the miscellaneous application, we permit the appellants to raise the additional ground that prior to 9.7.04, the activity carried out by them does not amount to manufacture.
4. We note that the apex court has clearly held that drawing of wires from wire rods does not amount to manufacture. However, the difficulty faced by us is that the process of manufacture of the appellants has not been clearly set out by them either in the reply to the show-cause notice or in the appeal before the Commissioner (Appeals) or in the appeal before the Tribunal. Although ld. counsel relies upon the order of the Additional Commissioner holding that the process carried out by them does not amount to manufacture, we find that the process as set out in the Additional Commissioners order is cleaning, lime coating, cutting; reeling and grinding of black coils/black bars into bright bars of various thicknesses and the finding of the Additional Commissioner is that appellants are only converting black coils/bars into bright bars and reducing the thickness as required. In the absence of any process of manufacture furnished by the appellants before the authorities below, or before the Tribunal, interest of justice requires that process carried out by them be examined to determine whether the apex courts judgment would apply in their case. If it is found, on verification, that the appellants are carrying out thickness reduction by drawing wires, then it goes without saying that the judgment of the apex court would be applicable and that the demand cannot be sustained on the appellants as their activity does not amount to manufacture.
5. We set aside the impugned order and remit the case for fresh decision in the light of the above guidelines to the adjudicating authority who shall pass fresh orders in accordance with law after extending reasonable opportunity to the assessee of being heard in their defence.
6. The appeal is thus allowed by way of remand.