Exemption for power-free manufacture upheld where duty-paid job-work goods were further processed into a new product.

Exemption under Notification No. 179/77 was available where duty-paid goods received from an independent job worker were further processed at the assessee's premises without the aid of power. The relevant manufacture was the creation of a new product, Precision Bonding Machine, and the decisive factor was the absence of power in the assessee's own manufacturing process. The fact that the job worker had earlier used electricity was not material because that activity had already ended, the goods had left the job worker's premises on payment of duty, and the job worker was treated as an independent manufacturer. The assessee was therefore held entitled to the exemption, and the Revenue's appeal failed.

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Issues: Whether the assessee was entitled to the benefit of Notification No. 179/77 for the period prior to 1-3-1986 when the goods received from a job worker had already suffered duty and the process undertaken at the assessee's premises was without the aid of power.

Analysis: The bonder received by the assessee was treated as duty-paid goods, and the further activity resulted in a new product known as Precision Bonding Machine. The decisive question was whether the manufacture of that new product at the assessee's premises involved use of power. The Revenue did not dispute that the relevant processes at the assessee's premises were carried out without the aid of power. The plea that the job worker had earlier used electricity was rejected because the job worker was an independent manufacturer and the goods had already left its premises on payment of duty. The exemption was therefore attracted. Reliance was also placed on prior Tribunal decisions taking the same view.

Conclusion: The assessee was entitled to the benefit of Notification No. 179/77, and the Revenue's appeal failed.

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