COMMISSIONER OF C. EX. Vs. USHA INDIA LTD.

JUDGEMENT

(1.) IN the present appeal, filed by the Revenue, the issue involved is whether the process of conversion of transformer from one model to another model, undertaken by M/s. Usha (India) Ltd., amounts to manufacture.

(2.) SHRI R.K. Sharma, ld. SDR, submitted that the Respondents manufacture transformers and rectifiers and semi -conductor devices; that they also undertake repairs of old transformers; that as the repair undertaken by them resulted in the conversion of Model BOT 3460 to Model HETT 3900, the Assistant Commissioner under Adjudication Order Nos. 152 -153/97, dt. 16.04.1997, demanded the duty and imposed penalty holding that process amounted to manufacture as BOT 3460 is a low capacity transformer compared to HETT 3900 transformer and the cost of repair/rewinding would be more than repair and reconditioning only; that the Commissioner (Appeals), under the impugned Orders, has set aside the Adjudication Order, holding that upgradation of a machine would not amount to manufacture so long as the said up -gradation does not bring into existence goods with a new name, character and use; that both models being transformers, the process does not amount to manufacture. The ld. SDR, further, submitted that as the capacity of the transformer has been changed instead of repair, the process involved in changing the capacity amounts to manufacture. He relied upon the decision in the case of Gehring India v. CCE, Kanpur, 1999 (32) R.L.T. 559 wherein the process of modifying and honing machine usuable for honing break drums only to make it usable for honing both the brake drums and the cylinder block was held to be a process amounting to manufacture. He also relied upon the decision in Becco Engineering Co. Ltd. v. CCE, New Delhi, 1995 (79) E.L.T. 705 (T). The ld. SDR also mentioned that core of the transformer is main part which has been changed; that the Respondents did not undertake the simple repair of the transformer as they had brought out a new transformer into existence; that Engineering products are known by their Model No. and once their model is changed their name, character and use change and, as such, the process undertaken by the Respondents amount to manufacture within the meaning of term 'Manufacture' under Section 2(f) of the Central Excise Act.

(3.) OPPOSING the appeal Shri R. Santhanam, ld. Advocate, submitted that the Respondents had only undertaken the repairs of the transformer; that, even after change of Model, the transformer remains transformer and as such no new product comes into existence. He relied upon the decision in Shriram Refrigeration Industries Ltd. v. CCE, Hydrabad, 1986 (26) E.L.T. 353 (T) wherein it was held that no manufacture was involved when the Original defective parts were replaced by new parts and identity of the product was not lost. He also relied upon the decision in the case of Enfield India Ltd. v. CCE, Madras, 1996 (88) E.L.T. 773 (T), in which Tribunal held that The change or upgradation of the machine or change of some parts cannot be taken to be manufacture of a new product for excise purposes. He also relied upon the decision of the Apex Court in U.O.I, v. J.G. Glass Industries Ltd. -1998 (97) E.L.T. 5 (S.C.) and State of Tamil Nadu v. Pyare Lal Malhotra, 1983 (13) E.L.T. 1982 (S.C.) wherein it was held "before attracting fresh levy, it is also necessary to determine whether they have ceased to be goods of one taxable description and become those of a commercially different category and description." Finally he referred to Boards's Circular No. 454/20/99 CX., dated 12.04.1999 in which it was clarified that upgrading of old and used computer system would not amount to manufacture.