2010 (11) TMI 86 - AT - Central Excise

Manufacture - cutting of wires/strips from the purchased coils of Nichrome as per the requirement of the customer and sold without fixing terminals - Nichrome coils are cut into required length and the length depends upon power and compatibility of the furnace it is to be used and the said wire cuttings were wound manually with the help of hand tools and resultant goods emerges as heating elements - heating element has different character and use than that of the coil - cutting of Nichrome coil into wire of desired length and wounding them for specific configuration for use as heating elements amounts to manufacture Appeal dismissed

Summary

Issues:
1. Demand of duty beyond SSI exemption limit for manufacturing heating elements.
2. Limitation period for issuance of show-cause notice.
3. Grounds of suppression and submission of invoices.
4. Classification of manufactured goods as heating elements.
5. Interpretation of the process of manufacture for heating elements.

Analysis:

1. The case involved a demand of duty beyond the Small Scale Industries (SSI) exemption limit for manufacturing heating elements. The appellant, a manufacturer of Electric Furnaces and Heating elements, was found to have cleared excisable goods over the exemption limit, leading to a demand of duty amounting to Rs. 1,82,108. The Department alleged suppression of facts to evade duty payment.

2. The appellant raised a plea regarding the limitation period for issuing the show-cause notice. The appellant argued that the notice was issued beyond six months from the date of the last recorded statement, thus being barred by limitation. However, the Tribunal noted that the normal period of demand had lapsed even before the visit by officers, and the date of recording the statement was not the relevant date for limitation purposes.

3. The appellant claimed that invoices were submitted along with regular monthly returns, negating the ground of suppression. However, the Department contended that the appellant had not submitted any returns or invoices, leading to the rejection of this ground by the Tribunal.

4. The classification of the goods as heating elements was disputed by the appellant, who argued that they merely cut electrical wires purchased from suppliers. However, the Tribunal found evidence that the appellant processed the wires to manufacture heating elements, as confirmed by a statement from the appellant's partner. The lower authority also relied on a Supreme Court decision to establish that the process undertaken by the appellant constituted manufacture.

5. The interpretation of the process of manufacture for heating elements was a crucial aspect of the case. The Tribunal, following the Supreme Court's guidance, determined that the transformation of Nichrome coils into heating elements, involving cutting and winding the wires to specific configurations, amounted to manufacture. The process resulted in a new commodity with a distinct character and use, justifying the classification as heating elements.

In conclusion, the Tribunal upheld the orders of the lower authorities, dismissing the appeal based on the findings related to duty demand, limitation period, grounds of suppression, and the classification of goods as heating elements. The decision was based on the interpretation of the manufacturing process and the legal principles established in relevant judgments.