Manufacture test for wire-to-coil conversion: winding duty-paid wire into transformer coils was treated as non-excisable.

Conversion of duty-paid double paper-covered wire into coils for transformer repair was treated as not creating a new and distinct commodity. The Tribunal followed earlier precedent that winding the wire into coils does not amount to manufacture, and the same reasoning was applied to the allegation that the coils were captively used after manufacture. On that basis, the activity was regarded as outside the central excise charging provision, and no duty was leviable.

---

---

Issues: Whether conversion of duty-paid double paper-covered wire into coils for use in repair of transformers amounts to manufacture and is exigible to central excise duty.

Analysis: The dispute turned on whether winding the wire into coils created a new and distinct commodity. The Tribunal followed the earlier decision holding that such conversion of duty-paid wire into coils for transformer repair does not amount to manufacture. The allegation in the show cause notice was also that the coils were manufactured and captively used, which was treated as already settled by the precedent relied upon.

Conclusion: The activity did not amount to manufacture and no duty was leviable; the appeal was rejected in favour of the assessee.

---