1997(03)LCX0206

IN THE CEGAT, COURT NO. II, NEW DELHI

Shri S.K. Bhatnagar, Vice President and Ms. Jyoti Balasundaram, Member (J)

Third Member on Reference : G.A. Brahma Deva, Member (J)

JAI VIJAY METAL LTD.

Versus

COLLECTOR OF CENTRAL EXCISE, ALLAHABAD

Misc. Order Nos. E/Misc/4/97-B1 & Final Order No. E/405-408/97-B dated 11-3-1997 in Appeal Nos. E/2337-2340/90-B

Cases Quoted

Hindalco Industries Ltd. v. Collector — Order No. E/71/96-B, dated 30-1-1996 — Relied on [Paras 3.2, 37, 57]

Ess Ess Metals & Alloys v. Collector — 1993(03)LCX0035 Eq 1993 (068) ELT 0423 (Tribunal)— Relied on [Paras 3.4, 34, 54, 58]

Ess Ess Metals & Alloys v. Collector — 1986(04)LCX0030 Eq 1986 (025) ELT 0366 (Tribunal) — Relied on         [Para 54]

Sanjay Wheels Ltd. v. Collector — 1986(03)LCX0031 Eq 1986 (024) ELT 0350 (Tribunal) — Referred          [Paras 3.4, 35]

Collector v. Peico Electronics & Electricals Ltd. — 1985(08)LCX0034 Eq 1987 (030) ELT 0608 (Tribunal) — Relied on [Paras 3.4, 33, 54, 58]

Indian Aluminium Cables Ltd. v. Union of India — 1985(05)LCX0012 Eq 1985 (021) ELT 0003 (S.C.) — Referred [Paras 6, 36, 40]

Swarup Fibre Industries Ltd. v. Collector — 1989(12)LCX0012 Eq 1990 (048) ELT 0118 (Tribunal) — Referred   [Para 15]

Indian Oil Corpn. Ltd. v. Collector — 1990(12)LCX0051 Eq 1991 (053) ELT 0347 (Tribunal) — Referred             [Para 31]

German Remedies Ltd. v. Collector — 1986(12)LCX0034 Eq 1987 (028) ELT 0144 (Tribunal) — Referred             [Para 31]

Collector v. Balraj Paper & Straw Board Mills (P) Ltd. — 1989(10)LCX0041 Eq 1990 (047) ELT 0139 (Tribunal) — Referred                                                                    [Para 31]

Collector v. Pashwara Paper (P) Ltd. — 1994(06)LCX0019 Eq 1994 (073) ELT 0297 (Tribunal) — Referred         [Para 31]

Guest Keen Williams Ltd. v. Collector — 1987(02)LCX0019 Eq 1987 (029) ELT 0068 (Tribunal) — Referred          [Para 31]

Bajrang Alloys Ltd. v. Collector — 1993(12)LCX0055 Eq 1994 (070) ELT 0624 (Tribunal) — Referred                  [Para 31]

Mahavir Metal Industries v. Collector — 1986(01)LCX0016 Eq 1987 (028) ELT 0085 (Tribunal) — Referred           [Para 31]

Sh. Hap Chemical Enterprises Pvt. Ltd. v. Collector — 1990(03)LCX0062 Eq 1990 (049) ELT 0377 (Tribunal) — Referred [Para 35]

MRF Ltd. v. Collector — 1986 (063) ELT 0968 (Tribunal) — Referred                                   [Para 35]

Peico Electronics & Electricals Ltd. v. Collector — 1996(10)LCX0048 Eq 1996 (087) ELT 0577 (S.C.) — Referred [Para 54, 58]

Advocated By : Shri V. Sridharan, Advocate, for the Appellant.

Shri K.K. Jha, SDR, for the Respondent.

[Order per : Jyoti Balasundaram, Member (J)]. - All the above four appeals involve common issues and were hence heard together and are being disposed of by this common order. The issues arising for determination in these cases are three-fold, viz.

(a) the correct classification of the goods in question i.e. wire rods manufactured by the appellants by the continuous casting and rolling process - whether under Heading 7605.11 as aluminium wire of which the maximum cross sectional dimension exceeds 6 mm (as confirmed by the Department) or under Heading 7601.30 as wire rods of unwrought aluminium or alternately under Heading 7604.10 as wire rods of wrought aluminium (as claimed by the appellants).

(b) the availability of benefit of Notification 101/88-C.E., dated 1-3-1988 at Sl. No. 5 of the Table annexed thereto.

(c) the date of taking effect of changes in the Finance Bill, 1988 by way of introduction of Chapter Notes 1(a) and 1(c) to Chapter 76.

2. The brief facts are that the appellants are engaged in the manufacture of aluminium wire rods, in coil form and with cross-sectional dimension exceeding 6 mm, which were classified under sub-heading 7603.10 as “aluminium wire rods” during the period prior to 1-3-1988. Consequent on introduction of the revised definitions under Budget, 1988, for “aluminium and articles thereof” in Chapter 76 of Central Excise Tariff Act, 1985, the appellants filed revised classification list, effective from 1-3-1988 and subsequent classification lists effective from 20-5-1988, 9-8-1988, claiming classification of their product under Heading No. 7604.10 and claiming concessional rate of duty at the specific rate, as applicable to “aluminium wire rods”. The Assistant Collector approved the revised classification lists effective from 1-3-1988, classifying the goods in question under sub-heading No. 7605.11, considering them as aluminium wires, after observing that since the goods in question are in “coil form” they fall in the category of “wire”, as defined under Chapter Note 1(c) of Chapter 76 and chargeable to duty at the ad valorem rate as applicable to “aluminium wires”. The lower appellate authority having upheld the four separate orders passed by the Assistant Collector, the appellants have preferred the above appeals.

