2002 (11) TMI 108 - SUPREME COURT

Wheteher assessee entitled to exeption notification No. 116 of 1988?

Whether the operation constitutes such a process which will be part of 'manufacture'?

Held that:- The words "substantial manufacture" appear to indicate that there need not necessarily be manufacture, but that any activity, including activities like assembling, which result in a new product, which is commercially a different product from what is imported, would be sufficient. The words "substantial manufacturing" do not indicate in any manner that a substantial amount of the components must also be manufactured. If that were required the policy would have said so. Of course, as set out in the case of M/s. Rattan Exports Ltd., Delhi v. Collector of Customs, Calcutta reported in [1987 (8) TMI 84 - SUPREME COURT OF INDIA] mere fixing of a part or two on a fully assembled product would not be considered to be manufacture. But that is not the case here. Therefore, the finding that manufacturing activity had not been undertaken cannot be sustained. Thus, it is clear that ultrasound scanners have been manufactured.

As regards the contention that the appellants were not entitled to the benefit of the exemption notification it is to be noted that the licensing authority having taken no steps to cancel the licence. The licensing authority have not claimed that there was any misrepresentation. Once an advance licence was issued and not questioned by the licensing authority, the Customs authorities cannot refuse exemption on an allegation that there was misrepresentation. If there was any misrepresentation, it was for the licensing authority to take steps in that behalf. In favour of assessee.