Copper wire drawing and insulation do not amount to manufacture, so excise duty and penalties cannot be sustained.

Drawing copper wire from a thicker gauge to a thinner gauge was treated as a non-manufacturing process, and the distinction sought to be made from precedents involving iron and steel was rejected. Varnishing the wire for insulation also did not create a new product, because copper wire remained copper wire and earlier tribunal rulings had already held that insulating copper wire is not manufacture. As the activity itself was not manufacture, central excise duty could not be sustained, penalties failed, and the question of small scale exemption did not survive.

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Issues: Whether drawing of copper wire from thicker gauge to thinner gauge and varnishing of the wire for insulation amounted to manufacture, and whether the goods were therefore liable to central excise duty with consequent penalty and denial of exemption.

Analysis: The process of drawing wire was held to be a non-manufacturing activity, and the distinction drawn on the basis that the cited precedent concerned iron and steel rather than copper was rejected. The Board circular withdrawing the contrary view was also noted. On insulation, varnishing of copper wire was treated as not bringing about a new product; copper wire remained copper wire, and earlier tribunal decisions had already held that insulating copper wire did not amount to manufacture. Since the activity itself was not manufacture, the question of eligibility to the small scale exemption did not survive.

Conclusion: The activity did not amount to manufacture, the duty demand and penalties could not stand, and the appeals were allowed.

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