Exemption for manufacture without power depends on the assessee's own process, not power used by independent component suppliers.

Exemption under Notification No. 179/77 was held to depend on whether the assessee itself carried on manufacturing processes with the aid of power in producing the assessed goods. Power used by independent third-party suppliers in making purchased components did not defeat the exemption where the assessee bought those components on a principal-to-principal basis and there was no proof that the assessee used power in its own factory or that the suppliers were dummy concerns. The operative test is confined to the assessee's own manufacturing process, not the internal processes of separate component manufacturers. On that basis, the goods remained eligible for the exemption, and the related duty demand and penalty could not be sustained.

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Issues: Whether the appellants were entitled to the benefit of Notification No. 179/77 in respect of disc fittings and transmission fittings where the appellants did not use power in their own factory, but some components were manufactured by independent third parties with the aid of power.

Analysis: The notification exempted goods falling under TI 68 in or in relation to the manufacture of which no process is ordinarily carried on with the aid of power. The decisive inquiry was confined to the manufacturing activity of the assessee whose goods were being assessed, and not to the processes employed by independent suppliers of components. The appellants purchased components from separate manufacturers on a principal-to-principal basis, and there was no proof that the appellants themselves used power in the manufacture of the finished goods or that the third parties were dummy concerns. The exemption had therefore to be construed with reference to the appellants' own manufacturing process, not the internal processes of independent component makers.

Conclusion: The appellants were entitled to the benefit of Notification No. 179/77, and the duty demand and penalty based on denial of the exemption could not be sustained.

Final Conclusion: The common controversy was resolved in favour of the appellants on the exemption issue, and the departmental challenges failed except to the extent of the appeal that was allowed for the assessee.

Ratio Decidendi: For exemption notifications conditioned on manufacture without the aid of power, the relevant test is whether the assessee itself carried on any such process in producing the assessed goods; power used by independent third-party manufacturers of purchased components does not by itself defeat the exemption.

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