Manufacture test for excise: insulation of transformer coil wire did not change its essential character or attract duty.

Insulation of electrical wire during repair of transformer coils was considered not to amount to manufacture for central excise purposes because the process did not change the wire's essential character or use. Although the insulated portion was marketable, the wire remained an electrical conductor serving the same function before and after insulation. On that basis, the excise duty demand was unsustainable, and the assessee's challenge succeeded while the revenue's challenge failed.

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Issues: Whether insulation of electrical wire in the course of repairing transformer coils amounts to manufacture so as to attract central excise duty.

Analysis: The insulated portion of the wire was found to be marketable, but the process of insulation did not alter the essential character or use of the wire. The wire continued to remain an electrical conductor and served the same purpose before and after insulation. On that reasoning, insulation by itself was held not to amount to manufacture.

Conclusion: The duty demand was unsustainable. The assessee's appeal succeeded and the revenue's appeal failed.

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