2011 (4) TMI 1309 - HC - Central Excise

Summary

Issues:
1. Classification of stainless steel wire made from stainless steel rods.
2. Application of previous court decisions on similar cases.
3. Manufacturing process distinction between mild steel and stainless steel wire.
4. Legal interpretation of the transformation of materials in the context of excise duty.
5. Request for interim relief and payment of excise duty.
6. Permission for further consideration by the Central Board of Excise and Customs.

Analysis:

1. The primary issue in this case revolves around the classification of stainless steel wire made from stainless steel rods. The counsel argued that this product is different from mild steel wire and should not be subject to the same classification based on a previous Supreme Court decision.

2. The counsel referenced various court decisions, including the Collector of Central Excise v. Technoweld Industries, to support their argument that the previous judgments were specific to mild steel rods and wires, not applicable to stainless steel products. They highlighted a Special bench decision in Krishna Wire Industries, which affirmed the manufacturing process of stainless steel wire from stainless steel rods.

3. A critical aspect of the argument focused on the manufacturing process, emphasizing the complexity and distinct nature of producing stainless steel wire from hot rolled black wire rods compared to drawing mild steel wire from mild steel rods. The counsel highlighted the number of processes involved in manufacturing stainless steel wire to differentiate it from mild steel wire production.

4. The legal interpretation of the transformation of materials was discussed, citing the Empire Industries Ltd. v. Union of India case, which emphasized that if a material is transformed into a different commercial commodity with distinct characteristics, it constitutes manufacturing for excise duty purposes. Reference was also made to the UJagar Prints v. Union of India case, reinforcing the importance of commercial distinctiveness in determining manufacturing.

5. The court granted leave as prayed for and directed the respondents to permit the petitioners to pay excise duty on stainless steel wires manufactured from stainless steel hot rolled black wire rods until the final disposal of the case. The counsel for the petitioners also stated that they would not claim a refund if the company fails ultimately.

6. Lastly, the court clarified that the pendency of the petition does not prevent the Central Board of Excise and Customs from considering the need for a distinction between the processes of drawing wires from mild steel rods and making stainless steel wires from stainless steel rods, as argued by the petitioners. The respondent No. 1 waived service of notice, while direct service was permitted for respondent Nos. 2 to 4, setting the stage for further legal considerations.