Power used by independent suppliers does not defeat exemption for goods manufactured without the aid of power.

Exemption for metal containers manufactured without the aid of power was not lost merely because tops and bottoms were made by independent outside suppliers using power. The assessee used no power in its own factory, and the components were purchased on a principal-to-principal basis. In the absence of proof that the outside units were dummy concerns or that the work was done on a job-work basis, power used by those independent manufacturers could not be attributed to the assessee. Mere supply of sheets, dies, or other commercial dealings did not alter that position. The exemption was upheld, and the demand and penalty were found unsustainable.

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Issues: Whether the use of power by outside suppliers in manufacturing tops and bottoms of metal containers disentitled the assessee from exemption under the relevant central excise notifications for metal containers manufactured without the aid of power.

Analysis: The exemption notifications applied to metal containers produced without the aid of power. The assessee did not use power in its own factory, and the tops and bottoms were purchased from outside manufacturers on a principal to principal basis. The outside manufacturers were independent entities, and the Department did not establish that they were dummy units or that the goods were got manufactured on job work basis. Mere supply of sheets, dies, or commercial dealings with related persons did not convert the assessee's manufacturing activity into use of power by the assessee. The cited decisions on job work and processing through outside units were distinguishable on facts.

Conclusion: The assessee remained eligible for the exemption, and the demand and penalty were unsustainable.

Ratio Decidendi: For exemption based on manufacture without the aid of power, power used by an independent outside supplier on goods purchased on a principal to principal basis is not treated as use of power by the assessee, absent proof of job work or dummy arrangement.

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