RAAJRATNA METAL INDUSTRIES LIMITED Vs. UNION OF INDIA

JUDGEMENT

(1.) By this petition under Article 226 of the Constitution of India, the petitioners have challenged the order-in-appeal No. 376-377/2005, dated 8-6-2005, (Annexure "I" to the petition) and the Orders-in-Original No. 947/Ref/2004 and No. 948/Ref/2004 both dated 20-12-2005 passed by the Commissioner of Central Excise, Ahmedabad (Annexure "G") to the petition collectively). The facts of the case as appearing in the petition are that the petitioner, a private limited company, is engaged in the business of manufacture of Stainless Steel Wires (SS Wires) of different thicknesses. Till 28-2-1986, under the erstwhile Tariff Item 26AA of the First Schedule to the Central Excises & Salt Act, 1944, the goods manufactured by the petitioner were considered as excisable and the Appellate Tribunal had also decided in the case of Krishna Wire Industries, Jaipur v. Collector of Central Excise, Jaipur,1983 13 ELT 984 that wire was a different product from the wire rod from which it was produced and process of obtaining wire from wire rod was manufacture. On 18-11-1987, the Appellate Tribunal in the case of Jyoti Engineering Corporation v. Collector of Central Excise, 1989 42 ELT 100, examined a case of MS wire and held that the activity of reducing thickness to 3 mm to 5 mm from wires of thickness of 6 mm to 8 mm was not manufacture. Despite the aforesaid decision, there was no dispute about the excitability of the SS wires produced by the manufacturers like the petitioners and they continued paying duties of excise on SS wires manufactured from SS rods and the Excise Department also never suggested that the decision in the case of Jyoti Engineering Corporation had any relevance or bearing to the excitability of SS wires from SS rods.

(2.) On 28-2-1986, the new Central Excise Tariff Act, 1985 came into operation and the SS wires came to be classified under Heading No. 72.33 whereas the petitioners' raw material, namely, SS hot rolled black wire rods came to be classified under Heading No. 72.21 of the Tariff. The petitioners continued paying excise duties on SS wires and the Excise Department also continued levying and recovering excise duties from the manufacturers like the petitioners on SS wires under Heading No. 72.23. Thereafter, on 16-2-2001, the Central Board of Excise & Customs issued a circular informing the trade that drawing of wire from wire rod was manufacture. This was in keeping with the understanding between the trade and the Revenue officers and also in keeping with the practice being followed throughout the country as regards SS wires. On 27-3-2003, the Supreme Court decided appeals involving issue of obtaining MS wires from MS rods in the case of Collector of Central Excise v. Technoweld Industries, 2003 155 ELT 209, and held that the initial product and the ultimate product were the same and all that was done was only gauge of the rod was made thinner and the product was finished a little better and, therefore, the decision of the Tribunal holding that MS wire obtained from MS rod was not liable to excise duty was correct. Despite the aforesaid decision of the Supreme Court, the manufacturers like the petitioner were paying excise duties on SS wires and the Revenue authorities were also collecting such duties without any objection.

(3.) Vide circular dated 29-5-2003, the Central Board of Excise & Customs withdrew the previous Circular dated 16-2-2001 and informed the trade that the review petitions filed by the Excise Department in cases decided by the Supreme Court in Collector of Central Excise v. Technoweld Industries , were dismissed.