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OFFICE OF THE
COMMISSIONER OF CUSTOMS, |
PUBLIC
NOTICE NO. 97 /2001
Sub: CE - Whether drawing of wire from wire rod
amounts to manufacture
under section 2(f) of Central
Excise Act, 1944.
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Government
of India, Ministry of Finance, Department of Revenue, New Delhi, Circular No.970/7/2001-CX., vide F.No.139/7/2000-CX.4
dated 16.02.2001, is reproduced below for the guidance of the Importers,
Clearing Agents, and Trading Public.
C11/23/2001-AP(PORT) (S.
SANKARAVADIVELU)
CUSTOM HOUSE, CHENNAI-1. DY. COMMR. OF CUSTOMS (APPG)
DATE :
________________________________________________________________________
CIRCULAR
NO.970/7/2001-CX.
F.NO.139/7/2000-CX.4
DATED 16.02.2001
A question has been raised whether the process of drawing
of wire from wire rod would amount to manufacture under section 2(f) of Central
Excise Act, 1944. Though duties were being paid in various centres by the units
undertaking the redrawing of wire from wire rods, doubts are being raised as
CEGAT in a recent order No.85/2000-B dated 13.1.2000 in the case of M/s.
Technoweld Industries Vs. CCE Jaipur has held that reduction of dimension or
gauge of wire rods by drawing is not a process of manufacture.
2. The matter has been examined by the Board. It has been
observed that before Budget 1988, the Chapter 72 of Central Excise Tariff was
not fully aligned with HSN. According to the definition provided under the
Chapter Note 1(xix), as was existing then, the wires are “cold drawn products
of solid section of any cross-sectional shape, of which no cross-sectional
dimension exceeds 13 mm” Thus such products having cross-sectional dimension of
13mm or less, though commercially known as wire rods were for Central Excise
purpose classifiable as wires. After 1.3.88, vide Chapter Note 1(0), the
definition of ‘wires’ changed to “cold-formed products in coils, of any uniform
solid cross-section along their whole length, which do not confirm to the
definition of flat-rolled products”. This definition did not contemplate any
ceiling in the cross-sectional dimension as was the case hitherto-before. The
wires were classified under Heading 72.17.
Bars
and rods, on the other hand, got defined under chapter note 1(1) and 1(m) as
distinct from wires, and were shown against the headings 72.13, 72.14 and
72.15. Thus wires and wire rods were considered
two distinct commercial commodities and conversion
of wire rods to wires was treated
as manufacture within the ambit of section 2(f) of the Central Excise act. The above
position was clarified by the Board under F.No.139/8/94-CX.4 dated 29.5.95 to
dispel any doubt in the minds of the trade Associations as well as the
Commissioners after the Department’s appeal filed against the decision of CEGAT
in case of Jyothi Engineering Corporation [1989) 42 ELT 100 (T) was dismissed
by the Supreme Court.
3. The issue also came up for discussion in the conference of
Chief Commissioners held on 29-30 August, 2000. The Conference took note of
CEGAT judgements including that in the case of M/s Technoweld Industries. The
Conference observed that in the case of Navsari Processing Industries [1996(85)
ELT 386 (T)] wires were drawn from the wire rods of 8mm thick. As wires, as
defined under old Central Excise Tariff, covered thickness upto 13mm, both the
products, input and output, were treated as wires only. CEGAT held that this
activity would not amount to manufacture. In case of Technoweld Industries
relating to HSN based Tariff, CEGAT relied on its earlier decision of Navsari
Processing Industries in connection with the old Tariff apparently not taking
note of the changes made in the tariff structure. The department has decided to
file a civil appeal against the order of CEGAT passed in Technoweld case.
The
Conference took note of the aforesaid developments and observed that there is
no overlapping now in the meaning assigned to wires and rods (including wire
rods) and they are classified under separate subheadings. Commercially they are
recognised as two separate commodities. Once wires are drawn from the wire rods
conforming to the definition either under note 1(1) or under note 1(m) of
Chapter 72, the Conference felt the activity of drawing should be treated as
manufacture.
Board
agrees with the above views of the Conference and accordingly holds that the
drawing of wire from wire rods would amount to manufacture.
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