2015 (10) TMI 2616 - AT - Central Excise

Manufacture - production of PVC insulated winding wires amounts to manufacture or not - Held that - no manufacture is involved if the wire of higher cross-dimension is drawn into the wire of lesser cross-dimension - in the present case, the final product for which exemption is being claimed is PVC Insulated Winding Wire. The input and the finished products are clearly distinct products and are known in the market as such. It would not require much imagination to show that process of making of PVC Insulated Winding Wire from simple wire is a process resulting in a different product and thus amounting to manufacture. Whether the PVC winding wire should be made from wire exceeding 6 mm cross-sectional diameter? - does it mean that the wire exceeding 6 mm cross-sectional diameter should be in the hands of the appellant themselves - Held that - even if the wire of cross-dimensional section exceeding 6 mm was not in their hands, it does not mean that the same was not the source of the material out of which PVC wire were made - The exemption on manufacture of PVC Insulated Winding Wire was available only if the input was wire of maximum cross dimensional area exceeding 6 mm of copper. We do not find under the notification any reference to the fact that PVC Winding wire should be made from cross-dimensional area less than 6 mm. This would be a mere presumption and has not been explained by the learned Counsel. Once the conditions of the notification are laid down, we see no reason to deviate from the same. Time bar - Held that - it is impossible for the Central Excise authorities to know that the assessee was using such wire. It was only after audit was conducted that the true facts came to light. Therefore, there is clear suppression of facts in claiming the benefit of notification wrongly. The extended period in such case is invocable. Whether the plea that the benefit of Modvat credit on the inputs should be given in case the benefit of exemption is denied, is justified? - Held that - had they not availed the benefit of Nil rate of duty under the exemption, Modvat credit on the inputs would have been available - we allow the benefit of the Modvat credit on the inputs subject to verification by the jurisdictional Assistant Commissioner. There was mis-statement of facts, the mandatory penalty under Section 11AC is imposable. Appeal disposed off - decided partly in favor of appellant.

Summary

Issues involved:
1. Whether the process of making PVC insulated winding wires amounts to 'manufacture' for the purpose of duty payment.
2. Whether the exemption for PVC insulated winding wires requires the input wire to exceed 6mm cross-sectional diameter.
3. Whether the time bar for invoking extended period applies in the case of claiming exemption benefits.
4. Whether Modvat credit on inputs should be granted if the exemption is denied.

Detailed Analysis:
1. The first contention raised was regarding the 'manufacture' aspect of PVC insulated winding wires. The appellant argued that no duty payment is required as there is no manufacture involved, citing relevant circulars and judgments. However, the Tribunal rejected this argument, stating that the process of making PVC insulated winding wires from simple wire constitutes a different product and amounts to manufacture. The Tribunal distinguished previous cases where the process was different, emphasizing the distinct nature of the final product in this case.

2. The second issue revolved around whether the input wire for PVC winding wires must exceed 6mm cross-sectional diameter. The appellant argued that even if they did not possess wire exceeding 6mm, the exemption should still apply if the source material met the criteria. The Tribunal disagreed, stating that the exemption condition clearly required the input wire to exceed 6mm, and there was no provision for presumption otherwise. Relevant judgments were cited to support this interpretation.

3. The time bar issue was raised concerning the invocation of the extended period for duty demand. The appellant claimed that since their classification list was approved without objection, the extended period should not apply. However, the Tribunal held that since there was a clear suppression of facts regarding the input wire dimensions, the extended period was justifiable. The Tribunal emphasized the importance of adhering to notification conditions approved by authorities.

4. The final issue was whether Modvat credit should be granted if the exemption was denied. The Tribunal agreed with the appellant on this point, stating that if the benefit of exemption was not availed, Modvat credit on inputs would have been available. Therefore, the Tribunal allowed the benefit of Modvat credit subject to verification by the Assistant Commissioner.

In conclusion, the Tribunal imposed a penalty for misstatement of facts but adjusted it based on the allowed Modvat credit. The duty demand was restricted to PVC winding wires made from wires not exceeding 6mm cross-sectional diameter, and the appeal was disposed of accordingly.