Allowing the appeal of the assessee the Court held that; the process of cutting and polishing diamonds is a complex one requiring specialized knowledge and expertise at every step. Rough unpolished diamonds on the one hand and cut and polished diamonds on the other differ completely in appearance, value and uses. Thus this process of cutting and polishing diamonds brings into existence a new product which is a totally different marketable commodity. It amounts to manufacture .Accordingly, that the assessee, which was engaged in the business of import of rough diamonds and export of finished diamonds after cutting and polishing them, was entitled to exemption. ( AY.2001-02)