Repair of transformers is not manufacture; labour charges are not dutiable, while duty may apply only to separately manufactured spare parts.

Repair of transformers does not amount to manufacture, so no duty arises merely from repair activity. Labour charges for such repair are not dutiable. Duty may still apply only to separately manufactured spare parts used in the old transformers, but only where such duty is otherwise payable. The clarification also notes the relevance of the exemption notification relied upon for in-house use of HT/LT coils, leaving any duty liability confined to spare parts and not to the repair service itself.

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Issues: Whether repair of transformers amounts to manufacture, and whether duty is payable on spare parts and labour charges used in such repair.

Analysis: The clarification records that repair of transformers does not amount to manufacture. It further states that duty, if otherwise payable, can be levied on the value of spare parts manufactured and used in the old transformers, while no duty is chargeable on labour charges. The clarification also reflects the relevance of the exemption notification relied upon for the in-house use of HT/LT coils.

Conclusion: Repair of transformers is not manufacture. Duty is not chargeable on labour charges, and duty on spare parts is confined to cases where such duty is otherwise payable.

Final Conclusion: The order was clarified in favour of the applicant on the non-manufacture and labour-charge aspects, while preserving duty liability only to the limited extent of spare parts, if otherwise exigible.

Ratio Decidendi: Repair work does not amount to manufacture, and labour charges for such repair are not dutiable, though duty may remain payable on separately manufactured spare parts if otherwise chargeable.

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