Job-worker manufacture of electrodes shifts duty liability away from the assessee under the contract structure.

Aluminium and lead electrodes fabricated by job workers from materials and designs supplied by the assessee were treated as manufactured by the job workers, not by the assessee, because the workers used their own machinery, appliances and labour and were contractually responsible for wages, accident compensation and labour compliance. Those terms showed that they were not mere hired labourers acting on the assessee's behalf. On that basis, and consistent with earlier examination of identical contracts, the duty liability could not be fastened on the assessee by treating it as the manufacturer.

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Issues: Whether aluminium and lead electrodes fabricated by job workers from raw materials supplied by the assessee were to be treated as manufactured by the assessee or by the job workers for the purpose of duty liability.

Analysis: The electrodes were fabricated in the assessee's premises from materials and designs supplied by the assessee, but the job workers brought their own machinery, appliances and labour, and the contractual terms showed that they were responsible for wages, compensation for accidents and labour compliance. These features did not establish that the job workers were merely hired labourers of the assessee. The identical contracts had already been examined in earlier proceedings and the same reasoning supported the conclusion that the job workers carried on the manufacturing activity on their own account and not as mere labour engaged by the assessee.

Conclusion: The job workers were the manufacturers, and the duty on the electrodes could not be demanded from the assessee by treating it as the manufacturer.

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