Resistance Alloys (i) Ltd. Vs. Collector of Central Ex. - Court Judgment

Excerpt:
1. this is an appeal filed against the order of collector (appeals), allahabad no. 63/94, dated 4-7-1994.2. ld. counsel stated that the appellants had imported stainless steel electric resistance wires for the purpose of re-drawing and re-processing the same into those of lesser dimensions. the imported wire was classified under heading 72.23 of the customs tariff as per the relevant copy of the bill of entry produced by them; and the bill of entry description is 'electric resistance wire; electric resistance alloy (ferroys based) annealed and pickled in coil for redrawing and reprocessing and the details of chemical composition have been shown therein. the relevant invoice also states the same.3. these imported goods were used for redrawing and reprocessing the electric resistance wires of different grades/types and sizes. while filing the classification list before the central excise authorities they had asserted that the process of cold drawing to which the imported material was subjected in order to draw wires of different dimensions did not amount to a process of manufacture, and hence, no central excise duty was required to be paid.4. the ac had however, rejected their contention and so did the collector (appeals) on the ground that the imported material was subjected to a number of processes including pickling and annealing etc. and this results into an article having different character, name or use but the department had not adduced any evidence in support of its contention.5. it was their submission that the imported item was known as electrical resistance wire and was classified as such and as a result of cold drawing it remained electrical resistance wire i.e. an article of same name, character and use except to the extent that its dimensions changed. the dimensions of the originally imported wire were in the range of 4-6 mm and these were reduced to 0.102 mm to 1.0 mm.6. it was also their submission that pickling, annealing etc. to which they were subjected in their factory were processes which were an integral part of the process of cold rolling as the material had to be prepared for drawing. in this connection, they will draw attention to the relevant extracts from a book called materials and processes in manufacturing by e. paul degarmo, j temple black and ronald a. kohser 7th edition.7. in fact the material which they had imported was also pickled and annealed, but it had to be further prepared for actual cold drawing proper. in this connection they would in particular draw attention to page 471 regarding wire drawing.8. it was their contention that even in the central excise tariff, the stainless steel wire was classifiable under 72.23.9. with reference to this context, he would like to draw attention to a number of orders and judgments to show that it is already a covered issue and in this connection, he would in particular draw attention to the order of tribunal in the case of jyoti engg. corpn. reported in 1989 (42) e.l.t. 100 in which the case of krishna wire industries, jaipur was distinguished and the members had observed inter alia that the facts of that case indicated that the wires are drawn to thickness of 3 mm to 5 mm from wires of 6 mm to 8 mm. hence, they would come in the ambit of the explanation 'wire' and the product would also be described only as wire.10. in other words, drawing wire of lesser gauge from wire of higher gauge did not amount to manufacture, hence, the product is not liable to any duty.11. this order relates to the period when tariff item 26aa(la) was in existence, but the basic principle and the ratio remains the same and is applicable to the present case. this ratio was also followed in the case of sree venkata durga aluminising works reported in 1990 (50) e.l.t. 294. further the appeal to the supreme court against the order of tribunal in the case of jyoti engg. was dismissed observing that in view of the facts involved in this case, it is not necessary to interfere with the order of the tribunal as reported in 1990 (48) e.l.t. a24.12. he would also like to draw attention to the judgment of supreme court in the case of steel strips limited reported in 1995 (77) e.l.t.248. it was also their contention that process, however, elaborate it might otherwise be, would not amount to 'manufacture' unless at the end of it a commercially new and different article emerges as held by the supreme court in the case of parle products pvt. ltd. reported in 1994 (74) e.l.t. 492. there are also other cases cited by him. they would also go to show that no process of manufacture was involved. it was also their submission that while they had produced the material to show that the process did not amount to manufacture, the department has not produced anything to the contrary to show that the process amounted to manufacture and a new commodity emerged as a result of application thereof.13. ld. dr drew attention to the order-in-original and order-in-appeal and reiterated the department's view as contained in the cross objection filed by them.14. he emphasised in particular that as a result of cold drawing of the wire, the wire of thinner dimension emerged and this changed the degree of resistance which it could offer to the passage of electricity, and therefore affected its use. however, in response to bench querries he had no other technical or commercial material to show in support of department's contention that a new commodity having different character, name or use had emerged.15. we have considered the above submissions. we observed that it is evident from the bills of entry and the invoice produced before us that what was imported by the appellant was stainless steel electrical resistance wire of indicated dimensions. from the copy of the classification list read with the covering letter, the submissions of the ld. counsel regarding the processes involved, and the technical literature filed before us, it is evident that pickling and annealing etc. are processes preparatory to cold drawing proper, and a part of the cold drawing process as a whole. that a new commodity does not emerge after application of these processes, is apparent as even after cold drawing the item remains a stainless steel electrical resistance wire although of a thinner dimension. in view of this factual position, in our opinion the issue is squarely covered by the tribunal's order in the case of jyoti engg. corpn. cited by the ld. counsel. since the appeal against this decision has already been dismissed by the supreme court and the ratio thereof, in our opinion, was still valid, therefore, it is not necessary on our part to refer to other case law.following the ratio of jyoti engg. corpn. we hold that the item was no excisable, and therefore, not, chargeable to duty. the appeal is, therefore, accepted.

Judgment:
1. This is an appeal filed against the order of Collector (Appeals), Allahabad No. 63/94, dated 4-7-1994.