3. We have heard Shri V. Sridharan, learned Counsel for the appellants and Shri K.K. Jha, learned SDR for respondents and record our findings as below :-

Issue No. 1

3.1 Classification of wire rods : The plea of the appellants is that the properzi rods manufactured by them are unwrought aluminium wire rods, falling under sub-heading 7601.30, applying the test of commercial parlance and also having regard to the fact that the show cause notice and the lower authorities have recognised that the products are wire rods. The commercial parlance test is satisfied by the IS glossary of terms relating to aluminium and aluminium alloys IS 5047 : 1986, wherein para 2.1 defines unwrought metal as a metal in any cast form meant for further processing; para 2.1.7 defines redraw rod as coiled rod of quality suitable for drawing into wire and para 2.1.8 defines wire rod as being the same as redraw rod. The appellants submit that a casting per se can never produce a coil and, therefore, redraw rod mentioned in IS as a coiled rod would, therefore, per se, cover only wire rod obtained by properzi process which is a continuous casting and rolling process of obtaining redraw rod in coil form. It is their further contention that only wire rods obtained by extrusion process or by rolling of billets/wire bars that can be treated as wrought metal falling under Heading 7604.10 (when not in coil form) and wire rod obtained by rolling or extrusion, if in coil form would go outside 7604 and falling under 7605 by virtue of statutory definition contained in Chapter Note 1(a) of Chapter 76, and if properzi rod is also to be treated as wrought metal no wire rod would ever fall under sub-heading 7601.30 which heading would thus be rendered redundant and nugatory. The appellants further submit that wire rods even in coil form would fall under 7604 by virtue of later portion of the Chapter Note 1(a) wherein coil forms of rods and bars are not excluded.

3.2 We find that the classification of the identical products has been decided in the case of Hindalco Industries Ltd. v. CCE, Allahabad (Order No. E/71/96-B, dated 30-1-1996) wherein the Tribunal has relied upon Chapter Note 1(a) of Chapter 76 introduced by the Finance Bill of 1988, so as to completely align the Central Excise Tariff with the HSN wherein the term bars and rods and wires were defined and Note 1(a) defines bars/and rods as “rolled, extruded, drawn or forged products not in coils”; while Note 1(c) defines wires as “rolled, extruded or drawn products in coils” and the Tribunal held that as the definition of wires was contained in the Schedule to the Central Excise Tariff Act, 1985, it would prevail over other aspects viz. trade understanding, common parlance and ISI specifications and upheld classification of properzi rods in coil form as aluminium wire under Heading 76.05. In addition, we see no force in the submission of the learned Counsel that sub-heading 7605.30 would be rendered redundant if properzi rods were also to be treated as wrought metal because wire rods obtained by casting (and without mechanical working such as rolling) would be covered thereunder as wire rods of unwrought aluminium. Since the properzi process of making wire rods involve rolling (albeit continuously with the casting) they do not satisfy the description of unwrought aluminium and hence, will not fall within the coverage of sub-heading 7601.30.

Classification under Heading 76.04 is also ruled out in view of Note 1(a) to Chapter 76. The reliance on the later portion of Note 1(a) which reads as under :

“The expression also covers cast or sintered products, of the same form and dimensions, which have been subsequently worked after production (otherwise than by simple trimming of descalling), provided that they have not thereby assumed the character of articles or products of other Headings.”

also does not advance the claim of the appellants for classification under Heading 76.04 because the entire Note has to be read harmoniously as a whole and the later portion cannot be viewed in isolation from the preceding portion wherein rolled, ...... products not in coils have been statutorily defined as bars and rods while rolled ... products in coils have been treated as wires. In the light of the above discussion, and also following the order of the Tribunal in the case of Hindalco Industries (supra) which applies on all fours to the facts of this case, we uphold the classification of properzi rods under sub-heading 7605.11. Accordingly, this issue is answered in favour of the Revenue.

Issue No. 2

3.3 Benefit of Notification No. 101/88 at Sl. No. 4

The contention of the appellants is that in the absence of any statutory definition of the expression “wire rod” in the tariff, the expression as appearing in the Notification has to be interpreted according to commercial understanding i.e. even assuming without admitting that for the purpose of classification they would fall under Heading 76.05 as wire. However, as rightly contended by the learned SDR, and as held by the Tribunal in the Hindalco Industries order, since the items to which the rates were applicable, were described differently in the Notification and we have held that the product is in fact aluminium wire classifiable under Heading 76.05, only the rates applicable to aluminium wires indicated in the Notification will apply. Hence, we hold that Sl. No. 8 of the Notification and not Sl. No. 4 will be applicable to the goods in question. This issue is answered in favour of the Revenue.

