Shakuntala Wire Industries Pvt. Ltd vs Commissioner Of Central Excise, ...

(Arising out of Order-in-Appeal No. BR/195/Th-II/05 dated 14.7.2005 passed by Commissioner of Central Excise (Appeals), Mumbai-I)

For approval and signature:

Honble Mr. P.K. Jain, Member (Technical) and Honble Mr. S.S. Garg, Member (Judicial)

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1. Whether Press Reporters may be allowed to see : No the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?

2. Whether it should be released under Rule 27 of the :

CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?

3. Whether Their Lordships wish to see the fair copy : Seen of the Order?

4. Whether Order is to be circulated to the Departmental : Yes authorities?

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Shakuntala Wire Industries Pvt. Ltd. Appellant Vs. Commissioner of Central Excise, Thane-II Respondent

Appearance: Ms. Aparna H., Advocate, for appellant Shri V.K. Agrawal, Additional Commissioner (AR), for respondent

CORAM: Honble Mr. P.K. Jain, Member (Technical) Honble Mr. S.S. Garg, Member (Judicial)

Date of Hearing: 24.9.2015 Date of Decision: 24.9.2015

ORDER NO

Per: P.K. Jain

Brief facts of the case are that the appellant is engaged in the manufacture of copper wires by wire drawing process using the copper wire rods. Thus the appellant was converting copper wire rods into copper wires. The issue is relating to whether such a process amounts to manufacture or not. The Honble Supreme Court in the case of CCE vs. Technoweld Industries reported in 2003 (155) ELT 209 (SC) held that the process does not amount to manufacture. Consequent to the said decision of the Honble Supreme Court, the Board vide circular No. 720/36/2003-CX dated 29.5.2003 withdrew its earlier circular dated 16.2.2001. In the present case, the issue relates to the period from 29.5.2003 to 8.7.2004.

2. Learned counsel for the appellant submitted that the Government vide the Taxation Laws (Amendment) Bill, 2005 has amended Rule 16 of the Central Excise Rules with effect from 29.5.2003 to 8.7.2004 and consequent to the said amendment, the issue no more survives.

3. Learned AR reiterates the findings in the adjudication order.

4. We find that the Taxation Laws (Amendment) Bill, 2005 has amended Rule 16 of the Central Excise Rules, 2002 to the following effect:-

After the enactment of the said Bill, the Board vide circular No. 831/8/2006-CX dated 26.7.2006, vide para 4.1 to 4.5 has clarified as under:-

4.1 Rule 16 of the Central Excise Rules, 2002 has been retrospectively amended to declare wire drawing units as assessees for the period 29-5-2003 to 8-7-2004, hereinafter referred to as the said period.

4.2. The process of drawing of wire from wire rod was held as? not amounting to manufacture by the Supreme Court in the case of M/s. Technoweld Industries [2003 (155) E.L.T. 209 (S.C.)]. Therefore, the benefit of availment of credit of duty on inputs by the wire drawing units was withdrawn on 29-5-2003 by a circular issued by the Board. However, certain wire drawing units continued to pay a sum representing duty, and continued to pass on the credit of amount paid as duty to the ultimate buyer of drawn wire for further manufacture. By an amendment in the Budget 2004, Note 10 was inserted in Section XV of the Central Excise Tariff Act, 1985 to declare the said process as amounting to manufacture. However, as the said Section Note was effective from 9-7-2004, it did not resolve the problem for the said period.

4.3 Accordingly, Show Cause Notices were issued to wire drawing units for recovery of Cenvat Credit availed on inputs on the grounds that the process of wire drawing did not amount to manufacture for the said period. Show Cause Notices were also issued to the downstream buyers of drawn wires who availed Cenvat Credit of amount paid as duty on drawn wire, on the ground that the sum paid on clearance of drawn wire by wire drawing unit did not represent central excise duty. Such wire drawing units could also not claim the refund of amount paid as duty on drawn wire, on the ground of unjust enrichment. In this regard, Boards letter dated 3rd January 2005 issued vide F. No. 139/3/2004-CX. 4 may also be referred to.

4.4 The retrospective amendment in Rule 16 is aimed at facilitating wire drawing units, which had paid a sum equal to the duty leviable on drawn wire after availing the credit of duty paid on inputs for the said period. It is aimed at regularizing availment of credits at two stages and payment of an amount representing duty at one stage. The purpose of the amendment is to regularize credit taken at the input stage (on wire-rod), credit taken by the downstream user of drawn wire and the amount paid as central excise duty on clearance of drawn wire. In other words, wire drawing units, which had paid a sum equal to duty leviable on drawn wire, would be eligible to avail the credit of duty paid on inputs and utilize the same for payment of duty on drawn wire for the period of amendment. The sum paid by the wire drawing unit in such cases will be treated as duty and shall be allowed as credit to the buyer of drawn wire, in terms of the amendment. This amendment would not create any additional liability on any wire drawing unit which did not pay duty on drawn wire during the period of amendment.

4.5 As the Taxation Laws (Amendment) Bill had been introduced in?Parliament, Board had, vide a letter dated 20th July 2005, directed all field officers to keep all such cases in call book till the passage of Taxation Laws (Amendment) Bill. Now that the Bill has been passed, you are directed to take out all such cases from call book and decide them by 15th August 2006. A compliance report in this regard may be sent to the Board by 31st August 2006.

5. In view of the above factual position, the appeal filed by the appellant is allowed.

(Pronounced in Court)

(S.S. Garg) Member (Judicial) (P.K. Jain) Member (Technical)

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