Manufacture at buyer's premises after inspection and packing kept clearances within the SSI exemption limit.

Aluminum conductors sent under Rule 57F(2) with prior permission were treated as manufactured only after inspection, testing, ISI marking, packing and certification at the buyer's premises, because those steps were integral to completion of the goods. The prescribed procedure for removal of inputs and receipt of finished goods was followed, and RG-1 entries were made only after the post-processing was completed. On that basis, manufacture was held to be complete at the buyer's premises, so the clearances remained within the buyer's SSI exemption limit and the Revenue's challenge failed.

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Issues: Whether the aluminum conductors were to be treated as manufactured and cleared by the job worker, or whether manufacture was completed at the premises of the buyer so that the clearances remained within the buyer's SSI exemption limit.

Analysis: The arrangement was undertaken under Rule 57F(2) with prior permission from the jurisdictional Assistant Commissioner, and the prescribed procedure for sending inputs and receiving the finished goods was followed. The buyer's contract required inspection, testing, ISI marking, packing and certification before clearance, and these requirements were integral to completion of the product. The goods were entered in RG-1 only after these processes, showing that the manufacturing process was not complete until the goods reached the buyer's premises. The view of the lower appellate authority was supported by earlier tribunal rulings treating such inspection, testing and packing as processes incidental or ancillary to manufacture.

Conclusion: The conductors were correctly treated as having completed manufacture at the buyer's premises, and the Revenue's challenge to the allowance of the appeal failed.

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