Simple physical operations do not amount to manufacture, so their cost cannot be added to assessable value.

Simple physical operations such as washing, cleaning, screwing plastic caps on aluminium collapsible tubes, and unspecified quality-control steps did not amount to manufacture because they did not change the goods. As no manufacture was established, the cost of those operations was not includible in the assessable value. The separate question whether the two units were related was left unexamined because it became unnecessary on the manufacture finding. The departmental challenge failed and the Collector's order remained undisturbed.

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Issues: Whether washing, cleaning, quality-control steps and screwing plastic caps on aluminium collapsible tubes amounted to manufacture so as to justify inclusion of their cost in the assessable value, and whether the two units were so controlled as to be treated as related.

Analysis: The processes described, including screwing of plastic caps, did not bring about a change in the tubes or the caps and were only simple physical operations. The record did not disclose any material showing that the unspecified quality-control steps amounted to manufacture. Since none of the processes could be characterised as manufacture, their cost was not includible. In view of this conclusion, it was unnecessary to examine whether the two concerns were controlled by the same persons.

Conclusion: The processes did not amount to manufacture and their cost was not includible in the assessable value; the related-person issue was left unexamined.

Final Conclusion: The departmental challenge failed and the Collector's order was left undisturbed.

Ratio Decidendi: A simple physical operation that does not result in a change in the goods does not constitute manufacture, and where no manufacture is shown, the cost of such operations cannot be added to the assessable value.

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