Issue No. 3

3.4 Effective date of Chapter Note 1(a) and 1(c) to Chapter 76

Prior to 1-3-1988 the rate of duty mentioned in the tariff for sub-heading 7603.10 (wherein according to the Revenue, properzi rods were classifiable) was 50% + Rs. 4000/- per M.T. As per the Finance Bill of 1988, the rate of duty in the Tariff for Heading 76.05 (where the properzi rods are now classified) is also 50% + Rs. 4000/- per M.T. In other words, the rate of duty remained the same in both the tariffs. That being so, the provisions of the Provisional Collection of Taxes Act, 1931 would not apply as the present case would not be one of imposition of penalty or increase in excise duties and for considering the applicability of the above Act in the tariff rates, as contained in the tariffs have to be looked at and not the effective rates read with Notification as evident from a plain reading of Section 3 of the Act and as held by the Tribunal in the case of Ess Ess Metals and Alloys and Another v. CCE, Chandigarh (Final Order Nos. E/54-55/93-B1, dated 18-3-1993 [1993(03)LCX0035 Eq 1993 (068) ELT 0423 (Tri.)]. This order in turn relies upon the earlier orders of the Tribunal in the case of Saney Wheels Ltd., Durgapur v. CCE reported in 1986 (024) ELT 350 and CCE v. Peico Electronics and Electricals Ltd. reported in 1985(08)LCX0034 Eq 1987 (030) ELT 0608 (Tribunal) = 1986 (006) ECR 416. As a consequence, we agree with the appellants that the tariff changes brought about in Chapter 76 by the Finance Bill of 1988 would be effective only from 13-5-1988 when the Bill was enacted as Finance Act, 1988 and, therefore, the demand for the period from 1-3-1988 to 12-5-1988 cannot be sustained and is hereby set aside. This issue is hence answered in favour of the appellants.

4. The appeals are disposed of in the above terms.

5. [Order per : S.K. Bhatnagar, Vice President]. - These are appeals against the common order-in-appeal Nos. 27 to 30-C.E./ALLD/90, dated 29-3-1990 passed by Collector of Central Excise (Appeals), New Delhi.

6. Learned counsel stated that “the Supreme Court in Indian Aluminium Cables Ltd. v. Union of India - 1985(05)LCX0012 Eq 1985 (021) ELT 0003 (S.C.) has held that properzi rods are indeed wire rods or even bars and rods in the Tariff. This proves that properzi rods are commercially bought and sold as wire rods.

7. The expressions `unwrought aluminium’ and `wire rod’ are not defined in the Tariff. Therefore, one has to go by the commercial parlance test. In the present case, this is evidenced by the IS Glossary of Terms relating to aluminium and aluminium alloys IS 5047 : 1986, which is not a specification for commodities, but is a glossary of terms. The Supreme Court has repeatedly held that IS glossary of terms represent the trade and commercial understanding.

8. Para 2.1 of this IS 5047 : 1986 defines `unwrought metal’ as a metal in any cast form meant for further processing. Para 2.1.8 defines `wire rod’ as same as redraw rod. Para 2.1.7 defines `redraw rod’ as coiled rod of quality suitable for drawing into wire.

9. Redraw rod/wire rod are defined in paras 2.1.7/2.1.8 respectively as a sub-category of para 2.1 defining unwrought metal. This is also clear from a perusal of IS which has indicated `unwrought metal’ in bold and bigger prints while `redraw rod’ and `wire rod’ are shown in smaller prints. Thus, IS 5047 : 1986 specifically recognises redraw rod and wire rod as a species of unwrought aluminium.

10. It is obvious that a casting per se can never produce a coil. It will be impossible to have a mould of such an infinite length so as to get the coil in `as-cast’ condition. Therefore, the redraw rod mentioned in IS 5047 : 1986 as a coiled rod would, therefore, per se cover only wire rod obtained by properzi process which is a continuous casting and rolling process of obtaining redraw rod in coil form.

11. There is no other redraw rod/wire rod known in the aluminium industry obtained in coil form and which has been obtained only by casting of metal alone and no other process. Therefore, redraw rod/wore rod referred to in IS 5047 : 1986 refers to properzi rods only. Therefore, in terms of this common parlance test as evidenced by the IS the properzi wire rod would be unwrought aluminium wire rod falling under sub-heading 7601.30.

12. If `as-cast’ form alone be unwrought aluminium, then there would be no wire rod/redraw rod which can fall in the IS glossary as a category of unwrought metal and consequently under sub-heading 7601.30.

13. Wire rod can also be obtained by extrusion process or by rolling of billets/wire bars. The wire rods obtained by extrusion or rolling process are indeed in wrought metal form. This is recognised by IS 5047 : 1986 vide paras 2.2, 2.2.16, 2.2.16.1, 2.2.16.2. Also see page 28 at page 30 of the paperbook and page 130 Vol. 2 of Encyclopedia of Chemical Technology by Kirk-Othmer. The only other wire rod available, therefore, is the properzi wire rod. If this is also to be treated as wrought metal, there would be no wire rod which can fall under sub-heading 7601.30 which would render sub-heading 7601.30 redundant and nugatory.

14. The properzi process of making wire rod, though involves apart from casting of metal, some rolling also, the rolling process, in a sense, forms an integral part of the casting of the metal. That is why the process is called continuous casting and rolling. It is not as if the metal in unwrought form is obtained distinctly and thereafter separately a further processing or working like rolling etc., is undertaken. It is one integrated process. That is why IS 5047 : 1986 puts redraw rod as a variety of unwrought metal.

