SHIVAM INDUSTRIES Vs. COMMISSIONER OF CENTRAL EXCISE, ALLAHABAD

JUDGEMENT

(1.) SINCE common issue involved in these appeals, the same were heard together and are being disposed of by a common order. The appellants are engaged in the manufacture of HT/LT Coils for transformers and also are engaged in repairing of transformers received from the electricity boards. One of the item required for repair and servicing of transformers is transformer oil, which is purchased by the appellants in bulk. The transformer oil is subjected to the process of filtration under vacuum and heating and, thereafter, the same is used for filing in the cavities in the transformers as liquid insulator. The department was of the view that subjecting the transformer oil to filtration and heating for making it suitable for use in transformers amounts to manufacture in terms of the provisions of Section 2 (f) (ii) of Central Excise Act, 1944 read with Chapter Note 4 of Chapter 27 of the Central Excise Tariff. On this basis, the show cause notices were issued to the appellants demanding duty on the transformer oil used by the appellants in the repair and servicing of transformers of their customers. The show cause notices were adjudicated by the respective original Adjudicating Authorities who confirmed the duty demands along with interest and imposed penalties on them. The appeals filed by the appellants were dismissed by the Commissioner (Appeals). Against these orders of the Commissioner (Appeals), these appeals have been filed. Heard both the sides.

(2.) SHRI S.P. Ojha, Consultant, the learned Counsel for the appellant, pleaded that the processes to which the transformer oil was subjected - filtration and heating to make it suitable for use in the transformers do not amount to manufacture, that the Chapter Note 4 of Chapter 27 according to which in relation to lubricating oils and lubricating preparations of Heading 2710, labelling or relabelling of containers or repacking from bulk packs and retail packs or the adoption of any other treatment to render the product marketable to consumer shall amount to manufacture, is not applicable to this case as the processes undertaken are meant to make the transformer oil suitable for industrial use i.e. for use in the transformers and not for, retail sale, that the Tribunal in the case of Mineral Oil Corporation v. CCE, Kanpur reported in : 1999 (114) E.L.T. 166 has held that the reclamation of transformer oil from used transformer oil does not amount to manufacture so as to attract levy of excise duty afresh, that ratio of this judgment of the Tribunal is squarely applicable to the facts of this case, and that in view of this, the impugned orders are not correct.

(3.) WE have carefully considered the submissions from both the sides and perused the records.