2008 (3) TMI 64 - AT - Central Excise

Whether repair of transformers amount to manufacture - damaged transformers were not brought in for repair but only 2 parts of damaged transformers i.e. tank & core were received - held that process of repair of transformer essentially consisted of replacement of its coil & HT leg coil & change of some minor parts & repair of transformer doesn t amount to manufacture - appellant are charged under Service Tax for providing repairing service, so they can t be called manufacturer appeal allowed

Summary

Issues Involved:
Whether repair of transformers amounts to manufacture.

Analysis:
The central issue in the present case revolved around determining whether the repair of transformers constitutes a manufacturing activity. The appellant argued that the repair process, which involved receiving damaged transformers and replacing certain parts such as coils and minor components, did not amount to manufacturing. The appellant also highlighted that they were being charged under Service Tax for providing repair services, indicating a service-oriented rather than manufacturing activity.

The Tribunal referred to a previous decision in the case of Hindustan Transformers, where it was held that the repair of transformers did not amount to manufacture. The Tribunal emphasized that the repair process mainly involved replacing coils and minor parts, and it did not alter the identity of the transformer. Additionally, the Tribunal noted that the appellant had paid duty on the spare parts used in the repair process, further supporting the argument that it was a repair service rather than manufacturing.

The Revenue, on the other hand, relied on the decision of the Supreme Court in the case of Escorts Ltd. v. CCE, where it was emphasized that reliance on decisions should involve a discussion on how the factual situation aligns with the precedent. The Revenue also cited a Tribunal decision in the case of Maruti Udyog, where the assembly of new motor vehicles using salvaged parts was considered manufacturing.

However, the Tribunal found that the facts of the present case closely resembled those in the Hindustan Transformers case. Therefore, the Tribunal set aside the impugned orders and allowed the appeals, affirming that the repair of transformers did not amount to manufacturing based on established precedents and the specific details of the case at hand.