Job-work manufacture of relabelled medicines qualified for exemption, and lack of factory registration did not defeat the benefit.

Labelling and re-labelling of P or P medicines through loan licencees and job workers constituted manufacture under Chapter Note V of Chapter Heading 30, so the assessees could claim the job-work and small scale industry exemptions. The absence of their own factory registration or infrastructure was immaterial because the manufacturing activity was carried out through job workers and loan licencees in the manner contemplated by the notifications. The record also showed movement under job-work challans, required declarations, and clearances within the exemption limit; the Revenue did not establish excess clearances. Denial of the exemption notifications was therefore not sustainable.

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Issues: Whether the assessees were entitled to the benefit of the job-work exemption notifications and the small scale industry exemption notwithstanding absence of a factory registration, and whether the clearances could be denied exemption on the basis urged by the Revenue.

Analysis: The assessees were engaged in labelling and re-labelling of P or P medicines and the goods were manufactured through loan licencees and job workers. Such activity fell within Chapter Note V of Chapter Heading 30 and amounted to manufacture. The goods were cleared after re-labelling, and the clearances were within the exemption limit. The absence of the assessees' own factory infrastructure was held to be immaterial because the manufacture was being carried out through job workers and loan licencees in their own right. The record also showed that the goods were moved under job-work challans, necessary declarations had been filed, and the Department had not shown that the clearances exceeded the relevant exemption limits.

Conclusion: The denial of the notifications was not sustainable, and the assessees were entitled to the exemption benefits.

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