Copy of the Board's Circular No

OFFICE OF THE COMMISSIONER OF CENTRAL EXCISE, CHENNAI-II 473.MHU COMPLEX, NANDANAM, ANNA SALAI, CHENNAI-35.

TRADE NOTICE NO.52/2001 Dt.31.07.2001

Sub: Whether drawing of iron and steel wires from wire rods amounts to Manufacture-reg.

*********

The copy of Board’s letter F.No.139/3/2001 CX-4 dt 18.06.2001 received from the Under Secretary to the Govt.of India , along with the Board’s Circular No.570/7/2001 CX dt 16.02.2001, which has already been communicated vide this office Trade Notice No.19/2001, is forwarded herewith for information and necessary action.

The contents of this Trade Notice may please be brought to the notice of all constituent members of your association in general and manufacturers in particular.

(Issued from file C.NO.IV/16/145/2001-Tech)

(G.V.KRISHNA RAO)

JOINT COMMISSIONER (TECHNICAL)

Copy of the Board's Circular No.570/7/2001-CX( F.No. 139/7/2000-Cx.4)
dated 16-2-2001

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 13mm". 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(l) 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 o 29-30 August, 2000. The Conference took note of GEGAT 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 meanings 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(l) or under note 1(m) of Chapter 72, the conference felt the activity of drawing should be treated as manufacture.

4. Board agrees with the above views of the Conference and accordingly holds that the drawing of wire from wire rods would amount to manufacture.

Yours faithfully,

Sd/-

(SANGHAMITRA PANDA)

DIRECTOR TO THE GOVERNMENT OF INDIA

F.NO.139/03/2001-CX.4

GOVERNMENT OF INDIA

Ministry of Finance

Department of Revenue

Central Board of Excise&Customs

New Delhi, the 18^th June,2001

1.Small Scale wire Drawing Units Association, Mumbai

2.Vidarbha Wire Manufacturers Association, Nagpur

3. Federation of Engineering Industries of India, New Delhi.

Sub: Whether drawing of iron and steel wires from wire rods amounts to manufacture-

Sir,

I am directed to refer to your letter NO.** dated on the above mentioned subject and to say that the matter has been examined. The Hon’ble Supreme Court vide their order dated 03.01.2001 have admitted Civil Appeal against CEGAT order No.85/2000B dated 13.01.2000 in the case of Technoweld Industries Vs CCE, Jaipur. In the circumstances, it is not proposed to withdraw Board’s Circular No.570/7/2001-CX dated 16.2.2001.

Yours faithfully,

(S.C.Bhatia)

Under Secretary (CX.4)

** Reference Nos.

(1) letter dated 26.04.2001

(2) VWMA/2001-2002 dated 28.04.2001

(3) FEII/01/1789 dated 03.05.2001

Copy forwarded to all Chief Commissioners of Central Excise for information and appropriate action.

(S.C.BHATIA)

Under Secretary(CX.4)