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TMI Blog2010 (5) TMI 467X X X X Extracts X X X X X X X X Extracts X X X X ..... dispute the correctness of the said technical opinion. - Matter remanded for limited purpose to adjudicating authority to decide the liability of the appellants bearing in mind the loss factor to be calculated based on whatever materials available on record. - E/5702/2004 - 599/2010-EX(PB) - Dated:- 13-5-2010 - Justice R.M.S. Khandeparkar, President and Shri Rakesh Kumar, Member (T) REPRESENTED BY : Shri B.L. Narsimhan, Advocate, for the Appellant. Shri Nitin Anand, DR, for the Respondent. [Order per : Justice R.M.S. Khandeparkar, President (Oral)]. - Heard the learned Advocate for the appellants and learned DR for the respondent and perused the record. 2. This appeal arises from order dated 8-10-2004 passed by the Commissioner (Appeals), Allahabad. By the impugned order, the appeal filed by the appellants against the order of the adjudicating authority has been dismissed, except reducing the penalty. The Joint Commissioner, Allahabad, by his order dated 29-3-2004, had confirmed the demand of excise duty to the tune of Rs. 10,50,532/- while disallowing Modvat credit to the extent of Rs. 88,271/- and imposing penalty of equal amount against the appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as Central Excise duty without actually debiting that duty. (v) The appellants availed credit of Rs. 88,271.00, on the strength of the invoice No. 295 dated 21-12-1994, issued by M/s. Hindustan Copper Ltd., New Delhi, without actually ever receiving the quantity of input. 6. The proceedings were contested by the appellants and the Joint Commissioner, Allahabad by his order dated 29-3-2004 confirmed the demand as stated above. The appeal carried against the same did not give any relief to the appellants. Hence, the present appeal. 7. The first point which is required to be decided as to whether the appellants are entitled to raise the additional grounds in the appeal. While drawing our attention to the decision of the Apex Court in CCE v. Technoweld Industries reported in 2003 (155) E.L.T. 209 (S.C.), the learned Advocate for the appellants submitted that in the course of proceedings before the lower authorities, the issue as to whether the process of drawing wires from wire rod would amount to manufacture or not was not raised as the appellants had no advantage of having any judicial pronouncement on the said issue till the Apex Court had decided the same in T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... expression under the said Act. 12. The appellants in their reply to the show cause notice had specifically stated that the activity undertaken by the appellants was that the appellants were receiving copper wire/rod of 8 MM diameter and since they had no facility to draw copper rods of the diameter upto the size of 0.7 MM, they used to send the inputs for job work for drawing the wire rod of the required diameter. It is their further case that they had no facility to weigh jumbo coil of the weight approximately of 2 M.T. each and weighment of wire rods sent to the job worker was as per the weight shown in the respective invoices. Further the drawn wire received from the job worker was further drawn into the required size in the factory of the appellants and this process of drawing had to be repeated till the required diameter was obtained. In that process, the copper wire was heated for annealing every time the drawing process was repeated. Such wire thereupon was lacquered with enameled, till it achieved the required covering. The said process was repeated to achieve the final product to meet the required standard. The enameled wire after manufacture was wound up on bobbi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rule to a case where wire rods of lesser diameter are drawn from the wire rod of greater diameter it was held that such process would not amount to manufacture. 16. Undoubtedly, the product which is subject matter of consideration in the matter in hand also goes through the process of lacquering with enamel. In that regard, learned Advocate for the appellants has placed reliance in the matter of Metlex (I) Pvt. Ltd. while contending that the said process also would not amount to manufacture. 17. In Metlex (I) Pvt. Ltd. case, the Apex Court after taking note of the decision of the Bombay High Court in the case of Garware Plastics Polyester Ltd. v. Union of India reported in 1991 (52) E.L.T. 506 (Bom.) held that the process of lacquering/metallising of polyester film does not amount to manufacture, there being no new distinct commercial commodity having a different identity or name. In Tega India Limited v. CCE, Calcutta-II reported in 2004 (164) E.L.T. 390 (S.C.) it was held that even though the polyester film was laminated and metalised, the product remained a film from start to end and thus there was no new distinct product which had came into existence even afte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... same time, it is also to be noted that the consistent view taken by the number of decisions of the Apex Court is that to result any process into a manufacturing process within the meaning of the said expression under the said Act, the final product has to be distinct commodity with commercial value and having a different identity or name. 21. The Apex Court in Union of India Others v. J.G. Glass Industries Ltd. Others reported in (1998) 2 SCC 32 = 1998 (97) E.L.T. 5 had laid down a two fold test for determining whether a process amounts to manufacture or not. Firstly, by the process a different commercial commodity should come into existence or the identity of the original commodity should cease to exist. Secondly, but for the process the commodity which was in existence would have served no purpose. Applying the two fold test, it was held that printing on bottles did not amount to manufacture. 22. A Constitutional Bench of the Apex Court, in M/s. Devi Das Gopal Krishnan etc. v. State of Punjab Others reported in AIR 1967 SC 1895 had observed that if by a process a different identity comes into existence then it can be said to be manufacture. 23. In E ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt to manufacture. Hence the challenge to the impugned order on this ground cannot be sustained. 26. Learned Advocate for the appellants referring to the merits of the case has submitted that the lower authorities have not disputed the fact that the process undergoes certain amount of loss of the raw material and as the claim of the appellant in that regard has been totally ignored by merely observing that the proprietor in his statement did not raise the plea indicating any loss in the process of manufacture. Attention was drawn to the materials which are placed before the authorities below including the copy of the Wire Industry Encyclopaedia Handbook 1963 which clearly described that the process of pickling of hot worked copper normally results in 6% of loss in the weight while the raw material is being transformed into a final product. Indeed the relevant portion of the said encyclopaedia read thus :- "Pickling of hot-worked copper is essential before drawing, but this only removes oxide so that more severe measures are necessary for complete eradication of surface faults. There seems little doubt that processes such as the following will be increasingly used in the d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and we find that the scrap was duly recorded in the RG-I register. The same clearly discloses that while considering the difference in weight, the authority ought to have taken note of the scrap also. 29. In the background of above facts, undoubtedly the appellants are justified in contending that the authorities failed to take note of the loss factor while arriving at the finding regarding clandestine removal of the goods. Such an exercise is certainly necessary before ascertaining exact liability of the appellants in respect of the excise duty. Certainly the same will have to be done by the adjudicating authority and for that purpose the matter will have to go back on that issue only before the adjudicating authority. 30. In the result, therefore, the appeal partly succeeds and is allowed only on the point stated above and consequently the matter is remanded to the adjudicating authority to decide the liability of the appellants bearing in mind the loss factor to be calculated based on whatever materials available on record. The remand is for limited purpose as stated above. The entire exercise should be done after hearing both the parties as expeditiously as pos ..... X X X X Extracts X X X X X X X X Extracts X X X X
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