2003 (3) TMI 123 - SC - Central Excise

Manufacture - whether the wire of the thinner gauge is excisable to duty - Held that - Court was also taken through the processes which are undergone by the manufacturer and which have been set out in some of the orders passed by the Commissioner. It was submitted that the raw material is a rod falling under tariff item 72.13 and/or 72.15 whereas after the process a distinct and separate marketable product falling under tariff item 72.17 has come into existence. It was submitted that the market price of both the products is also different inasmuch as the cost of the raw material was approximately Rs. 13, 000/- per metric ton whereas for the final product the market price was approximately Rs. 15, 000/- per metric ton. It was submitted that under these circumstances the Court must now hold that the earlier decisions of the Tribunal are not correct and that the final product i.e. the Wire which is drawn by the cold drawing process is an excisable product. It is to be seen that the initial product was a wire rod. The ultimately product is also a wire. All that is done is that the gauge of the rod is made thinner and the product is finished a little better. In our view the earlier decisions of the Tribunal are correct. There is no manufacture of a new product. Merely because there are two separate entries does not mean that the product becomes excisable. The product becomes excisable only if there is manufacture - Decided against Revenue.

Summary

Issues:
1. Whether drawing wire into a thinner gauge amounts to manufacture and renders the wire excisable to duty.

Analysis:
The judgment addresses the central issue of whether the process of drawing wire into a thinner gauge constitutes manufacture and makes the wire excisable to duty. The Customs, Excise and Gold (Control) Appellate Tribunal previously held that this process does not amount to manufacture, citing precedents such as the case of Jyoti Engg. Corpn. v. Collector of Central Excise. The Tribunal reasoned that no new product emerges from this process, as both the raw material (wire rod) and the final product (wire) remain fundamentally the same. Civil appeals challenging these decisions were dismissed, reinforcing the Tribunal's stance.

Furthermore, the Tribunal consistently applied these decisions in subsequent cases, including the matter involving M/s. Hind Enterprises, which was also dismissed by the Court. The argument was raised that the earlier decisions should be reconsidered in light of updated tariff items, specifically highlighting the distinction between Bars and Rods under tariff items 72.13 and 72.15, and Wires under tariff item 72.17. Additionally, Chapter Note 1(o) defining "Wire" was invoked to support the contention that the drawn wire qualifies as a distinct product.

However, the Court disagreed with this argument, emphasizing that the wire rod and the drawn wire both fall under the category of wire. The Court noted that while the gauge of the wire may change and the final product may be refined, no new product is created through this process. The Court affirmed the Tribunal's position that mere differentiation in tariff entries does not automatically render a product excisable; true excisability hinges on the presence of manufacturing activity. Consequently, the Court upheld the Tribunal's decisions, dismissing all appeals without costs.