15. In Swarup Fibre Industries Ltd. v. CCE - 1989(12)LCX0012 Eq 1990 (048) ELT 0118 (Tribunal), the CEGAT was concerned with the classification of vulcanised fibre in the form of rods. Heading 39.13 covered natural polymer in primary form. Primary form was statutorily defined in Chapter Note 6 in a particular manner and sheets, rods etc., are not covered by this definition of primary form. Heading 39.20, however, inter alia, covered sheets of plastics. The Revenue classified vulcanised fibre sheets under Heading 39.20. The Tribunal noticed that the vulcanised fibre is always available in the form of rods, sheets, plates and strips and there is no stage prior to this. The Tribunal noticed that if literal meaning of primary form is given, then sub-heading 3913.30 will become redundant (last sentence of para 10.1). Therefore, the Tribunal held that vulcanised fibre sheets would fall under sub-heading 3913.30. The same reasoning will equally apply for classification of properzi rods. They have to fall under sub-heading 7601.30.

16. The Department has also been consistently classifying for a long period of time the wire rods under sub-heading 7601.30 even after the amendment made by Finance Act of 1988. See gate pass of National Aluminium Co. dated 9-1-1993 at page 11, dated 2-11-1989 at page 13 and gate pass of Indian Aluminium Co. at pages 12 and 14 wherein wire rods in coils have been classified under sub-heading 7601.30.

17. Sub-heading 7604.10 also covers wire rods under Heading 76.04 covering aluminium bars, rods and profiles. It thus appears at first blush that the Tariff has sought to classify wire rods under more than one heading. However, a proper reding of the headings as a whole with the chapter note clearly brings out the scope of the various sub-headings.

18. While wire rod obtained by the properzi process would always fall under sub-heading 7601.30 though it is in coil form, wire rod obtained by extrusion process or rolling process would fall under sub-heading 7604.10 as a species of bars and rods only when it satisfies the statutory definition of bars and rods given in Chapter Note 1(a) of Chapter 76 i.e. when it is not in coil form. Wire rod obtained by rolling or extrusion process, though may be a species of bars and rods generally, if it is in coil form, would by virtue of the statutory definition contained in Chapter Note 1(a) would go outside Heading 76.04 and also consequently from sub-heading 7604.10 but would fall under Heading 76.05. It is submitted that this is the correct reading of the various headings and sub-headings.

19. The definition contained in Chapter Note 1(a) for bars and rods needs to be looked into only for interpreting the expression `bars and rods’ wherever it occurs in Chapter 76. In other words if we are not to interpret or understand the meaning of the expression `bars and rods’, we are not to look at Chapter Note 1(a) defining the said expression `bars and rods’. Similarly, we need to look at Chapter Note 1(c) only when we have to interpret of understand the meaning of the expression `wire’ appearing in Chapter 76.

20. Heading 76.01 Simply refers to unwrought aluminium whether or not alloyed. There is no reference either to bars and rods or aluminium wire in Heading 76.01. Therefore, for construing the expression `unwrought aluminium’ appearing in Heading 76.01 one need not look at Chapter Note 1(a) or 1(c) of Chapter 76.

21. Unwrought aluminium falls under Sl. No. 1 of Notification No. 101/88 (pages 9 to 10 of the paperbook) attracting 11% duty which is much lower than the 18% duty already paid by the appellants. Hence, the question of demanding duty at 20% as done by the Revenue in the present case cannot arise differential duty of 2% cannot arise.

IN VIEW OF LATER PORTION OF CHAPTER NOTE 1(a) WIRE RODS IN QUESTION EVEN IN COIL FORM WOULD FALL UNDER

HEADING 76.04

22. The later portion of Chapter Note 1(a) reads as under :

“The expression also covers cast or sintered products, of the same form and dimensions, which have been subsequently worked after production (otherwise than by simple trimming or descalling), provided that they have not thereby assumed the character of articles or products of other headings.”

23. The properzi rods squarely answer this description. These are cast products which have been subsequently worked after production. In fact the later portion of Chapter Note is tailor-made for that product only.

24. The expression “of the same form and dimensions” simply refer to form i.e. cross section and dimension viz., cross section exceeding 1/10th of the width etc. The expression “same form and dimensions” do not refer to not in coils. If the later portion were also to refer to not in coils there is no need for the later portion at all. The product would have been covered by the opening part of Chapter Note 1(a).

25. The later portion of Chapter Note 1(a) has expanded the scope and is over and above the products mentioned in the first part of Chapter Note 1(a).

26. We are not concerned with Chapter Note 1(b) as such. However, opening portion of this chapter note refers to “whether or not in coils”. The later portion of this chapter note is identical to later portion of Chapter Note 1(a). The expression “same form and dimensions” appears in this chapter note also. As already seen the opening part refers to whether or not in coils. The expression same form and dimensions obviously, therefore, cannot refer to whether or not in coils.

27. Though, it is true that it is possible for the Legislature to have artificial definition treating X as Y and vice versa, generally speaking statutory definitions in HSN are more in tune with trade and commercial understanding and definition. Viewed in this light also, it is evident that a product which is bought and sold as wire rod world over would, without any reason, be treated as wire in the HSN. It is submitted that the error is not in the HSN definition but in the interpretation placed by the Revenue of reading the words not in coils appearing in Chapter Note 1(a) in isolation. If later portion of Chapter Note 1(a) is duly considered the wire rod would fall under Heading 76.04.

