Processing vs manufacture under octroi exemption: size reduction of copper wire goods stayed within the exemption.

Reduction in the thickness of imported copper wire bars and wire rods within municipal limits was treated as processing, not manufacture, for octroi exemption under Rule 7. Manufacture was confined to a transformation into a new commodity with a distinct name, character or use; mere size reduction without change in chemical composition or substantive identity did not meet that test. The activity therefore remained within the scope of temporary import for processing, and the exemption could not be denied on the basis that the process fell outside the rule. The Commissioner's finality clause did not exclude judicial review under Article 226, and the refusal was held to be unsupported by reasons.

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Issues: Whether reduction in thickness of imported copper wire bars and wire rods within municipal limits amounted to processing or manufacture for purposes of octroi exemption under Rule 7 of the Bombay Municipal Corporation Exemption from Octroi (Free Gift, etc.) Rules, 1966, and whether the exemption could be denied on the ground that the process was outside the scope of the rule.

Analysis: Rule 7 exempted temporary imports for processing, subject to the condition that no change of form, condition or appearance would occur except to the extent inherent in the processing. The Court held that manufacture requires transformation into a new and different commodity having a distinct name, character or use, whereas every change does not amount to manufacture. On the facts, the activity consisted only of reducing the size of wire bars and wire rods, without change in chemical composition or substantive identity, and with only incidental loss in weight. Such activity did not create a new commodity and therefore fell within processing. The Court also held that the Commissioner's finality clause did not oust judicial scrutiny under Article 226 and that the refusal to grant exemption was unsupported by reasons.

Conclusion: The activity was processing and not manufacture, and the assessee was entitled to the benefit of Rule 7.

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