Excise duty on job-worked motor vehicle parts cannot be recovered from a trader when independent workers perform the manufacture.

Excise liability cannot be fastened on a trader where the finishing operations on unfinished motor vehicle parts were carried out by independent job workers, even if the finished goods were later sold by that trader. The notice showed that cutting, moulding, powder coating and electroplating were performed by other concerns, and there was no finding that those concerns were the same as the trader. On that basis, the manufacturing activity, if any under Note 6 to Section XVII of the Tariff, was attributable to the job workers rather than the trader, so the duty demand could not be sustained.

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Issues: Whether the respondent could be held liable to central excise duty when the finishing processes on unfinished motor vehicle parts were carried out by job workers and not by the respondent itself.

Analysis: The notice itself showed that the processes such as cutting, moulding, powder coating and electroplating were undertaken by different concerns other than the respondent, and the goods were sent back only after those processes were completed. There was no finding that those concerns were the same as the respondent. In these circumstances, even if the conversion of an unfinished article into a finished article amounted to manufacture under Note 6 to Section XVII of the Tariff, the liability would arise against the persons who actually carried out the manufacturing processes and not against the respondent.

Conclusion: The respondent was not liable for the duty demand.

Final Conclusion: The appeal failed because the department could not fasten excise liability on the respondent for manufacturing activity performed by independent job workers.

Ratio Decidendi: Where the manufacturing processes are found to have been undertaken by independent job workers, excise duty cannot be recovered from a trader merely because the finished goods were ultimately sold by it.

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