28. The later portion of Chapter Note 1(a) refers to goods not assuming the character of articles of another heading. Wire rod manufactured by the appellant is a raw material/input for the manufacture of wire. Thus, wire is a product to be manufactured from the wire rod. The question of, therefore, the wire rod assuming the character of wire cannot arise.

29. Even if it is assumed that the product should be described as an aluminium wire for the purpose of Heading 76.05, it is submitted that the benefit of Sl. No. 4 of Notification No. 101/88, which covers wire rod cannot be denied to the appellants.

30. As already aforesaid, there is no definition of `wire rod’ in the Tariff. The expression wire rod’ is also not defined in Notification No. 101/88. Sl. No. 4 confers exemption to `wire rods’ apart from bars and other rods of `aluminium wrought’. The expression `wire rods’ appearing in Sl. No. 4, in the absence of any statutory definition either in the Tariff or in the notification, has to be understood in commercial sense. It has already been submitted that commercially the product in question is known, bought and sold as wire rod. Once that is so, it would fall under Sl. No. 4 of Notification No. 101/88.

31. The conclusion flowing out from the Department’s argument would at best be that the wire rod in question would fall under Sl. No. 8 of Notification No. 101/88 as it is aluminium wire in view of the definition contained in Chapter Note 1(c). The position would, therefore, be that the product in question is covered both by Sl. No. 4 as well as Sl. No. 8 of the notification. Once this is so, the conflict would be resolved by the well known position that when two exemptions are available, the assessee can choose anyone which will reduce its burden. [See 1990(12)LCX0051 Eq 1991 (053) ELT 0347 (Tribunal) = 1992 (038) ECR 630 at 639, 1987 (028) ELT 144, 1990 (47) ELT 139, 1985 (022) ELT 544 and 1994 (073) ELT 297]. Equally, even if one has to apply the argument of specific description vis-a-vis general description, then also the wire rod would fall under Sl. No. 4. Thus, viewed from any angle, the wire rod attracts only 18% duty under Sl. No. 4 of Notification No. 101/88. Thus, even if the conclusion of the Department that wire rod in coil is aluminium wire for the purpose of Heading 76.05 is accepted, no differential duty payable E.4. It may be clarified that it is not open to the Department to contend that Sl. No. 4 applies only to wire rods falling under sub-heading 7604.10. It not also open to the Department to argue that only products satisfying the definition of `bars and rods’ as given in Chapter Note 1(a) can fall under Sl. No. 4 of Notification No. 101/88. This is for the simple reason that Chapter Note 1(a) would apply only when the expression `bars and rods’ occurs. When such an expression does not appear in Sl. No. 4 of the notification, Chapter Note 1(a) cannot be looked into. Further, it is well settled that chapter note do not apply to interpretation of words in the notification. Hence, wire rods in question would fall under Sl. No. 4 of Notification No. 101/88 only. See 1987 (029) ELT 68, 1994 (70) ELT 624, 1987 (028) ELT 85.

IN ANY CASE THE AMENDMENT TAKES EFFECT FROM 13-5-1988 ONLY

32. The case of the Revenue is that the wire rods in question fall under Heading 76.03 prior to 1-3-1988 and under Heading 76.05 as aluminium wire after that date. The rate of duty mentioned in the Tariff (tariff rate) prior to 1-3-1988 for sub-heading 7603.10 was 15% + Rs. 4000/- per MT. The rate of duty mentioned in the Tariff for Heading 76.05 as per Finance Bill of 1988 is also 50% + Rs. 4000/- per MT. In fact practically for the entire Chapter 76 the rate of duty in the Tariff as it stood prior to 1-3-1988 was only 50% + Rs. 4000/- per MT. That was the rate even in the Chapter 76 as introduced by Finance Bill, 1988. In other words as far as the products in question are concerned, the rate of duty remained the same in both the Tariffs. Once that is so, the provisions of Provisional Collection of Taxes Act, 1931 cannot apply as the present case would not be a case of imposition or increase in excise duties.

33. For considering the applicability of Provisional Collection of Taxes Act, 1931 only the tariff rates mentioned in the Tariff has to be seen and not the effective rates read with the notification. This is evident from a plain reading of Section 3 of the Provisional Collection of Taxes Act, 1931. This is also clear from the judgment of the Hon’ble Tribunal in the case of CCE v. Peico Electronics & Electricals Ltd. - 1985(08)LCX0034 Eq 1987 (030) ELT 0608 (Tribunal) which has been relied upon by the Collector himself in the impugned order. In para 8 of this order, the argument of the assessee therein to look at the effective rate i.e. tariff rate read with notification was in terms rejected by the Tribunal.

34. In relation to the very provisions introduced by the Finance Bill, in relation to Chapter 79, the Tribunal in the case of Ess Ess Metal & Alloys v. CCE, Final Order Nos. E/54 and 55/93-B1, dated 18-3-1993 [1993(03)LCX0035 Eq 1993 (068) ELT 0423 (Tri.)] has specifically held that the amendment would be effective from 13-5-1988. This ratio directly applies to the present case as this judgment also dealt with the provisions of the Finance Bill, 1988 relating to another metals chapter. The Collector could not have ignored this judgment which is binding on him.

