1983 (8) TMI 277 - AT - Central Excise

Summary

Issues: Classification of sub-merged arc welding wires and CO2 wires under Item 50 of the Central Excise Tariff.

Analysis:
The judgment involves two appeals concerning the classification of sub-merged arc welding wires and CO2 wires under Item 50 of the Central Excise Tariff, which covers "welding electrodes, all sorts." The lower authorities had classified these wires under Item 50, leading to penalties, duty demands, and confiscation of goods against the appellants for manufacturing and clearing the wires without a Central Excise license and payment of duty. The appellants contended that their wires, copper-coated steel wires, were not electrodes as no electric current passed through them during welding. They argued that the lower authorities had erred in basing their findings on the use of the wires for welding, asserting that the wires were merely a welding medium, not electrodes. They further claimed that copper coating was solely for preventing rusting, akin to galvanizing.

During the proceedings, the Department's Representative highlighted that the wires were used for welding purposes, similar to electrodes, and therefore fell under Item 50. He referenced Tariff Advice No. 2/73, indicating that copper-coated steel wires were classifiable under Item 50 based on advice from the Directorate General of Technical Development. The Department's stance emphasized the use of the wires for welding as a crucial factor in classification. However, the appellants' assertion that electric current did not pass through the wires during welding remained uncontroverted. The Department's case primarily relied on the wires' welding use, without concrete evidence that they were welding electrodes as understood commercially.

The Tribunal delved into the tariff classification issue, drawing parallels with a previous Bombay High Court case involving copper-coated steel wires for gas welding. The High Court's observations emphasized that Item 50 did not consider end-use for classification, unlike other tariff items. It stressed that the burden of proof lay with the Department to establish the goods as welding electrodes commercially. The Tribunal concurred that the Department failed to prove the wires as welding electrodes, as the words "all sorts" in Item 50 should be interpreted in conjunction with "welding electrodes." Since the wires were not proven to be welding electrodes, they did not fall under Item 50. The Tribunal also acknowledged the need for lower authorities to consider alternative tariff entries, such as Item 68 or Item 26AA(ia), for further verification of facts.

In conclusion, the appeals were allowed on the grounds that the subject wires were not classified under Item 50 of the Central Excise Tariff. Consequently, duties demanded, penalties imposed, and goods confiscation orders against the appellants were set aside, with the Department retaining the right to explore alternative classification for the wires.