2013 (12) TMI 218 - AT - Central Excise

Benefit of exemption Notification No. 119/66 - Revenue was of the view that the copper wire bars cannot be treated as virgin copper in crude form Held that - Both copper wire rods as well as copper wire bars are covered by Rule 56A for benefit of proforma credit and in respect of both, the rate of duty is at the specific rate at 3000 P.M.T., the benefit of proforma credit of the Additional Customs duty paid in respect of wire bars would be available for discharging duty in respect of wire rods - The entire case would be revenue neutral and the net duty liability of the appellant would be nil. The appellants are not covered by the Section 11C notification - the basis for denying exemption under Notification No. 119/66-C.E., is that wire bars are not copper in crude form/virgin copper - Once it is accepted that copper wire bars were Additional Customs duty paid, the proforma credit of the duty under Rule 56A cannot be denied - once the proforma credit benefit is extended, the net duty liability of the appellants would become nil order set aside Decided in favour of Assessee.

Summary

Issues:
1. Interpretation of Notification No. 119/66-C.E. for exemption on copper wire rods made from copper wire bars.
2. Eligibility for proforma credit under Rule 56A of the Central Excise Rules, 1944.
3. Applicability of Section 11C notification on duty paid copper wire rods.
4. Question of time-bar in duty demands.
5. Determination of whether the process of making wire rods from wire bars amounts to manufacture.

Analysis:

Issue 1: Interpretation of Notification No. 119/66-C.E.
The appellants were availing exemption under Notification No. 119/66-C.E. for making copper wire rods from copper wire bars. The dispute arose when the department contended that wire bars did not qualify as virgin copper in crude form, leading to duty demands. The Commissioner and Tribunal initially upheld the duty demands, but subsequent proceedings highlighted the practice of treating wire rods made from duty-paid wire bars as exempt. The Tribunal ultimately ruled in favor of the appellants, emphasizing the historical practice and the duty paid nature of the imported wire bars.

Issue 2: Eligibility for Proforma Credit
The appellant argued for proforma credit under Rule 56A, asserting that both wire rods and wire bars fell under the same tariff heading with a specific duty rate. The Tribunal agreed that proforma credit should be available for discharging duty on wire rods, given the duty paid nature of the wire bars used in manufacturing. The department's contention lacked evidence to refute the duty paid status of the wire bars, leading to the acceptance of proforma credit benefit and nullification of duty liability.

Issue 3: Applicability of Section 11C Notification
The Tribunal found that the Section 11C notification did not apply to the appellants, as the duty paid nature of the wire bars was established. Despite previous decisions against the appellants, the Tribunal emphasized the historical practice and the absence of evidence questioning the duty paid status of the wire bars.

Issue 4: Time-Bar in Duty Demands
Although the question of time-bar was raised, the Tribunal did not delve into this issue as the appeal was allowed based on other grounds, specifically the availability of proforma credit and the duty paid nature of the wire bars.

Issue 5: Manufacturing Process
The Tribunal did not address whether the process of making wire rods from wire bars amounts to manufacture, as the decision was primarily based on the availability of proforma credit and the nullification of duty liability.

In conclusion, the Tribunal set aside the impugned orders, allowed the appeals, and emphasized the availability of proforma credit, leading to a nil net duty liability for the appellants. The decision did not delve into other issues such as time-bar or the manufacturing process due to the favorable outcome based on proforma credit availability.