2. Ld. Counsel stated that the appellants had imported stainless steel electric resistance wires for the purpose of re-drawing and re-processing the same into those of lesser dimensions. The imported wire was classified under Heading 72.23 of the Customs Tariff as per the relevant copy of the bill of entry produced by them; And the bill of entry description is 'Electric Resistance Wire; Electric Resistance Alloy (Ferroys based) annealed and pickled in coil for redrawing and reprocessing and the details of chemical composition have been shown therein. The relevant invoice also states the same.

3. These imported goods were used for redrawing and reprocessing the electric resistance wires of different grades/types and sizes. While filing the classification list before the Central Excise authorities they had asserted that the process of cold drawing to which the imported material was subjected in order to draw wires of different dimensions did not amount to a process of manufacture, and hence, no Central Excise duty was required to be paid.

4. The AC had however, rejected their contention and so did the Collector (Appeals) on the ground that the imported material was subjected to a number of processes including pickling and annealing etc. and this results into an article having different character, name or use but the department had not adduced any evidence in support of its contention.

5. It was their submission that the imported item was known as electrical resistance wire and was classified as such and as a result of cold drawing it remained electrical resistance wire i.e. an article of same name, character and use except to the extent that its dimensions changed. The dimensions of the originally imported wire were in the range of 4-6 mm and these were reduced to 0.102 mm to 1.0 mm.

6. It was also their submission that pickling, annealing etc. to which they were subjected in their factory were processes which were an integral part of the process of cold rolling as the material had to be prepared for drawing. In this connection, they will draw attention to the relevant extracts from a book called Materials and Processes in Manufacturing by E. Paul DeGarmo, J Temple Black and Ronald A. Kohser 7th Edition.

7. In fact the material which they had imported was also pickled and annealed, but it had to be further prepared for actual cold drawing proper. In this connection they would in particular draw attention to page 471 regarding Wire Drawing.

8. It was their contention that even in the Central Excise Tariff, the stainless steel wire was classifiable under 72.23.

9. With reference to this context, he would like to draw attention to a number of orders and judgments to show that it is already a covered issue and in this connection, he would in particular draw attention to the order of Tribunal in the case of Jyoti Engg. Corpn. reported in 1989 (42) E.L.T. 100 in which the case of Krishna Wire Industries, Jaipur was distinguished and the Members had observed inter alia that the facts of that case indicated that the wires are drawn to thickness of 3 mm to 5 mm from wires of 6 mm to 8 mm. Hence, they would come in the ambit of the explanation 'wire' and the product would also be described only as wire.

10. In other words, drawing wire of lesser gauge from wire of higher gauge did not amount to manufacture, hence, the product is not liable to any duty.

11. This order relates to the period when Tariff Item 26AA(la) was in existence, but the basic principle and the ratio remains the same and is applicable to the present case. This ratio was also followed in the case of Sree Venkata Durga Aluminising Works reported in 1990 (50) E.L.T. 294. Further the appeal to the Supreme Court against the order of Tribunal in the case of Jyoti Engg. was dismissed observing that in view of the facts involved in this case, it is not necessary to interfere with the order of the Tribunal as reported in 1990 (48) E.L.T. A24.

12. He would also like to draw attention to the judgment of Supreme Court in the case of Steel Strips Limited reported in 1995 (77) E.L.T.248. It was also their contention that process, however, elaborate it might otherwise be, would not amount to 'manufacture' unless at the end of it a commercially new and different article emerges as held by the Supreme Court in the case of Parle Products Pvt. Ltd. reported in 1994 (74) E.L.T. 492. There are also other cases cited by him. They would also go to show that no process of manufacture was involved. It was also their submission that while they had produced the material to show that the process did not amount to manufacture, the department has not produced anything to the contrary to show that the process amounted to manufacture and a new commodity emerged as a result of application thereof.

13. Ld. DR drew attention to the order-in-original and order-in-appeal and reiterated the department's view as contained in the Cross Objection filed by them.

14. He emphasised in particular that as a result of cold drawing of the wire, the wire of thinner dimension emerged and this changed the degree of resistance which it could offer to the passage of electricity, and therefore affected its use. However, in response to bench querries he had no other technical or commercial material to show in support of department's contention that a new commodity having different character, name or use had emerged.

15. We have considered the above submissions. We observed that it is evident from the bills of entry and the invoice produced before us that what was imported by the appellant was stainless steel electrical resistance wire of indicated dimensions. From the copy of the classification list read with the covering letter, the submissions of the Ld. counsel regarding the processes involved, and the technical literature filed before us, it is evident that pickling and annealing etc. are processes preparatory to cold drawing proper, and a part of the cold drawing process as a whole. That a new commodity does not emerge after application of these processes, is apparent as even after cold drawing the item remains a stainless steel electrical resistance wire although of a thinner dimension. In view of this factual position, in our opinion the issue is squarely covered by the Tribunal's order in the case of Jyoti Engg. Corpn. cited by the Ld. Counsel. Since the appeal against this decision has already been dismissed by the Supreme Court and the ratio thereof, in our opinion, was still valid, therefore, it is not necessary on our part to refer to other case law.

Following the ratio of Jyoti Engg. Corpn. we hold that the item was no excisable, and therefore, not, chargeable to duty. The appeal is, therefore, accepted.