2016 (12) TMI 1053 - AT - Central Excise

Whether the appellant procuring duty paid Black Wire and subjecting it to process of galvanization & clear the same, does it amount to manufacture? - Held that - we take notice that prior to 01.03.2005, both plated or coated wire with zinc and un-plated wire were listed in heading 7217 and subsequent to March 01, 2005 under the 8 digit Tariff, Black wire was listed under heading 72171010 and G.I. Wire under heading 72172010. We hold that process of galvanization simplicitor does not amount to manufacture and accordingly the whole show cause is misconceived, demanding Central Excise duty from the appellant. Further, we hold that the appellant have rightly paid duty by reversal of credit under the provisions of Rule 6(3)(b) of Cenvat Credit Rules, 2004. We also hold that the show cause notice is misconceived as it ignores the CBEC Circular, wherein it has been said that galvanization of black wire does not amount to manufacture - decided in favor of appellant-assessee.

Summary

Issues:
- Whether subjecting duty paid Black Wire to galvanization and clearance amounts to manufacture.

Analysis:
The appellant, a manufacturer of wires, appealed against an Order-in-Original by the Commissioner of Central Excise, Ghaziabad. The main issue revolved around whether the process of subjecting duty paid Black Wire to galvanization and clearance constituted manufacturing. The appellant procured duty paid Black Wire, took Cenvat credit, and carried out various processes, including galvanization. The Revenue contended that galvanization amounted to manufacture, leading to a demand for differential Excise duty. The appellant argued that galvanization did not constitute manufacture, citing a CBEC Circular. The Revenue issued a show cause notice proposing recovery of Cenvat Credit due to alleged short reversal of duty. The appellant contested the notice, leading to confirmation of the demand for short payment by the Revenue. The appellant then appealed to the tribunal.

The appellant's counsel argued that galvanization alone did not amount to manufacture, citing judicial precedents and the CBEC Circular. They highlighted the necessity of a change in the commercial commodity's identity for a process to be considered manufacturing. The Revenue relied on the impugned order to support its position.

After considering the arguments, the tribunal found that galvanization alone did not constitute manufacturing. The tribunal noted the Tariff changes post-March 2005 and held that the process of galvanization did not amount to manufacture. The tribunal also acknowledged that the appellant had correctly paid duty by reversing credit under the Cenvat Credit Rules. The tribunal deemed the show cause notice misconceived, especially in light of the CBEC Circular stating that galvanization of Black Wire did not amount to manufacture. Consequently, the tribunal set aside the impugned order, allowing the appeal with any consequential benefits to the appellant.

In conclusion, the tribunal's judgment clarified that the process of galvanization simplicitor did not amount to manufacturing, providing relief to the appellant against the demand for differential Excise duty. The decision was based on legal interpretations, precedents, and the CBEC Circular, emphasizing the significance of a change in the commercial commodity's identity for a process to be considered manufacturing.