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Shalimar Wires and Industries Vs. Collector of Central Excise - Court Judgment

LegalCrystal Citation
CourtCustoms Excise and Service Tax Appellate Tribunal CESTAT Delhi
Decided On
Reported in(1984)(16)ELT495TriDel
AppellantShalimar Wires and Industries
RespondentCollector of Central Excise
.....and do not fall under item 33b (their letter no. 13/7/64-cx7 dated 31-7-64). also that copper wire rods of 99.5% (with 6.02 phosphorous content) purity are unsuitable for use as electric conductor and copper wires and/or rods of this nature are not to be assessed under item 33b (ii) (board's letter no. 13/25/65-cx. 7 dated 5-1-1966). the collector has failed to take these instructions into account.4. the finding of the collector that wires and wire rods are not interchangeable because according to 1si specification no. is 3288 of may, 1977, copper wire and copper wire rods are distinct from each other and copper wire upto 10 mm is regarded as wire above 10 mm is regarded as rods, is not correct. an order placed by m/s. indian telephone industries describing phosphorous bronze rods.....
1. This is an appeal to the Tribunal u/s 35B of the Central Excises & Salt Act, 1944 against order-in-appeal No. 241-242/West Bengal/82 dated 6-11-82 passed by the Collector of Customs & Central Excise (Appeals), Calcutta, and a cross appeal has also been filed by the CCE., West Bengal before the Tribunal.

2. The Appellants manufacture Fourdrinier Wire Cloth, Dandy Rolls and Dandy Accessories falling under Item 68 of the C.E.T. amongst other products from Copper Alloy Wires. Copper Alloy Wires as also Strips are also manufactured by the Appellants. The dispute in the present case is regarding the classification of three types of scrap, namely, (i) that arising out of Fourdrinier Wire Cloth, Dandy Rolls and Dandy Accessories etc., (ii) that arising out of Copper Alloy wires and (iii) that arising out of Copper Alloy strips. The Appellants had claimed classification under T.I. No. 68 in respect of the first, 26A (ia), for the second and 26A(ib) for the third. The Asstt. Collector classified the first and third types of scraps under item 68 and the second type of scrap, in the case of wires upto 1 mm. diameter under item 68 instead of 26A(ia). The Appellate Collector ordered that the scrap of strips [item 26A (ii)] should be classified under item 26A(ib).

However, as regards classification of Copper Alloy wires, he ordered that this should be under item 33B of the Tariff.

3. In the present appeal it is contended that the classification of copper wires upto 1 mm. diameter under item 33B is unlawful and beyond jurisdiction inasmuch as Sec. 35A empowers the Collector to confirm, modify or annul the order appealed against and if he wants to enhance the penalty, fine etc. a reasonable opportunity should be afforded to the appellants. In this case classification under item 33B involves a higher incidence of duty and various operational constraints and yet no opportunity was provided. Notwithstanding this legal objection the wires being manufactured are of Brass and Phosphor Bronze which are neither capable of being used for electrical purpose nor are marketed for such purposes. They are used for the manufacture of wire cloth dandy rolls which are used in the paper mills. When such wires are sold outside, they are used for purposes other than electric. The Industrial Licence possessed by the Appellants is for industrial quality, non-electrical copper and copper alloy wires. The Central Board of Excise & Customs have instructed that Brass Wire with even 97% copper content, cannot be used as electric conductor and do not fall under item 33B (Their letter No. 13/7/64-CX7 dated 31-7-64). Also that Copper Wire rods of 99.5% (with 6.02 phosphorous content) purity are unsuitable for use as electric conductor and copper wires and/or rods of this nature are not to be assessed under Item 33B (ii) (Board's letter No. 13/25/65-CX. 7 dated 5-1-1966). The Collector has failed to take these instructions into account.

