Manufacture for exemption purposes turns on where the finished excisable goods come into existence, not where components are made.

Manufacture for exemption purposes means the emergence of a new and distinct excisable article with its own character and use. Applying that test, radios assembled in the petitioner's industrial unit were treated as manufactured there, even though panels supplied from another unit were used in the process. The fact that one component was produced elsewhere did not mean the finished radios were manufactured in two units. Because the notification required manufacture in the petitioner's unit, that condition was satisfied and the exemption applied; the contrary show cause notice and rejection of exemption were quashed.

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Issues: Whether the radios were manufactured in the industrial unit of the petitioner so as to satisfy the exemption notification issued under Rule 8 of the Central Excise Rules, 1944.

Analysis: The expression "manufacture" denotes the bringing into existence of a new substance or article having a distinctive name, character or use. The radios came into existence in the petitioner's unit, even though panels supplied by another unit were used in their assembly. The mere fact that an essential component was manufactured elsewhere did not mean that the radios were manufactured in two units. The condition in the notification required manufacture in the petitioner's industrial unit, and that condition was fulfilled. The subsequent show cause notice, based on a contrary footing, could not stand.

Conclusion: The radios were manufactured in the petitioner's unit and were eligible for exemption. The order rejecting exemption and the connected show cause notice were quashed, in favour of the assessee.

Ratio Decidendi: Manufacture means the emergence of a new and different article, and for an exemption conditioned on manufacture in a particular unit, the relevant test is where the finished excisable goods come into existence, not where individual components are made.

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