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TMI Blog1989 (8) TMI 185X X X X Extracts X X X X X X X X Extracts X X X X ..... enefit of exemption Notifications No. 89/79 and 105/80 be extended to the appellants to the extent they were eligible. He demanded duty amounting to Rs. 3,94,234.64 paise and imposed a penalty of Rs. 1000/- on the appellants. Hence this appeal 3. Shri Haksar, the learned Advocate for the appellants submitted that the raw materials necessary for making PVC coated steel wires viz. PVC granules and bare wires were admittedly supplied by IDL and the resultant product was returned to them. He submitted that in the circumstances there was no manufacture at all as a new product did not emerge, wires having remained as wires. He explained that the coating for wires was done for insulation purposes. Otherwise, the utility of the coated wires was the same as that of uncoated wires. Therefore, there was no manufacture and no excise duty was liable to be paid by the appellants. He also pointed out that the Collector did not enter a finding that manufacture was involved. In this context the learned Advocate cited a decision of the Bombay High Court reported in the case of M/s. Shakti Insultated Wires Pvt. Ltd. and Others v. Union of India and Others [1982 (10) E.L.T. 10 (Bom.)]. 4. Shri Hak ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e was a process of manufacture according to the learned DR. Shri Sundar Rajan argued that the coated wires have different nomenclature, characteristics and use as compared to bare wires and it is not at all correct to say that no manufacture is involved. 9. The learned DR argued that there is no information as to who gave the machinery to the appellants and if IDL gave them the appellants unit is but a dummy. 10. Submitting that it was not the same wire which was returned by the appellants to IDL, Shri Sundar Rajan referred to a judgment of the Larger Bench of the Tribunal in the case of National Organic Chemical Industries Ltd. v. Collector of Central Excise, Bombay [1985 (21) E.L.T. 252 (T)] and argued that the benefit of Notification No. 119/75 was not available to the appellants. 11. Emphasising that coating of bare wires with PVC compound wires and coated wires is commercially a different commodity, Shri Sundar Rajan cited a judgment of the Supreme Court in the case of Standard Fireworks Industries, Sivakasi and Another v. Collector of Central Excise, Madurai [1987 (28) E.L.T. 56 (S.C.)] and Brakes India Ltd. v. Collector of Central Excise, Madras and Others [1986 (26) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . When bare wires are coated with PVC compound, is there manufacture; 2. If so who is the manufacturer; 3. Does the process entitle the manufacturer to the benefit of Notification No. 119/75 enabling them to pay duty only on the job charges. If not, what is the value on which duty can be charged; 4. If the demands are otherwise justified are they time-barred. 16. On the first question about the presence or otherwise of manufacture the objection taken by the learned Advocate was that there is no finding in the Collector s orders that there is manufacture and there was no evidence or discussion about the same. However, our perusal of the Collector s order shows that this question was not raised before him and it is quite obvious from the Collector s order that he proceeded on the assumption that there was manufacture. The learned Advocate for the appellants relied very strongly on Shakti Insulated Wires Pvt. Ltd. (supra) to argue that there was no manufacture involved in the making of coated wires. We have perused this judgment and note that the High Court in that judgment was dealing with a situation where bare copper or aluminium strips were insulated by glass fibre or by p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt in H. Guru Instruments (supra) is concerned, the circumstances therein were that the appellants in that matter supplied raw materials to M/s. IEC who manufactured scientific and industrial instruments therefrom as per the specifications of the appellants. The instruments so manufactured bore the brand name and ISI mark of the appellants and they were also marketed by the appellants just like similar instruments manufactured in their own large scale factory. It was in these circumstances that the Tribunal held that in the facts of the case IEC was no better than hired labour. We, however, note that there is no finding in the judgment that IEC are not manufacturers. A reading of Section 2(f) shows that the definition of the term manufacturer is an inclusive one so as to include not only a person who employs hired labour in the production or manufacture of excisable goods but also any person who engages in the production or manufacture on his own account. There is nothing in the records to show that the entire capital and machinery of the appellants did not belong to them. Their products are not shown to have been manufactured under the brand name of IDL. Nothing is on record to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat we had said earlier only the normal period of limitation would apply here in the circumstances of this case and not the enlarged period. We, therefore, order that the demands against the appellants be revised accordingly. 22. We have considered the pleas of the appellants with regard to penalty. In view of our findings above, we set aside the penalty of Rs. 1000/- imposed on the appellants. 23. The appeal is thus partly allowed. 24. [Per: G. Sankaran, Sr. Vice-President]. - I have carefully perused the order proposed by Brother Shri Rao but find myself unable to agree with the conclusion as regards taxability of the goods under consideration. 25. The crucial issue for determination in this appeal is whether the processes applied by the appellants to bare steel wire amounted to manufacture within the meaning of Section 2(f) of the Central Excises Salt Act. If the resultant product, viz., PVC coated galvanised steel wire is distinct and different from the bare wire in name, character and use and is recognised so in trade parlance, then, manufacture has taken place. This would also necessitate the classification of the product under the First Schedule to the aforesai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t PVC coated G.I. steel wires ceased to be under Item No. 26AA [ Iron or steel products, the following, namely: (i-a) Bars, rods, coils, wires,.......... not otherwise specified ]? 29. It is a cardinal principle of taxation that it is for the taxing authority to prove taxability of the goods sought to be taxed and to show that the goods fall under the particular entry of the Tariff Schedule under which they are sought to be taxed. In the present case, the Revenue, in my opinion, has not discharged this burden. Indeed, the proceedings before the Collector have gone on the (un-established) basis that there has been manufacture for the purpose of levy of excise duty. The question, as submitted by the counsel, does not seem to have been even raised before the: Collector. 30. The learned DR has sought to draw an analogy with Item No. 33-B of the CET in support of his contention that, after the coating process, the goods, constituted distinct and different goods attracting classification and duty under Item No. 68 of the CET. I am not impressed by this argument. Item No. 33-B of the CET is specific for electric wires and cables, all sorts, not otherwise specified. There are two sub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The Court held that the process of drilling, trimming or chamferring which was applied to brake lining blanks purchased by the petitioner was incidental or ancillary to manufacture of brake linings and that therefore the petitioner, must be deemed to be a manufacturer. It is important to note that the question arose in the context of Item No. 34-A of the CET which specifically had an entry covering brake linings. Such is not the position in the present case. 34. The real question is whether the PVC coated galvanised steel wires are more appropriately ctassifiable as steel wires or as other goods not elsewhere specified. For the reasons set out herein, I would consider that the more appropriate classification is the former. In this view of the matter, the impugned order is not sustainable and is set aside and the appeal is allowed with consequential relief to the appellants. 35. [Per: Harish Chandra, Member (J)]. -I have perused the orders proposed by learned Brothers Shri I.J. Rao and Shri G. Sankaran. I agree with the view of Shri G. Sankaran, Senior Vice-President. Learned Brother Shri I.J. Rao has discussed at length the nature of processes. Both the learned Brothers have ..... X X X X Extracts X X X X X X X X Extracts X X X X
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