Foreign Trade Policy manufacture test for deemed exports turned on testing, additions, and policy-defined manufacturing processes.

The Foreign Trade Policy treated deemed exports as available where supplied goods were manufactured in India, and its definition of manufacture in Clause 9.36 was broad enough to include processes such as testing, calibration and re-engineering. Because the purchase order required performance guarantee tests and inspection before supply, testing formed part of the supply obligation. The matter needed fresh verification on whether indigenous components were actually added and whether the overall processes amounted to manufacture under the policy. The impugned order could not stand as it was and had to be reconsidered on those factual and legal questions.

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Issues: Whether the processes undertaken on imported valves, including testing and any added components, amounted to manufacture under the Foreign Trade Policy so as to sustain the benefit claimed for deemed exports.

Analysis: The policy governing the relevant period treated deemed exports as permissible where the supplied goods were manufactured in India. The definition of manufacture in Clause 9.36 was broad and inclusive, expressly extending to processes such as testing, calibration and re-engineering. The purchase order also required performance guarantee tests and inspection before supply, showing that testing was an integral part of the supply obligation. The earlier authorities had not examined, in the proper perspective, whether the petitioner's actual processes satisfied the policy definition. The record also left a factual grey area on whether indigenous components were in fact added, which required fresh verification.

Conclusion: The impugned order could not be sustained as it stood, and the matter was required to be reconsidered afresh on the factual question of actual additions and the legal question whether the processes undertaken constituted manufacture.

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