2000 (9) TMI 119 - AT - Central Excise

Summary

Issues involved:
1. Classification of coils made from Double Paper Covered (DPC) wire for excise duty.

Analysis:

The appeal filed by the Revenue questioned whether coils made from Double Paper Covered (DPC) wire are subject to excise duty. The Respondents, engaged in manufacturing power distribution transformers, used L.V./H.V. coils made from DPC wire in repairing old transformers. The Dy. Commissioner imposed duty and penalty, considering the coils as non-marketable under Heading No. 85.44 of the Central Excise Tariff Act. However, the Commissioner (Appeals) set aside the order, highlighting contradictions in the findings. The Appellate Tribunal referred to a previous case where it was established that a coil does not exist independently as a marketable commodity but as part of a transformer. The Tribunal concluded that the conversion of DPC wires into coils does not constitute manufacturing a new marketable product.

The ld. Consultant argued that transformer coils should be classified under a different heading attracting a lower duty rate of 10%. Referring to legal precedents and notifications, the Consultant contended that coils made from DPC wire are excisable products liable for duty at 10% under a specific tariff heading. The Consultant emphasized that if duty is applicable, penalty imposition is unwarranted.

The Tribunal considered the arguments presented by both sides. It reiterated the previous decision that coils are not considered goods under the Central Excise Act, supported by a Supreme Court ruling. The Tribunal differentiated the current case from a previous one involving transformer repair, emphasizing that coils are not stand-alone goods. It clarified that excise duty cannot be charged twice on DPC wire used in transformer repairs. However, if Modvat Credit was availed, duty equivalent to the credit must be discharged. The Tribunal agreed with the Consultant that penalty imposition was not justified, leading to the decision that no penalty should be imposed.

In conclusion, the appeal was resolved based on the Tribunal's findings that coils made from DPC wire do not constitute a new marketable product subject to excise duty. The decision also clarified the duty liability in cases where Modvat Credit was utilized and emphasized the inapplicability of penalty in the current scenario.