2006 (8) TMI 25 - AT - Central Excise

Central Excise Manufacture Process of stranding of GI wires amounts to manufacture Order-in-Original uphold with modification

Summary

Issues:
1. Whether the process of stranding amounts to manufacture.
2. Whether the appellants are liable to the duty demand.
3. Whether the penalty imposed on the appellants and the Managing Director is justified.

Analysis:

1. Process of Stranding Amounts to Manufacture:
The Commissioner held that the process of stranding amounts to manufacture as it results in a new and different article with distinct characteristics and utility. The Commissioner referred to the decision in General Industrial Corporation Vs. Collector of Central Excise, Kanpur, which concluded that stranding galvanized wires improves utility and strength, thus constituting manufacture. The Commissioner rejected the appellant's argument citing the Apex Court's decision in Aluminium Industries, emphasizing that the issue of whether stranding amounts to manufacture was not addressed in that case. The Commissioner upheld that stranding wire is a marketable commodity and falls under a specific entry in the tariff, supporting the conclusion that the stranding process amounts to manufacture.

2. Appellants' Liability to Duty Demand:
The appellants contested that the stranding was done by registered job workers, not by them directly. However, the Commissioner relied on the Managing Director's admission that the appellants manufactured and supplied stranded wire to APSEB without duty payment. The Commissioner examined financial records and found discrepancies in job work expenses, leading to the dismissal of the appellants' claims. The Commissioner justified invoking a longer period for duty demand based on the Managing Director's admission and financial discrepancies. The duty demand on short goods was not contested by the appellants.

3. Penalty Imposed on Appellants and Managing Director:
The penalty imposed on the appellants under Rule 173Q was reduced from Rs. 15,00,000 to Rs. 7,50,000. The penalty on the Managing Director under Rule 209A was not contested by the appellants. The Commissioner upheld the penalties based on the findings related to duty evasion and discrepancies in financial records. The decision to reduce the penalty on the appellants was made considering the circumstances of the case.

In conclusion, the Appellate Tribunal upheld the Order-in-Original with modifications to the penalty imposed on the appellants. The judgment emphasized that the process of stranding wire amounts to manufacture, and the appellants were held liable for duty demand based on the evidence presented, including the Managing Director's admission. The penalties imposed were justified based on the Commissioner's findings regarding duty evasion and discrepancies in financial records.