SHREE KRISHNA INDUSTRIES Vs. COMMISSIONER OF CENTRAL EXCISE

JUDGEMENT

(1.) IN these two appeals arising out of two different Orders, the common issue involved is whether the provisions of Section 11D of the Central Excise Act are attracted against the Appellants namely M/s. Bajrang Wires Products (India) Pvt Ltd. and M/s. Shree Krishna Industries.

(2.) BOTH the Appellants manufacture wires, which are being drawn out of wire rods falling under Chapter 72 of the Schedule to the Central Excise Tariff Act. Both the Appellants avail of the Cenvat credit of the duty paid on wire rods. They cleared wire on payment of Central Excise duty. In view of the judgment of the Supreme Court in the case of C.C.E v. Technoweld Industries, 2003 (155) E.L.T. 209 (S.C.) the process of drawing of wires from wire rods does not amount to manufacture. Accordingly, show cause notices were issued to both the Appellants for disallowing the Cenvat credit availed of by them and for recovering the Central Excise duty collected by them from their customers under the provisions of Section 11D of the Central Excise Act. The Commissioner, Central Excise, Jaipur under Order -in -Original No. 15/2004 dated 17 -5 -2004 disallowed the Modvat Credit to M/s. Bajrang Wire Products (India) Pvt. Ltd. and also Ordered for recovery of the Central Excise duty collected by them from their customers under Section 11D of the Act besides imposing penalty and demanding interest on the ground that they had collected the amount from their customers in the guise of Central Excise duty and paid only a fraction thereof through their P.L.A. Similarly, the Commissioner of Central Excise, Jaipur -II under Order -in -Original No. 12/2004, dated 20 -8 -2004 disallowed the Modvat credit to Shree Krishna Industries and Ordered for recovery of the amount collected by them from their customers as Central Excise duty under Section 11D of the Central Excise Act.

(3.) SHRI L.P. Asthana, learned Advocate for M/s. Bajrang Wire Products (India) Pvt. Ltd., submitted that as per Section 11D of the Act every person who is liable to pay duty under Central Excise Act or Rules made thereunder, and has collected any amount in excess of duty assessed or determined and paid on any excisable goods under the Act or the Rules from the buyer in any manner as representing duty of Excise, shall forthwith pay the amount so collected to the Credit of the Central Government, that the provisions of Section 11D are applicable only to a person who is liable to pay duty under the Central Excise Act/Rules, that the Appellants are not liable to pay any duty under the Act or Rules as the activity undertaken by them has been held to be not amounting to manufacture by the Supreme Court; that accordingly the provisions of Section 11D are not applicable. The learned Advocate, further, submitted that Section 11D further provides that there is a liability to pay any amount collected in excess of the duty assessed or determined under the Act/Rules; that when no duty is payable by them the question of collecting any amount in excess of the duty assessed or determined does not arise; that if the duty was payable by them they have collected the same amount of duty only from their customers and hot in excess; that accordingly the provisions of Section 11D are not applicable in their case. 5. Shri A.R. Madhav Rao, learned Advocate for Shree Krishna Industries, adopted the submissions made by Shri L.P. Asthana, learned Advocate, and submitted in addition that Section 11D of the Central Excise Act was initially applicable to every person who has collected any amount from the buyer on any goods in any manner as representing duty of Excise; that this provision was Sub -sequently amended by Section 113 of the Finance Act, 2000 retrospectively; that the effect of amendment which has been given retrospectively, is that the provisions of Section 11D are applicable only to a person who is liable to pay the duty under the Act or Rules; that as the Appellants have been held not liable to pay ' Central Excise duty the provisions of Section 11D do not apply. He relied upon the decision in the case of Bharat Petroleum Corporation Ltd. v. C.C.E., Meerut -2002 (146) E.L.T. 646 (Tribunal). We also heard Smt. Krishna A. Mishra, learned SDR. 6. We have considered the submissions of both the sides. Both the Appellants are drawing wire from wire rods, the activity which has been held not amounting to manufacture by the Supreme Court in the case of C.C.E. v. Technoweld Industries - 2003 (155) E.L.T. 209 (S.C.). It has been held by the Supreme Court that initially the product was wire rod and ultimate product is also wire and "all that is done is that the gauge of the rod is made thinner and the product is finished little better......... There is no manufacture of a new product." Thus in view of the judgment of the Supreme Court both the Appellants are not manufacturers and not liable to pay Central Excise duty on wires drawn out of wire rods. The provisions of Section 11D are applicable to only those persons who are liable to pay duty under the Central Excise Act or the Rules made thereunder. Other requirements mentioned in Section 11D is that the persons who have collected an amount in excess of the duty assessed or determined and paid on any excisable goods under the Act or the Rules, from the buyers representing in any manner duty of Excise, are required to pay the said amount to the credit of the Central Government. Both the requirements for attracting the provisions of Section 11D are not satisfied in case of both the Appellants. Firstly they are not liable to pay duty under the Central Excise Act, as the process undertaken by them does not amount to manufacture and the duty under the Central Excise Act is levied only on the activity of manufacture. Once they are not liable to pay duty the question of satisfying requirement of Section 11D does not arise as it cannot be said that they have collected any amount in excess of the duty assessed and paid. This was also the view expressed by this Tribunal in the case of Bharat Petroleum Corporation Ltd, (supra) where the provisions of Section 11D were sought to be invoked against the registered dealer of goods. The Tribunal has held that even prior to amendment of the expression "every person" in Sub -section (1) of Section 11D, the Andhra Pradesh High Court has read down the said expression as "the manufacturer/producer." The Tribunal further observed that this view has been expressed by the statutory amendment under Section 103 of the Finance Act, 2002 with retrospective effect from 20 -9 -1991. The Tribunal, therefore, hold that no demand can be raised against the Appellants who is a registered dealer under Section 11D as it is not the manufacturer of the concerned goods. Thus provisions of Section 11D are not attracted in the present matters. Accordingly both the appeals are allowed to this extent.