1994 (8) TMI 36 - SC - Central Excise

Summary

Issues:
- Whether the process of winding cotton or fibre-glass yarn on electric wire amounts to manufacture for the purpose of excise duty liability.
- Whether the insulated wire produced through the process constitutes a new product attracting excise duty.
- Whether the assessee is entitled to exemption under a specific notification.
- Whether the Tribunal's decision on the process being incidental or ancillary is correct.

Analysis:
The case involves an appeal against the order of the Customs, Excise & Gold (Control) Appellate Tribunal regarding excise duty liability on the process of winding cotton or fibre-glass yarn on electric wire. The Assistant Collector of Central Excise held that the process resulted in the creation of a new product, insulated wire, distinct from bare wire, thus attracting excise duty under Tariff Item 33B. The Assistant Collector rejected the assessee's claim of being a manufacturer entitled to exemption under a notification. The Collector of Central Excise (Appeals) reversed this decision, stating that no new product emerged from the process, and excise duty was not payable as the process did not amount to manufacture.

The Collector of Central Excise appealed this decision before the Tribunal, which upheld the appellate order. The Tribunal criticized the Assistant Collector's reasoning that the process created a new product, emphasizing that no evidence was presented to establish the process as manufacturing or resulting in a new commercially recognized article. The Tribunal highlighted that subjecting the same item to duty multiple times for incidental processes was incorrect. The Tribunal's decision was based on the lack of evidence from the excise authorities to prove that the winding process transformed the product into a new commercially recognized article, affirming the appellate authority's findings.

Ultimately, the Supreme Court dismissed the appeal, upholding the Tribunal's decision. The Court found no justification to delve into the question of whether the winding process constituted manufacturing, as the excise authorities failed to provide evidence supporting their claim. The Court concurred with the Tribunal's reasoning that the winding process did not result in a new commercially recognized article, thus affirming the orders of the appellate authority and the Tribunal.