35. This submission of the appellants is also reinforced by the following further judgments :

(1) Sh. Hap Chemical Enterprises Pvt. Ltd. v. CCE - 1990(03)LCX0062 Eq 1990 (049) ELT 0377 (Tribunal)

(2) Sanjay Wheels Ltd. v. CCE - 1986(03)LCX0031 Eq 1986 (024) ELT 0350 (Tribunal)

(3) MRF Ltd. v. CCE - 1993 (063) ELT 0968 (Tribunal)

As a consequence even if the view of the Revenue that the product would be aluminium wire falling under Heading 76.05 is correct, it can be so only from 13-5-1988. The demand for the period from 1-3-1988 to 12-5-1988 is not maintainable.

36. Learned DR reiterated the Department’s view point as contained in the order-in-original and order-in-appeal and emphasised that it is a fact that `wire rods’ were not defined in the Central Excise Tariff during the relevant period but the fact remains that the `goods in question’ fall outside the purview of `rods’ as defined under Chapter note 1(a) of Chapter 76 w.e.f. 1-3-1988 since they are admittedly in the `form of coils’. On the other hand, the goods in question of the given description fit in the definition of `wire’ given in Chapter note 1(c) and the sub-heading No. 7605.11 specifically covers such goods which are of cross-sectional dimension exceeding 6mm. As regards the plea taken by the appellants about ISI specifications, it may be stated that the specifications issued by the ISI are primarily for ensuring quality control and have nothing to do with the classification of the goods under the Central Excise Tariff as has been held by the Hon’ble Supreme Court in the case of Indian Aluminium Cables Ltd. reported in 1985 (021) ELT 3, wherein it has been held by the Hon’ble Court that although there are two separate ISI specifications for `properzi rods’ and `wire rods’, but for the purpose of classification under the Central Excise Tariff, both were to be classified under one tariff heading, ignoring the ISI specifications. Hence, when the goods in question fall within the definition of `aluminium wire’ given in the tariff effective from 1-3-1988 there is no scope for classification on the basis of trade parlance ISI or any other consideration. In fact, Notification No. 69/89, referred to by the appellants at the time of hearing, also justifies the stand taken by the Asstt. Collector regarding classification of the goods in question.

37. He further added that the Tribunal’s order in the case of Hindalco Industries Limited v. CCE, Allahabad (Order No. E/71/96-B, dated 30-1-1996) is in respect of similar products and in their order, the Tribunal has upheld the Department’s contention that such product was classifiable as aluminium wire under Chapter Heading 76.05. Further, the Tribunal has also held that with the change in the definition of the product, net effect was increase of duty. Therefore, in terms of Section 3 of the Provisional Collection of Taxes Act, 1931, it shall take effect from the date of introduction of the change in the Finance Bill i.e. 1-3-1988 and not from the date on which the Bill became the Act.

38. Similarly, on the question of applicability of rates indicated in Notification Nos. 150/86 and 101/88, the Tribunal has held that the items to which rates became applicable were described differently therein and as properzi wire/rod is in fact aluminium wire classifiable under chapter Heading 76.05, therefore, only rates applicable to aluminium wire, if any, indicated in the aforesaid two notifications shall be applicable. The Tribunal has also upheld the penalty imposed on the appellants. Since the appellants were under obligation to file a fresh classification list in accordance with the budgetary changes, once the same had been introduced but they did not do so.

39. It was his contention that the ratio of the above order was squarely applicable to the facts of the present case.

40. I have considered the above submissions. I observe that the `wire rods’ manufactured by properzi process are required to be treated differently from ordinary wire rods as well as wires. The Supreme Court judgment in the case of Indian Aluminium Cables reported in 1985(05)LCX0012 Eq 1985 (021) ELT 0003 (S.C.) was pronounced when the new tariff had not come into force and its ratio cannot be applied in the changed circumstances when the tariff itself distinguishes between wire rods from rods and bars on one hand and wires on the other. It is even more significant that the chapter note provides a definition or description of products which do not fall in any of the categories described as rods, bars, wires, plates, sheets, strips and tubes etc. and calls them `profiles’ as evident from the Chapter note 1(b).

41. Since the product in question is manufactured by properzi process which admittedly includes both casting and rolling simultaneously, therefore, such wire rods in which an element of working gets simultaneously involved cannot be considered as a variety of unwrought element and cannot be classified under 7601.30.

42. At the same time, they can also not be classified under 7604.10 as they are admittedly in coil form and the tariff covers rolled, extruded or drawn products in coils under the category of wires as per Chapter Note 1(c). In other words, heading 7604.10 covers only such wire rods which were not in coil form in spite of the fact that ISI recognises a form called `wire rods’ in coiled form.

43. Further, in may opinion, the products in question could not be classified under 76.05 also inasmuch as the definition of wire covers only rolled, extruded or drawn products in coils which have a uniform cross section along with their whole length whereas the products produced by the perperzi process are admittedly formed by casting and rolling simultaneously.

44. This, therefore, lead us to consider as to whether these products were `profiles’ covered by Chapter Note 1(c) which reads as follows :-

“Rolled, extruded, drawn forged or formed products, coiled or not, of a uniform cross-section along their whole length, which do not conform to any of the definitions of bars, rods, wire plates, sheets, strip, foil, tubes or pipes. The expression also covers cast or sintered products, of the same forms, which have been subsequently worked after production (otherwise than by simple trimming or de-scaling), provided that they have not thereby assumed the character of articles or products of other headings.”

