2. The dispute in this case relates to the demand for differential duty which the appellants have been called upon to pay under rule 10A of the Central Excise Rules, 1944 for the period from 21-8-76 to 14-7-77 in respect of steel wire manufactured by them from duty paid steel wire rods. During the major part of this period, upto 17-6-77 to be exact, exemption notification No. 67/73-CE fixed the effective rate of duty for the relevant category of steel rods and steel wire at Pvs. 165/- per m.t. The proviso to this notification gave a further reduction of Rs. 75/- per m.t. if the rods and wire were manufactured out of specified types of scraps etc. with the aid of electric furnace. In other words, in such a case the effective duty payable both on rods and wire was only Rs. 90/- per m.t. (Rs. 165 minus Rs. 75). The show cause notice issued to the appellants states that they obtained their rods from M/s Mukand Iron and Steel Ltd., Bombay, who paid the duty of Rs. 90/~ per m.t. on such rods (meaning thereby that M/s Mukand were availing of the electric furnace concession), that the wire drawn by the appellants, which was a distinct commercial product different from rods, was liable to duty @ Rs. 16 5/- per m.t. under notification No.67/73-CE (meaning thereby that the appellants were not., entitled to the electric furnace concession) and that, therefore, after getting set off of the duty already paid in terms of notification No. 75/67-CE, the appellants were liable to pay the duty difference of Rs. 75/- per m.t.
(and an equivalent amount as auxiliary duty) in respect of the wire manufactured and cleared by them. Based on the same rationale, and following the Budget changes of 1977, duty difference at the consolidated rate of Rs. 150/- per m.t. was demanded for the period from 18-6-77 onwards in terms of exemption notification No. 152/77-CE which was the successor notification to the earlier notification No.67/73-CE. The demand was confirmed by the Assistant Collector whose order was upheld by the Appellate Collector. The appellants filed a revision application to the Central Government which on transfer to this Tribunal has been taken up as the subject appeal.
3. During the hearing before us, the Department's representative maintained that since the appellants did not have any electric furnace, they were not entitled to the electric furnace concession. He added that the appellants had never asked for this concession at the lower stages. This latter assertion of the Department was effectively rebutted by the appellants by producing their classification list No.61/76 in which 'nil' rate of duty was duly approved by the Department on 27-11-76 for the steel wire manufactured by them and by citing from their memorandum of appeal in which they had stated that denying them the benefit of notification No. 67/73-CE would lead to absurd results.
It has also been the appellants' plea that since rods and wire fall in the same sub-item of the Tariff [item 26AA (ia)] and carry the same rate of duty, making wire from rods, did not amount to manufacture and no question of payment of any duty on wire arose (AIR 1976 SC 800).
During the hearing before us, they raised a new plea of a portion of the demand being time-barred under rule 10 since the demand was issued on 31-8-77 by which time the new rule 10 introduced on 6-8-77 had reduced the earlier time limit of one year to six months.
4. We have carefully considered the matter. We would like to deal with the substantive question involved first, that is, whether or not the appellants' wire was entitled to get the electric furnace concession.
The relevant proviso to notification No. 67/73-CE reads as under :- "Provided that in the case of the products mentioned against S. Nos.
l(b), 2(c) and 3(b) and 4(b) of the aforesaid Table, manufactured with the aid of electric furnace from any of the following materials, namely: - (ii) a combination of the material referred to at (i) above with fresh unused steel melting scrap on which the appropriate duty of excise . has been paid ; and (iii) iron in any crude form falling under item No. 25 of the said First Schedule on which the appropriate duty of excise has been paid, in combination with the materials referred to at (i) and (ii) above, the duty specified against the corresponding entries in column (3) of the said Table shall be reduced by seventy-five rupees per metric tonne, upto the period ending with the 28th day of February, 1977." The relevant proviso to the successor notification No. 152/77-CE is also in similar terms It is clear from the wording of the proviso that the further reduction on given thereunder is applicable to the specified products provided they are made with the aid of electric furnace and out of specked categories of scraps etc The function of an electric furnace is only to melt the scrap and iron so that steel ingots can be cast from the liquid metal. In the further Process of rolling he ingots into wire rods and then drawing wires out of such rods the elect electric furnace has no role to play. The only reasonable interpretation of the proviso, therefore, is that the further concession contemplated herein is applicable to all the specified products made out of steel ingots which there is applicable electric furnace and out of specified were manufacture etc There is no dispute that both steel wire rods and steel categories of scrap etc.
specified in the proviso. . As such, so long as the Department accepts the position that the appellants' wire has come out of wire rods which had enjoyed the electric furnace concession because they fulfilled the terms of the proviso, we find no reason why the same concession Should be denied to wire manufactured out of such wire rods. We find no Stipulation in the proviso that the concession thereunder is in relation to a manufacture or a factory possessing the electric furnace nor is there any stipulation that all the processes of manufacture must take place in the same factory in which the furnace is located. The stipulation is only in relation to the product and so long as it can be proved that the product was manufactured product and electric furnace and out of specified inputs, the concession given by the provision is admissible. We hold, therefore, that the appellants' wire was elegible to the electric to the electric furnace concession and since the electric since the effective rate of duty chargeable thereon was the same as had already been paid on the wire rods purchased by them from M/s Mukand Iron & Steel Ltd., they were, in terms purchased by the 75/6 since the effective rate of duty chageable thereon was the same 7-CE not liable to pay any further duty. In view of notification No 75/67-CE, the other pleas of the appellants relating to time bar and to the question whether making of wires out of wire rods amounted to manufacture or not.
5 Accordingly, we allow this appeal. The demand served on the appellants is set aside In case they have paid the demand already, the consequential refund shall be granted to them.