Court Overturns Decision on Valve Manufacturing; Testing and Inspection Qualify as 'Manufacture' Under Exim Policy.

The HC set aside the order dated 12.08.2014 by the Director General of Foreign Trade, which denied the petitioner's claim that the processes performed on imported valves constituted 'manufacture' under the Exim Policy. The court determined that processes like testing and inspection fall within the definition of 'manufacture.' The case was remanded to Respondent 1 for reconsideration, particularly on whether the petitioner added indigenously procured components to the valves. The writ petition was allowed without costs.

---

---

Issues Involved:
1. Validity of the order dated 12.08.2014 by the Director General of Foreign Trade.
2. Whether the processes carried out by the petitioner qualify as 'manufacture' under the Exim Policy.
3. The factual correctness of the petitioner's claim regarding the addition of indigenously procured components.

Summary:

1. Validity of the Order Dated 12.08.2014:
The petitioner challenged the order dated 12.08.2014 by the Director General of Foreign Trade, which rejected the petitioner's claim that the processes carried out on imported valves constituted 'manufacture.' The petitioner argued that the processes, including fitting actuators and gearboxes, hydro testing, and re-assembly, rendered the valves commercially fit for use.

2. Qualification as 'Manufacture' Under Exim Policy:
The respondents contended that the imported and exported items were identical and no manufacturing activity was involved. The court examined the definition of 'manufacture' under Clause 9.36 of the Exim Policy, which includes processes like testing, re-packing, and re-labelling. The court referred to several judgments, including Doypack Systems (Pvt) Ltd. v. Union of India and Flex Engineering Limited v. Commissioner of Central Excise, U.P., to emphasize that processes like testing and inspection fall within the ambit of 'manufacture.'

3. Factual Correctness of Addition of Indigenously Procured Components:
There was a dispute regarding whether the petitioner had added any indigenously procured components to the imported valves. The court noted that the petitioner consistently claimed to have fitted actuators and gearboxes, but the authorities pointed out a declaration in Form ANF 4A stating otherwise. The court concluded that even without such additions, the processes of testing and inspection would suffice to satisfy the definition of 'manufacture.'

Conclusion:
The court set aside the impugned order and remanded the matter to Respondent 1 for a fresh decision, considering whether the petitioner made any additions to the imported valves by procuring indigenous products. The writ petition was allowed with no costs.

---