Job work exemption under Notification No. 214/86-C.E. is not lost merely because the worker uses ancillary consumables from its own stock.

Notification No. 214/86-C.E. remained available where a job worker manufactured goods for a principal manufacturer using the principal's main raw materials, even though the job worker also used some materials from its own source. The CESTAT noted that the self-supplied items were only ancillary consumables, such as nuts, bolts and paints, and did not give the final product its essential character. It also relied on the earlier view that use of some non-supplied materials does not, by itself, take the activity outside the scope of job work under the Explanation to the notification. On that basis, denial of exemption was set aside and consequential relief followed.

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Issues: Whether the benefit of Notification No. 214/86-C.E. dated 25-3-1986 was available to a job worker who used some materials from its own source while manufacturing goods for the principal manufacturer.

Analysis: The principal manufacturer had obtained permission to get the goods manufactured on job work basis and had supplied the main raw materials required for the product. The materials sourced by the job worker were found to be mainly consumables, and the nuts, bolts and paints used by it did not impart the essential character of the final product. The prior remand had already indicated that use of some materials other than those supplied by the principal manufacturer did not by itself exclude the activity from the scope of job work under the Explanation to the Notification. On the facts, the core raw materials remained those supplied by the principal manufacturer, and the independently sourced materials were not treated as disqualifying raw materials.

Conclusion: The benefit of Notification No. 214/86-C.E. was held to be available, and the denial of exemption was set aside.

Final Conclusion: The appeals succeeded, the impugned orders were set aside, and consequential relief followed.

Ratio Decidendi: A job worker is not denied exemption under Notification No. 214/86-C.E. merely because it uses some ancillary or consumable materials from its own source, so long as the principal manufacturer supplies the requisite raw materials and the self-supplied materials do not constitute the raw materials forming the essential character of the product.

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