1994 (8) TMI 110 - AT - Central Excise

Summary

Issues:
1. Whether the activity of PVC coating of G.I. Wires amounts to manufacture under the Central Excises and Salt Act.

Detailed Analysis:

Issue 1:
The main issue in this case is whether the activity of PVC coating of G.I. Wires undertaken by the respondents on a job work basis constitutes "manufacture" under Section 2(f) of the Central Excises and Salt Act, 1944.

Analysis:
The Revenue contended that the PVC coating of G.I. Wires should be considered as manufacture since it results in a commercially new product with a different name, character, and use. They relied on a Tribunal decision in the case of Collector of Central Excise v. Eastern Chemical & Industries to support their argument. On the other hand, the respondents argued that the PVC coating of G.I. Wires does not amount to manufacture as it does not result in a new product with distinct characteristics. They cited the case law of Rexor India Ltd. v. Collector of Central Excise, New Delhi and X.L. Telecom Pvt. Ltd. v. Union of India & Ors. to support their position.

The Tribunal examined the records and submissions from both parties. They noted that the key question was whether the insulation of G.I. Wires through PVC coating could be considered as manufacturing under the law. The Tribunal reviewed the Collector (Appeals)' reliance on previous decisions related to the classification of similar products under different tariff items. They highlighted that the specific sub-heading 8544.00 of the Central Excise Tariff Act covered insulated wires, cables, and conductors, which was different from the broader coverage of electric wires and cables in the previous tariff.

The Tribunal referenced various legal precedents to establish the definition of "manufacture" under the Central Excises and Salt Act. They cited the Supreme Court's decision in Empire Industries Ltd. v. Union of India, Union of India v. Babubhai Nyalchand Mehta, and the Gujarat High Court's ruling in K.S. Jhala v. N.H. Hokabay to support their interpretation. Based on the commercial differences between bare G.I. Steel wires and PVC coated insulated wires, the Tribunal concluded that the conversion process amounted to manufacture under Section 2(f) of the Act.

Ultimately, the Tribunal set aside the Collector (Appeals)' order and allowed the appeal, determining that the conversion of G.I. Steel Wires into PVC coated insulated wires constituted manufacturing under the Central Excises and Salt Act, making the product chargeable to Central Excise Duty.