4. The finding of the Collector that wires and wire rods are not interchangeable because according to 1SI specification No. IS 3288 of May, 1977, Copper Wire and Copper Wire Rods are distinct from each other and copper wire upto 10 mm is regarded as wire above 10 mm is regarded as rods, is not correct. An order placed by M/s. Indian Telephone Industries describing phosphorous Bronze Rods as covering material of 3 03 mm. is filed. They have also described brass wires over 1 mm diameter as 'Brass Rolls'. The ISI specification was modified in 1981 where the dimension of copper wire is upto 6 mm. and that of wire rod is upwards of 6 mm. Before that there was no dimension specified for wire rods in ISI 1973. It is also submitted that in Customs Tariff Heading 74.03, copper wire has been included but no specific mention of copper wire is made in item 26A, though wire has been mentioned for iron and steel products under item 25AA. The term 'Wire' and 'Wire Rods' are synonymous and the copper wires should also be classified under item 26A (ia). As regards scraps of wires, they do not conform to the word 'manufacture' since they are obtained in the process of mauufacture of wires and have no use at all except melting.

There are several rulings of the Supreme Court and the Board and Appellate Collectors that scraps are not classifiable under item 68.

The Collector should, therefore, have held that scraps of Copper Alloy Wires are also classifiable under item 26A (ib).

5. In the parallel appeal u/s 35B the Collector of Central Excise, West Bengal has sought an order to quash the order-in-appeal No.241-242/WB/82 dated 6-11-1982 and to give effect to the order-in-original dated 30-12-1981 passed by the Assistant Collector, Serampore Textile Division. In this appeal it is stated that the Respondents have another factory at Nasik from where Copper Alloy wire of diameter 3 to 6.5 mm is brought to the factory at Uttar-para without payment of duty under Notification No. 118 of 75 dated 30-4-1975, as amended, classifying the same under item 68 and covering it by a consignor's bond. Out of this wire finer wires of different S.W.G. are drawn which have also been classified by the Asstt. Collector under T.I. 68. The major portion of the finer wire is used in the manufacture of Eourdrinier wire cloth which bears duty under item 68 and some portion of wire is sold. The end-use of the wire so sold has been verified and it is never used as a conductor of electricity. The National Test House, Alipore have also certified that IS 8130 of 1976 for Copper conductors is not satisfied by the samples sent. Board's orders dated 29-8-1964, 31-7-1964 and 5-11-1966 also support this ground. It is, therefore, clear that the Appellate Collector was not correct in law in classifying the wire under T.I. 33B and the order of the Asstt. Collector classifying it under item 68 is correct. Waste and scrap arising out of products falling under item 26A(i) and 26A(ia) alone are covered by item 26A(ib). In the instant case scrap arising out of copper alloy strips falling under 26A(ii) and Copper alloy wire classifiable under item 68 are correctly assessable under T.I. 68. It is, therefore, prayed that the order of the Appellate Collector be set aside.

6. Shri Bhowmik explained that the classification list involved four varieties of products, namely, (i) strips of copper alloy, (ii) scrap of such strips, (iii) wires of copper alloy and (iv) scrap of such wires. So far as wires are concerned they are clearly not classifiable under item 33B. Since even the concerned Administrative Collector has filed an appeal to this effect, the only question is whether they are assessable under Item 68 as claimed or under 26A(ia). Shri Bhowmik conceded that since ISS 3288 Part I of 1981 specified a diameter not exceeding 6 mm for wires and exceeding 6 mm for rods, the claim for assessment as rods on the ground that wires and rods are synonymous, gets weakened. As regards the scrap of wires, it is going for remelting, in support of which challans are filed. Since it is not manufactured, it should not be classified under item 26A(ib) but under Item 68.

7. For the Department, Shri Laxmi Kumaran supported assessment of the wires under item 68 instead of 33B. As regards assessment of the scrap arising out of wires under item 68 by the Asstt. Collector, he had nothing to say.

8. The Tribunal agrees that there was no reason to treat the copper alloy wires as electric wires under item 33B and that on the basis of the ISS they are correctly classifiable under item 68 since only 'wire rods' and not "wires" finds mention in item 26A(ia). As regards the scrap of wires, since this is specified in item 26A(ib) it is correctly classifiable under it. In the circumstances, the order of the Appellate Collector is modified accordingly and this will apply to both appeals before the Bench.

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