2001 (10) TMI 793 - AT - Central Excise

Manufacture - Wires from wire rods -Reference to Larger Bench - Manufacture, drawing of MS wire from wire rods

Summary

Issues Involved:
1. Whether drawing of MS Wires from MS Wire Rods amounts to manufacture.
2. Whether the issue requires referral to a Larger Bench.

Issue-wise Detailed Analysis:

1. Whether drawing of MS Wires from MS Wire Rods amounts to manufacture:

The appellants are engaged in drawing MS Wires from MS Wire Rods, which are classified under different headings in the Central Excise Tariff Act, 1985. Initially, no duty was demanded due to an exemption under Notification 202/88-C.E., but after this notification was rescinded, duty was demanded for the subsequent period.

The appellants argued that their activity does not amount to manufacture, citing several case laws, including *Jyoti Engineering Corporation*, *Resistance Alloys (I) Ltd.*, and *Technoweld Industries*. They contended that drawing wire from higher gauges does not constitute manufacture and that the classification lists were approved, implying the demand could only be prospective. They also claimed that the benefit of Modvat credit was not considered by the lower authorities.

The respondent distinguished the cited case laws, arguing that the facts in those cases were different and not applicable to the present case. They emphasized that the process results in a new product with a distinct name, commercial identity, and use, thus constituting manufacture. They cited several Supreme Court decisions, including *SD Fine Chemicals*, *JG Glass*, and *Laminated Packing*, which support the broader interpretation of manufacture.

The Tribunal, considering the submissions, found that the nature of the process is not as important as the result. The determining factor is whether the process produces something with a new name, identity, and use. The Tribunal concluded that drawing wires from wire rods results in a new commercial entity, thus constituting manufacture.

2. Whether the issue requires referral to a Larger Bench:

One member of the Tribunal, S.S. Sekhon, suggested referring the issue to a Larger Bench due to differing views in previous decisions. He argued that the issue should be resolved by the Larger Bench to determine if drawing MS rods into MS Wires results in new exigible goods subject to duty under the Central Excise Tariff Act, 1985.

However, another member, G.A. Brahma Deva, disagreed with the referral. He noted that the issue had already been covered by several decisions, including *Technoweld Industries v. CCE, Jaipur* and *Vishvaman Industries v. CCE, Delhi*, which held that drawing wires from wire rods does not amount to manufacture. He emphasized that the Supreme Court had upheld this view by dismissing the revenue's appeal. Therefore, he proposed allowing the appeal without referring the issue to a Larger Bench.

The third member, C.N.B. Nair, agreed with G.A. Brahma Deva, stating that the legal position established by the Supreme Court's dismissal of the appeal in *Vishvaman Industries* should be followed. He concluded that there was no need to refer the issue to a Larger Bench and that the appeal should be allowed.

Conclusion:

The Tribunal ultimately decided that drawing MS Wires from MS Wire Rods does not amount to manufacture, following the established legal position upheld by the Supreme Court. The appeal was allowed, and there was no need to refer the issue to a Larger Bench.