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It is the contention of the Central Excise Department that Industrial Laminates and glass epoxing laminates cannot be considered as electrical insulator, because these sheets are required to be cut in the requisite shape and holes may have to be punched in them before the could be fitted as insulator. However, mere cutting or punching holes does not amount to "manufacture."

14. He also observed that the Hon Supreme Court decision in the case of Gem India Manufacturing Co. (supra) fully supports the case of the Revenue. He referred to the following observations of the Hon Supreme Court in this regard:

It is the contention of the Central Excise Department that Industrial Laminates and Glass Epoxy Laminates cannot be considered as electrical insulator because its sheets are required to be cut in the requisite shape and holes may have to be punched in them before they could be fitted as insulator. However, mere cutting or punching hole does not amount to manufacture.
23. He has picked up the words "cutting or punching hole" from the above decision and came to the conclusion that the activity of the assessees were akin to the cutting or punching holes. Shri Prasad argued that though in his proposed order, the ld. JM has put emphasis on the above portion of the decision by underlining them he has not highlighted the subsequent observation of the Hon Court. He argued that ld. JM has completely overlooked significance of the word "mere" used by the court in its order, Hon court had held that "mere cutting or punching holes" does not amount to manufacture. In this case, the issue was as to whether industrial laminates and glass epoxy laminates could be construed as electrical insulator. Hon Supreme Court noted that electrical sheets were already having insulating property and were used as insulator. Thus before the process and after the process the basic characteristic of insulation was present and no new product came into existence. Regarding cutting and punching holes the Hon Supreme Court observed that only because they had to be cut to the requisite shape or a few holes may be required to be punched in them in order that they may be fit into electrical equipments, this could not be taken out of category of electrical insulator. From the observation of Hon Supreme Court it was clear that the activity of cutting and punching holes was not a process of manufacturing activity. The cutting and punching holes was being done so that they could fit in the electrical instruments. But in the cases of the assessees it was not "mere cutting or punching holes". A lot of other processes were involved in the manufacture of transformer core. The cutting of the sheets or holing process was the process of manufacturing as per the design and technical specification of the customers. Such cutting and punching hole in the case of the assessees was not for the purpose of fitting them into electrical instrument. Thus the ld. JM's reliance on this case was completely out of context.