From the definition cited above, it would be clear that profiles may be extruded, forged or formed products, coiled or not, of a uniform cross section. The fact that in the later portion of this definition, the word `subsequently worked after production’ occur does not effect the position inasmuch as these words are preceeded by the phrase `also covers‘. In other words, the definition of a profile is an inclusive definition. Since the product in question does not conform to the definition of bars, rods, wire plates, sheets, coil, tubes or pipes and is a product formed simultaneously by casting and rolling, therefore, in my opinion, it can only be considered as a profile. The profiles (other than hollow profiles) are classifiable under sub-heading 7604.29 - `other’. Therefore, I consider that the properzi rods/wire rods are classifiable under this heading.

45. Looking at the problem from a slightly different angle, the appellants have stated that wire rods are used for drawing wires and are not wires by themselves and this is correct; and they have also shown that as per ISI specifications, the properzi wire reods are a type of wire-rods. Therefore, commercially and factually, it will be odd to confuse between a parent and its offspring. That for central excise purpose, it is required to be treated as a profile is a different matter; But, the above factual and legal position would justify its exclusion from 7605 on one hand and from 7601.30 and 76.04 on the other. Hence, it has to be classified under 7604.29 as a `profile’. Therefore, with due respects, I differ from the view taken in the case of Hindalco Industries Ltd. and adopted by my learned colleague in here portion of the order.

46. However, insofar as the date from which the provisions of the Finance Bill came into force is concerned, I hold that it is the date of passing of the Finance Bill i.e. 1-3-1988 which will be the effective date for the purpose of applying the amended provisions.

47. Insofar as the question of relevant notifications is concerned, I would like to mention that in the case of aluminium, some notifications specifically refer to ISI specifications whereas others do not. Thus, for example, Notification No. 150/86 as amended by Notification 203/88 refers to wire rods whether or not in coils conforming to the ISI specifications. However, the notification relevant for our purposes, namely, Notification No. 101/88 does not refer to ISI specifications. Again, while the former does not cover `profiles’, the later does cover them.

As far as applicability of rates indicated in Notification 101/88 is concerned, I find that since the product has been held to be a `profile’ in the above paragraphs, the benefit thereof could be availed of only to the extent prescribed in Notification 101/88, dated 1-3-1988.

48. Since the effective rate of duty prescribed respect of profiles other than hollow profiles was 25%, therefore, the appellants were actually required to pay duty at this rate.

49. In the show cause notice, however, the duty has been demanded only @ 20% and there is no cross appeal for enhancement of duty. Therefore, the demand is required to be confined to the rate and amount demanded in the show cause notice.

50. In view of the above discussion, the appeals are rejected.

POINT OF DIFFERENCE

51. In view of the difference of opinion between Hon’ble Member (Judicial) and the Vice President, the matter is submitted to Hon’ble President for reference to a Third Member on the following points :-

“(1) Whether the product was classifiable as `aluminium wire’ under Heading 7605.11 or as `profile’ classifiable under 7604.29.

(2) Whether the effective rate of duty as prescribed under Notification 101/88 will be applicable from 1-3-1988.

(3) Whether the orders of the authorities below are required to be modified as proposed by Hon’ble Member (Judicial) or the appeals were required to be rejected as proposed by the Vice President."

52. [Order per : G.A. Brahma Deva, Member (J)]. - Since there has been difference of opinion between the Hon’ble Vice President and the Hob’ble Member (Judicial), the following questions have been referred to me to express my opinion as Third Member :-

“(1) Whether the product was classifiable as `aluminium wire’ under Heading 7605.11 or as `profile’ classifiable under 7604.29.

(2) Whether the effective rate of duty as prescribed under Notification 101/88 will be applicable from 1-3-1988.

(3) Whether the orders of the authorities below are required to be modified as proposed by Hon’ble Member (Judicial) or the appeals are required to be rejected as proposed by the Vice President."

53. I have heard both sides with reference to point of difference. It was submitted by Shri V. Sridharan, ld. Advocate that dispute is in respect of classification of wire rods manufactured by the appellants by the continuous casting and rolling process. Whether item in question is classifiable under Heading 7601.30 as wire rods of unwrought aluminium or alternately under heading 7604.10 as wire rods of wrought aluminium as claimed by the party or under heading 7605.11 as aluminium wire as per the department. He submitted that party’s claim was negatived by both the Members. The Hon’ble Judicial Member has accepted the contention of the Revenue in classifying the item under 7605.11 as aluminium wire. But the Hon’ble Vice President has gone beyond the dispute in deciding the item as `Profile’ classifying it under 7604.29. Shri Sridharan said that this was not even the case of the department and not even allegation in the show cause notice in treating the item as `Profile’ classifiable under 7604.29. He contended that no material has been placed on record by either side in classifying the item as `profile’ and the Hon’ble Vice President has gone beyond the adjudication proceedings. He also contended that this issue was not even urged by the Departmental Representative during the hearing. It was also susbmitted by him that though the claim of the assessee was negatived by the Hon’ble Judicial Member, but he has nothing to argue on this issue at this stage since the Judicial Member has followed the precedence in classifying the item.

