Job worker manufacture and inapplicable exemption notification prevent duty from being shifted to the principal supplier.

Duty could not be fastened on the principal supplier for winding wire manufactured by a job worker, because the exemption notification relied upon did not cover winding wire and expressly excluded it from the relevant entry. Non-payment of duty on electric motors used in exempt pumps did not mean the assessee had availed that notification for winding wire. Since the goods were manufactured by a job worker, any primary duty liability would lie on the job worker, not the assessee. The duty demand and penalty were therefore unsustainable, and the demand was set aside.

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Issues: Whether duty could be demanded from the assessee on winding wire manufactured by a job worker and used in the manufacture of power-driven pumps, and whether the assessee could be treated as having availed the exemption notification applicable to goods captively consumed.

Analysis: The exemption notification relied upon did not apply to winding wire at all, as winding wire was expressly excluded from the relevant entry. The fact that no duty had been paid on electric motors used in the manufacture of exempt pumps did not establish that the assessee had taken benefit of that notification in respect of winding wire. The winding wire was manufactured by a job worker, and even if duty were otherwise payable, the primary liability would fall on the job worker. The department's attempt to fasten that liability on the assessee was not sustainable.

Conclusion: The duty demand and penalty against the assessee were unsustainable.

Final Conclusion: The appeal succeeded and the order confirming duty demand was set aside.

Ratio Decidendi: Where goods are manufactured by a job worker and the exemption notification does not apply to those goods, duty liability cannot be fastened on the principal supplier merely because the finished product is captively consumed or some other exempted goods are involved.

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