Purchase under central excise includes transfer of possession for consideration, sustaining exemption and defeating duty demands.

An exemption notification using the terms "sale" or "purchase" without defining them was read with Section 2(h) of the Central Excise Act, 1944, so transfer of possession of goods for valuable consideration constituted purchase even without transfer of title or sales tax payment; on that basis, the garments received from job workers qualified for Notification No. 38/2003-C.E. and the duty demand failed. A dealer or trader was not treated as the manufacturer merely because it arranged tagging, labelling, or packing, since the taxable event is manufacture and the job workers had already cleared the goods on duty; the connected demand also could not survive.

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Issues: (i) Whether the movement of ready-made garments from job workers to the appellants constituted 'purchase' within the meaning of the exemption notification so as to entitle the appellants to Notification No. 38/2003-C.E. benefit; (ii) whether the dealer/trader appellant in the connected matter could be treated as the manufacturer and made liable to duty.

Issue (i): Whether the movement of ready-made garments from job workers to the appellants constituted 'purchase' within the meaning of the exemption notification so as to entitle the appellants to Notification No. 38/2003-C.E. benefit.

Analysis: The notification did not define 'sale' or 'purchase', so the expression had to be read with Section 2(h) of the Central Excise Act, 1944. That provision treats sale and purchase as transfer of possession of goods for cash, deferred payment, or other valuable consideration. The appellants received the goods from job workers after payment of job charges, and possession of the goods moved from the job workers to the appellants. The absence of sales tax or transfer of title was not decisive under the Central Excise law. The transaction therefore satisfied the statutory meaning of purchase for the purpose of the exemption.

Conclusion: The appellants were entitled to the benefit of Notification No. 38/2003-C.E., and the duty demand could not be sustained on the ground that there was no purchase.

Issue (ii): Whether the dealer/trader appellant in the connected matter could be treated as the manufacturer and made liable to duty.

Analysis: The taxable event under central excise is manufacture, and ownership of the end product is irrelevant. The job workers had themselves manufactured the garments and cleared them in bulk on payment of duty. On the facts, the connected appellant was not the manufacturer merely because it arranged further processing such as tagging, labeling, and packing. Even otherwise, once the purchase condition in the notification was satisfied, denial of exemption was unjustified.

Conclusion: The connected appellant was not liable to be fastened with duty as manufacturer, and the demand could not survive.

Final Conclusion: The exemption was wrongly denied, the duty demands and interest could not be maintained, and the appeals were allowed with consequential relief.

Ratio Decidendi: Where an exemption notification uses the terms 'sale' or 'purchase' without defining them, the definition in Section 2(h) of the Central Excise Act, 1944 applies, and a transfer of possession of goods for valuable consideration constitutes purchase even if title does not pass and sales tax is not paid.

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