ORDER
S.L. Peeran, Member (J)
1.The assessee’s appeal and the Department’s appeal are taken up together for disposal as per law.
2. The assessee is aggrieved with Order-in-Original No. 23/99, dated 30-9-99 passed by the Commissioner of Central Excise, Hyderabad. The assessees are manufacturers of hermetically sealed gas compressors, split air-conditioners, water coolers and parts and accessories used in “Refrigeration and air-conditioning appliances” falling under Chapter sub-heading No. 8414.00. On verification of records, it was noticed that during the period from 12-11-93 to July, 1998, they had manufactured in their service centre the scrap of “waste of enamelled winding wire of copper (burnt and pieces) and copper tube”, along with other scrap materials such as the scrap of iron and aluminium by cutting defective compressors and defective stator which were received for the purpose of repairs and cleared the scrap of waste of enamelled winding wire of copper (burnt and pieces) and copper tube without payment of duty claiming that the same is not dutiable. The scrap centre is registered under Central Excise and the notice was removing the scrap of iron and aluminium on payment of duty. However, it was alleged that they wilfully avoided paying duty on the copper scrap removed from the centre. Therefore, larger period was invoked to demand duty of Rs. 55,44,257/- under Rule 9(2) of Central Excise Rules and also show cause notice was issued to explain as to why penalty should not be imposed. The appellants took the view that there were no excisable goods manufactured in the scrap centre and there was no manufacturing activity. The scrap are not goods. Old and defective compressors were received by them for repairs and while so doing certain worn out copper wires were removed which were burnt and were in the nature of small pieces. They contended that they were not excisable and not marketable. They relied on the judgment rendered in the case of Finolex Cables Ltd. v. CCE, Pune as reported in 1996 (86) E.L.T. 418, which has been confirmed by the Apex Court in 1997 (96) E.L.T. A229. They further relied on a subsequent judgment of the same party reported in 1998 (100) E.L.T. 517 which has also been confirmed by the Apex Court as reported in 2002 (146) E.L.T. A100. Further reliance was also placed on the judgment of the Tribunal rendered in the case of CCE, New Delhi v. Hitech Cable [1996 (86) E.L.T. 88]. Reliance was also placed on the judgment rendered in the case of CMI Ltd. v. CCE, Delhi [2002 (143) E.L.T. 209]. The Commissioner on due consideration did not agree with the appellants. He has noted that the scrap generated in the repair centre is required to be considered as goods and the activity carried out by them has to be considered as manufacture in terms of Section 2(f) of the Central Excise Act. He has also noted that larger period is invocable as they have not declared and paid duty. However, he has not adverted to the citations relied by the party. Hence, the grievance.
3. We have heard ld. Advocate, Smt. L. Maithili and ld. DR Shri B.R. Jagadish.
4. Ld. Counsel reiterated the submissions made before the authorities and pointed out that the judgments relied by them squarely applied to the facts of the case and hence the appeal is required to be allowed. She also contended that the demands are barred by time as the fact of the manufacture was known to them. She pointed out to the letters written by the party in this regard to the Department on 26-7-94 wherein they had disclosed the copper scrap, burnt enamelled winding wire generated in the centre. It was pointed out that there was a series of correspondence on this issue and ultimately the Superintendent by his letter dtd. 26-10-94 informed them to take Central Excise registration certificate and pay appropriate duty on discarded/rejected aluminium parts and did not clarify anything on the copper scrap in the form of burnt out wires generated in their factory. Therefore, she submitted that larger period was not invocable.
5. Ld. DR, Shri B.R, Jagadish reiterated the findings given by the Commissioner in the impugned order and stated that the activity of repairing the defective compressors is an activity of manufacture and the burnt copper scrap and burnt enamelled winding wire which is generated during such repair are goods and dutiable in terms of Chapter Heading 7404.90.
6. On a careful consideration and on perusal of the citations we notice that in the case of Finolex Cables Ltd. v. CCE [1996 (86) E.L.T. 418], which has been confirmed by the Apex Court, it has been held that wires and cables generated in the form of scrap are not excisable goods and the question of classification under Central Excise Tariff Act does not arise. The same view was again reiterated by the Tribunal in the same company’s case as reported in 1998 (100) E.L.T. 517 which was confirmed by the Apex Court as noted supra. It was held that unserviceable pieces in the form of a mass of metal and insulating material are not excisable and not liable to pay duty and it has also been held that there is no process of manufacture to bring any production of new goods. This view was reiterated by the Tribunal in the case of CMI limited v. CCE [2002 (143) E.L.T. 209]. It has also been affirmed by the Apex Court as noticed from 2003 (152) E.L.T. A106. It has been clearly held that end cuttings of cables are not classifiable under sub-heading 7404.90 in the light of the Apex Court judgment rendered in the case of Finolex Cables Ltd. [1997 (96) E.L.T. A229] and Collector v. Voltas Ltd. [1996 (87) E.L.T. A131] confirming the proposition that waste and scrap of insulating wires and cables are not excisable. The Tribunal also in the case of CCE v. Hitech Cables (supra) held that lengths of waste and scrap of insulated wires and cables are not excisable and not liable for classification under Chapter 85. This view was expressed in the light of the earlier judgment rendered in the case of Finolex Cable Ltd. We also note that the activity of repairing the damaged compressors cannot be considered as an activity of manufacture as held by the Commissioner. Therefore the generation of scrap of copper burnt wires and burnt enamelled winding wire of copper and other pieces cannot be considered as goods in the light of the judgment noted. Furthermore, there is no suppression of facts on the part of the appellant. The appellants by their letter dtd. 26-7-97 to the Assistant Commissioner of Central Excise, Division-IV, Namapally Station Road, Hyderabad had clearly declared about the activity carried out by the centre and disclosed about the generation of aluminium scrap, ferrous scrap, copper scrap, burnt enamelled winding wire and had asked the Commissioner to clarify as to whether duty is required to be paid. After long drawn correspondence, the clarification was issued by the Superintendent vide his letter dated 26-10-94, finally only with regard to discarded/rejected aluminium parts amounting to manufacture and called upon them to pay duty and therefore there is no suppression in the matter and larger period is not invocable and the duty demand is headed by time-bar. In the result, the appellant succeeds and the appellant’s appeal is allowed.
7. E/1126/03 is the appeal filed by the Revenue against Order-in-Appeal No. 52/03 dtd. 24-7-03. In this case also the Commissioner (Appeals) after due consideration of all the judgments noted (supra) has held that the generation of waste and scrap of wires and cables would be classifiable as waste and scrap and that they are not dutiable. Therefore, the remnants of enamelled copper wire on which duty was said to be confirmed was set aside. Ld. DR pointed out that this enamelled winding wire of copper was produced by the appellants during the manufacture of stators and rotors and not in the service centre but in the factory. Therefore, he held that in so far as this case is concerned, such scrap generated during the course of manufacture of stators and rotors are required to be considered as dutiable goods.
8. Ld. Counsel again reiterated the submissions made in their appeal which is noted (supra) and prayed for dismissing the Revenue’s appeal based on the judgments cited by her, which has been gone into great detail by the Commissioner (Appeals) and applied the ratio.
9. On a careful consideration we notice that the Commissioner (Appeals) has gone into the facts of the case and has applied the ratio of all the judgment noted (supra) and held that waste and scraps of wires and cables are not excisable goods and are not required to be classifiable under Chapter 85.44. We are of the considered opinion that the finding recorded by us in the assessee’s appeal based on the citations referred to supra would apply to the facts of this case also and we have to uphold the assessee’s contention and confirm the Commissioner’s (Appeals) orders. Revenue’s appeal is rejected.