D and H Secheron Electrodes vs Asstt. Collector, C. Excise

C.K. Prasad, J.—The petitioners have filed this revision application for quashing of the criminal prosecution pending in the Court of Addl. Chief Judicial Magistrate (Economic Offences Court) Indore in Criminal Case No. 27/86 u/s 9 of the Central Excises and Salt Act, 1944 (hereinafter referred to as the Act).

The facts giving rise to the present application are that on 4-2-1983, the officers of the Central Excise Department seized nine cases of stainless steel wires weighing 140 kgs. valued at Rs. 3,500/-. The seizure was effected on the ground that the straightening and cutting of the stainless steel wire into such cut wire called filler wire amounts to manufacture within the definition of Section 2(f) of the Act and consequently, the petitioner-company was bound to pay duty on the said filler wire under Tariff Item No. 68 of the Old Tariff of the said Act. A show cause notice was issued to the petitioner stating that during the period from August, 1978 to June, 1983, the company had not paid a sum of Rs. 68,683.82 P. by way of Central Excise Duty on the value of the said wire so manufactured during this period. The petitioners appeared before the Additional Collector and submitted that no excise duty is leviable on such an item. However, this contention of the petitioners was rejected by the Additional Collector by its order dated 21-12-1984 and he held that process of conversion of S.S. Wire into filler wire amounts to manufacture. In his opinion, by this process a new product known into the market by the distinct name and style comes into existence. Accordingly, he directed that an amount of Rs. 68,683.82 be recovered from the petitioner-company and he further imposed a penalty of Rs. 5,000/- on the petitioners.

Besides departmental proceedings, the respondent also initiated prosecution against the petitioners by filing a complaint stating therein that the petitioners had evaded payment of duty and had consequently liable to be prosecuted for offence under the Act. Aggrieved by the order of the Additional Collector dated 21-12-1984, the petitioners preferred appeal before the Central Excise Tribunal. The Tribunal by its order dated 28-3-1990 set aside the aforesaid order of the Additional Collector and held as follows :-

"We have gone through the records of the case. We have also considered the arguments of the learned Advocate and have gone through the judgment/decisions relied on by him. Following the ratio laid down by the aforesaid judgments/decisions, we hold that the processes of straightening the stainless steel wire and cutting the same into required sizes do not amount to manufacture within the meaning of Section 2(f) of the Central Excises and Salt Act, 1944 as no new product emerges as a result of the processes. The stainless steel wires remain stainless steel wire after processing. The change in their form does not bring about a new product although the appellants gave a local name ''Filler Wire''; to the straightened and cut stainless steel wire. Since there was no manufacture u/s 2(f) ibid, no Central Excise Duty was chargeable on the filler wire under Tariff Item 68."

Nobody has appeared on behalf of the petitioners. The petitioners were being prosecuted for evading payment of duty which they were liable to pay in view of the order dated 21-12-1984 passed by the Additional Collector, Central Excise. As stated earlier, the order of the Additional Collector dated 21-12-1984 has been set aside by the Central Excise Tribunal and it is not disputed by Shri B.G. Neema, learned counsel appearing on behalf of the respondents that the said order has reached its finality. In this view of the matter, it cannot be held that the petitioners had evaded payment of duty. The very foundation of the complaint has thus become non-est by virtue of the order of the Central Excise Tribunal, the petitioners cannot be prosecuted and punished for offence u/s 9 of the Central Excises and Salt Act, 1944.

For the reasons stated above, this application is allowed. The entire proceedings pending against the petitioners in the Court of Additional Chief Judicial Magistrate (Economic Offences Court) Indore in Criminal Case No. 27/86 are hereby quashed. Records of the courts below be sent back along with a copy of this order.