2010 (6) TMI 186 - AT - Central Excise

Demand- the adjudicating authority by its order confirmed the demand to the tune of Rs. 5, 96, 529/- while holding that the appellants were availing Cenvat credit and was paying duty @ 8% in terms of Rule 57AD(2)(b) though the clearance of the goods was governed by Rule 57-AB(ic) of the Central Excise Rules. Being dissatisfied the appellants carried the matter before the Commissioner (Appeals) wherein while rejecting the application for stay the appellants were directed to deposit the entire amount demanded. Appellant submits that process not manufacture and Commissioner (Appeals) should have considered the same. Held that- activities conducted comprised of drawing of wires from wire rods of higher gauge. Such process not manufacture as held in CCE v. Technoweld Industries 2008 -TMI - 46589 SC while considering liability under aforesaid Rules necessary for authorities to consider whether any process of manufacture involved. Matter remanded for decision.

Summary

Issues involved:
Challenge to order of non-compliance with Section 35F of the Central Excise Act, 1944.

Analysis:
1. The appellants challenged the order dated 29-11-2004 passed by the Commissioner (Appeals) Chandigarh, which dismissed their appeal for non-compliance with Section 35F of the Central Excise Act, 1944. The appellants were engaged in the manufacture of iron and steel items under specific sub-headings of the Central Excise Tariff Act, 1985. A show cause notice was issued to them alleging misutilization of SSI exemption, demanding payment of Rs. 5,96,511 for a specific period.

2. The adjudicating authority confirmed the demand of Rs. 5,96,529, stating that the appellants were availing Cenvat credit and paying duty at a certain rate. The appellants appealed to the Commissioner (Appeals), who directed them to deposit the entire demanded amount along with a penalty. As the appellants did not comply, the impugned order was passed.

3. The challenge to the impugned order was based on the argument that the Commissioner (Appeals) ignored the Supreme Court decision in the case of CCE v. Technoweld Industries, which held that the process of drawing wires from wire rods did not amount to 'manufacture' under the Central Excise Act. The appellants contended that if this aspect had been considered, there would have been no need for the deposit demanded by the original authority. The authorities should have taken into account the Technoweld Industries decision while determining duty liability.

4. The Tribunal acknowledged that the process of drawing wires from wire rods did not constitute manufacture as per the Technoweld Industries case. Therefore, the impugned order was set aside, and the matter was remanded to the Commissioner (Appeals) for a fresh decision on merits. The Tribunal considered the amount already deposited by the appellants as sufficient for compliance with Section 35 of the Central Excise Act.

5. In conclusion, the Tribunal allowed the appeal, emphasizing the necessity for authorities to consider legal precedents like the Technoweld Industries case while determining duty liability. The impugned order was overturned, and the case was sent back for a reevaluation on the basis of relevant legal principles.