Repair of transformers not 'manufacture'. Duty only on spare parts used. Appellant prevails.

The Tribunal held that the repair of transformers in the case did not amount to 'manufacture'. The appellant was directed to pay duty only on the value of spare parts manufactured and used in the old transformers, excluding duty on bought-out items and labor charges. The decision overturned the lower authorities' findings and ruled in favor of the appellant, setting aside the impugned order and allowing the appeal on these terms.

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Issues Involved:
1. Whether the repair work undertaken by the appellant amounts to 'manufacture' and is liable to fresh duty as transformers.
2. Admission of additional evidence.
3. Applicability of various judicial precedents and notifications.
4. Liability of duty on bought-out items and labour charges.

Detailed Analysis:

1. Whether the repair work undertaken by the appellant amounts to 'manufacture' and is liable to fresh duty as transformers:
The primary issue revolves around whether the repair work performed by the appellant on old and damaged transformers constitutes 'manufacture' under the Central Excise Act. The Assistant Collector had rejected the appellant's contentions, stating that the repair involved the replacement of significant parts, thereby amounting to 'manufacture' and attracting duty. The Collector (Appeals) upheld this view. However, the Tribunal, after reviewing precedents such as AIR 1973 SC 425 Allenbury Engineers Pvt. Ltd. v. Shri Ram Krishna Dalimia and Others, 1982 E.L.T. 794 (GOI) In re: Electric Equipment Factory, and 1988 (35) E.L.T. 275 (All.) Roman Electricals, Mathura v. UOI and Anr., concluded that the repair of transformers does not amount to 'manufacture'. The Tribunal emphasized that the transformation must result in a new and different article with a distinctive name, character, or use, which was not the case here.

2. Admission of additional evidence:
The appellant requested the admission of six documents as additional evidence. The Tribunal admitted these documents, noting that items (i) to (v) were already part of the record, and item (vi) was an extract from 'Law Lexicon'. This decision was made after considering the arguments from both sides.

3. Applicability of various judicial precedents and notifications:
The appellant cited several judgments to support their argument that repair work does not constitute 'manufacture'. These included 1986 (26) E.L.T. 353 (Tribunal) Shriram Refrigeration Industries Ltd. v. CCE, Hyderabad, and 1987 (29) E.L.T. 751 SC Lalitha Industrial Suppliers Co. P. Ltd. v. CCE, Baroda. The Tribunal also referred to 1980 E.L.T. 538 (Guj.) Suhrid Geigy Ltd., Ahmedabad v. UOI and Others, which emphasized uniform application of excise duty. The respondent referred to 1985 (20) E.L.T. 179 Empire Industries Ltd. and Others v. UOI and Others and 1985 (20) E.L.T. 392 (Tribunal) M/s. Daya Ram Metal Works P. Ltd. v. CCE, Baroda to argue that the repair work amounted to 'manufacture'. However, the Tribunal found the appellant's references more persuasive in this context.

4. Liability of duty on bought-out items and labour charges:
The appellant argued that no duty should be paid on bought-out items and labour charges, citing Notification No. 118/75, dated 30th April, 1975. The Tribunal agreed, noting that the appellant is liable to pay duty only on the value of spare parts manufactured and used in the old transformers, not on bought-out items or labour charges. This conclusion was supported by the judgment in Roman Electricals, Mathura v. UOI and Anr., which clarified that repair work does not attract duty under Tariff Item 68.

Conclusion:
The Tribunal held that the repair of transformers in the instant case does not amount to 'manufacture'. The appellant is liable to pay duty on the value of spare parts manufactured and used in the old transformers, and no duty is chargeable on the labour charges. The impugned order was set aside, and the appeal was allowed in these terms.

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