54. As regards other two questions he said that question No. 3 is inter-linked and connected with question No. 2. He submitted that modification of the impugned order arises only if Tribunal comes to the conclusion that changes in the Finance Act will come into force not from the date of introduction of the Bill but from the date of assent of the Bill. He contended that provisions in the Finance Bill will come into force from the date of introduction of Bill only if at all there was change in the rate of duty or if the levy was introduced for the first time in the Finance Bill. No such change has taken place in the instant case since the rate of duty as per the Tariff remains the same as it was even prior to the introduction of the Finance Bill. He said that the very issue had come up for consideration in the case of 1986(04)LCX0030 Eq 1986 (025) ELT 0366 (Tribunal) - M/s. Ess Ess Metal & Alloys and Another and the Tribunal as per Final Order Nos. E/54-55/93-B, dated 18-3-1993 [1993 (066) ELT 0423 (Tri.)] has held that Provisional Collection of Taxes Act, 1931 applies only to imposition or increase in duty following the earlier decision of the Tribunal in the case of M/s. Peico Electronics and Electricals Ltd. reported in 1985(08)LCX0034 Eq 1987 (030) ELT 0608 (Tribunal). He drew my attention to the para 7 of the said wherein it was observed that.

“The respondent’s contention that prior to 28-2-1982, the duty was `nil’ beca-use of the exemption which increased to 8% because the goods fell under Item 68, has no force, firstly because Section 3 of the Provisional Collection of Taxes Act talks of imposition or increase of excise duty by a provision of a Bill.”

He submitted that in the case of M/s. Ess Ess Metal and Alloys, the very Clause 8(1) of Finance Act, 1988 was discussed and with reference to that issue it was clearly held that clause of the Finance Act will be applicable only if there was increase or imposition of duty. He also contended that the view expressed by the Tribunal in the case of Peico Electronics and Electricals Ltd. was upheld by the Supreme Court as reported in 1996(10)LCX0048 Eq 1996 (087) ELT 0577 (S.C.) while dismissing the appeal filed by the party. In Para 9 of the judgment, the Supreme Court has clearly held that Section 3 of the Provisional Calculation of Taxes Act, 1931 empowers the Govt. where a Bill to be introduced on its behalf “provides for imposition or increase of a duty of customs or excise”, to insert in the Bill a declaration that “any provision of the Bill relating to such imposition or increase shall have immediate effect under the Act.”

55. Shri Jayaraman, ld. DR submitted that he has no quarrel with the proposition in classifying the item under 7605.11 as it was proposed by the Member Judicial following the earlier decisions of the Tribunal and since this was the claim of the department. As regards effective rate of duty as prescribed under Notification 101/88 he said that this will come into force from the date of introduction of the Finance Bill and not from the date of assent. He submitted that the change in duty has taken place with reference to the notification and the notification has to be read with the Tariff Entry. Furthermore, in the declaration under the Provisional Collection of Taxes Act, 1931 given at the time of introduction of Finance Bill, 1982 it was declared that provisions of clauses 76, 77, 81, 82 and 83 of the Bill shall have immediate effect under the Provisional Collection of Taxes Act, 1931. Clause 81 refers to the amendment of Central Excise Tariff and in view of the declaration it comes into force on the date it was introduced and the declaration is binding on both Govt. as well as on the party.

56. In reply Shri Sridharan submitted that the issue with reference to declaration also has been considered by the Tribunal as well as by the Apex Court in the cases referred to above. In respect of the declaration under the Provisional Collection of Taxes Act, 1931, the Supreme Court clearly held that provisions of Finance Act will come into force if there was any increase or imposition of duty. In other words it was held that if the levy was introduced for the first time then the provisions of Finance Act is applicable or if there was an increase in the rate of duty with reference to Tariff.

57. I have carefully considered the matter. On going through the respective proposed order written by my learned brothers, I find that there is some force in the arguments advanced on behalf of the appellants that no material evidence has been brought on record for classifying the item as `Profile’ and the Tribunal being a statutory authority cannot go beyond the adjudication proceedings. It was also the contention of the Revenue that it was not the case of the department in classifying the item as Profile. Further I find that the Member (Judicial) has followed the earlier decision (M/s. Hindalco Industries Ltd. v. CCE, Allahabad as per Order No. E/71/96-B, dated 31-1-1996) while deciding the issue of classification. In view of the judicial discipline and following the precedence, Member (Judicial) was right in classifying the item under Heading 7605.11.

58. As regards the remaining questions, i.e., effective date of Chapter Notes 1(a) and 1(c) to Chapter 76, I find that the very issue has already been dealt with by the Tribunal in the case of M/s. Ess Ess Metals and in the case of Pieco Electronics and Electricals Ltd. The Tribunal had taken the view that provisions of Finance Bill will come into force only if there was increase or imposition of duty. This view was upheld by the Supreme Court in the case of Peico Electronics and Electricals Ltd. referred to above. Since the Supreme Court has confirmed the view taken by the Tribunal that provisions of the Finance Bill will come into force from the date of introduction if there was imposition or increase in duty and no such element has taken place in this case, following the ratio of the said decision, I am also of the view that provisions of the Finance Bill will come into force from the date of assent of the Bill as it was proposed by the Hon’ble Member (Judicial). Accordingly the views expressed by the Hon’ble Member (Judicial) are concurred with on the issues referred to me. With this view, I am returning this file to the original Bench to pass an appropriate order. Ordered accordingly.

FINAL ORDER

In view of the majority opinion the item was classifiable under Heading 7605.11 and the orders of the authorities below are modified to the extent indicated in the order of the Hon. Member (Judicial)

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Equivalent  1999 (109) ELT 840 (Tribunal)