Excisability of transformer repair coils and research exemption for supplied transformers were upheld on marketability and notification conditions.

Conversion of double paper coated copper wire into coils for transformer repair did not amount to manufacture because the coils did not emerge as distinct, marketable excisable goods, so the duty demand failed; the limitation objection was unnecessary once the levy itself was unsustainable. Transformers supplied to IGCAR were eligible for exemption under Notification No. 10/97-C.E. because the goods were scientific equipment or apparatus cleared to a qualifying research institution under the Atomic Energy Department for research use, supported by the required certificate, so the exemption conditions were met and the duty demand could not stand.

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Issues: (i) Whether Double Paper Coated copper coils removed for replacement in transformers were excisable goods and liable to duty as insulated wire, and whether the demand was barred by limitation; (ii) Whether transformers supplied to the research institution at IGCAR were eligible for exemption under Notification No. 10/97-C.E. dated 01-03-1997.

Issue (i): Whether Double Paper Coated copper coils removed for replacement in transformers were excisable goods and liable to duty as insulated wire, and whether the demand was barred by limitation.

Analysis: The applicable test was whether the product emerged as a distinct and marketable commodity and whether the process amounted to manufacture within the meaning of the excise law. The Tribunal applied its earlier view that conversion of DPC wire into coils for transformer repair did not amount to manufacture and that such coils were not marketable as independent goods. On that basis, the demand raised on the coils could not survive. The limitation objection did not alter the result because the very levy itself failed.

Conclusion: The duty demand on the DPC copper coils was unsustainable and the assessee succeeded on this issue.

Issue (ii): Whether transformers supplied to the research institution at IGCAR were eligible for exemption under Notification No. 10/97-C.E. dated 01-03-1997.

Analysis: The notification exempted scientific instruments, apparatus and equipment, including spares and accessories, cleared to research institutions working under the Atomic Energy Department for research purposes. The transformers were supplied to IGCAR, a research institution under that department, on the basis of the required certificate for research use. The Tribunal treated transformers used in scientific research as falling within the notified category of scientific equipment or apparatus, and found the exemption conditions satisfied.

Conclusion: The exemption was admissible and the duty demand on the transformers was unsustainable.

Final Conclusion: Both duty demands having failed, the impugned order could not be sustained and the assessee obtained complete relief.

Ratio Decidendi: Goods used only as transformer repair coils, which do not emerge as separate marketable commodities, are not excisable by reason of such conversion, and scientific equipment supplied to a qualifying research institution for research purposes is entitled to exemption under the governing notification.

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