2008 (1) TMI 756 - AT - Central Excise

Summary

Issues involved:
The issue involves whether the repair of transformers can be considered as bringing into existence new goods, based on differing interpretations of relevant legal precedents.

Issue 1 - Interpretation of legal precedents on repair of transformers:

The Commissioner (A) confirmed the Order-in-Original holding that the repair of transformers does not result in the creation of new goods, citing various judgments. The learned SDR referenced the A.P. State Electricity Board case to argue that once goods become marketable, they should be treated as new goods. On the other hand, the learned Consultant referred to a previous decision by the Bench affirming the Commissioner (A)'s order that no new product emerges from repairs of old transformers. The Tribunal examined the issue in detail, considering the process of repairing transformers and the marketability of the resulting coils.

Issue 2 - Classification of HV/LV coils in repair of transformers:

The Tribunal analyzed the activity of repairing old transformers, specifically the replacement of High Voltage Coils/Low Voltage Coils. The Department contended that these coils are excisable and should be dutiable under Chapter sub-heading 8504.00. Various legal decisions were cited, including the Punjab State Electricity Board case, to argue that the conversion of wires into coils does not amount to manufacturing new marketable products. The Tribunal examined the marketability of the coils and concluded that they cannot be considered as goods under the Central Excise Act.

Issue 3 - Existence of new product in repair activities:

The Revenue argued that a new product arises from the repair activities, specifically the conversion of DPC wires into coils. However, the Tribunal, after considering multiple judgments on similar issues, held that no new coil is created during the repair of transformers. The Tribunal distinguished the Apex Court's judgment on new goods being brought to the market for sale, emphasizing that the situation in the present case is different. Based on the precedent set by previous decisions, the Tribunal rejected the appeal, finding no merit in the Revenue's argument.