Rule 173H ambiguity preserved exemption for reprocessing defective goods where manufacture was not established.

Reprocessing of defective goods returned under Rule 173H was not treated as manufacture where the permission itself prohibited any process amounting to manufacture. The Tribunal examined earlier decisions on remaking and re-manufacture and treated the ambiguity in the wording and structure of Rule 173H as the controlling consideration. On the facts, the process undertaken was not shown to justify denial of the rule's benefit, so the assessee continued to receive the benefit of Rule 173H until the ambiguity in the rule was resolved.

---

---

Issues: Whether the process undertaken on defective goods received back under Rule 173H amounted to manufacture so as to deny the benefit of the rule.

Analysis: The goods were received for reprocessing under permission granted subject to the condition that no process amounting to manufacture would be undertaken. The Tribunal compared the process with earlier decisions on re-making and re-manufacture, and noted that the controlling consideration was the ambiguity in the wording and structure of Rule 173H. On the facts, the process in the present case was not shown to justify denial of the rule's benefit, and the benefit was to continue until the ambiguity in the rule was resolved.

Conclusion: The process did not warrant interference with the appellate order and the benefit of Rule 173H remained available to the assessee.

---