1982 (7) TMI 262 - CGOVT - Central Excise

Repairing transformers not manufacturing under Tariff Item 68. Court distinguishes repair from manufacture. Duty liability applies only to manufacturing.

IN RE : ELECTRIC EQUIPMENT FACTORY

IN RE : ELECTRIC EQUIPMENT FACTORY - 1982 (10) E.L.T. 794 (G. O. I.) Issues:1. Whether repairing transformers amounts to manufacturing under Tariff Item 68.2. Applicability of Notification No. 119/75 to the case.3. Interpretation of Section 2(f) of the Act 1 of 1944.4. Comparison between repair and manufacture for excise duty purposes.5. Commercial distinction between repair and manufacture under Central Excise Law.Analysis:1. The case involved a dispute regarding whether repairing transformers constitutes manufacturing under Tariff Item 68. The petitioners argued that repairing transformers did not result in the creation of a new product with a different name and use, hence duty under Tariff Item 68 should not apply. They emphasized the distinction between repair and manufacture, citing legal precedents to support their position.2. The issue of Notification No. 119/75's applicability was raised during the appeal process. The Appellate Collector upheld the Assistant Collector's decision that the notification did not apply to the petitioners' case. The petitioners contended that the lower authorities misinterpreted the non-applicability of the notification to conclude that duty was leviable on repaired transformers under Item 68.3. The petitioners invoked Section 2(f) of the Act 1 of 1944 to support their argument that repairing transformers should not be considered manufacturing. They relied on legal precedents, including judgments from the Hon'ble Supreme Court, to establish the criteria for determining whether an article qualifies as a manufactured product for excise duty purposes.4. A comparison was drawn between repair and manufacture in the context of excise duty liability. The petitioners highlighted that repair work aimed at restoring the serviceability and efficiency of damaged transformers did not result in the creation of a new commercial commodity with distinct characteristics. Various trade notices were referenced to support the distinction between repair and manufacture.5. The judgment emphasized the commercial distinction between repair and manufacture under the Central Excise Law. It was noted that repair should be distinguished from manufacture for excise duty purposes, as only the latter attracts duty liability. The government concluded that the process of repair conducted by the petitioners did not amount to manufacture under the law, and therefore, no duty was leviable on the repairs as long as new components and materials used in the repair process discharged their respective duty obligations.