Customer-supplied fabric stitched for personal use remained excise-exempt, and job-work rules did not override the exemption.

Garments stitched from customer-supplied fabric for the customer's personal use fell within the excise exemption for articles of apparel manufactured or got manufactured for personal use. The Delhi High Court noted that the job-work provisions in Rule 7AA of the Central Excise Rules, 1944 and the corresponding rules under the 2002 Rules did not override that exemption. Because the stitching activity was limited to tailoring customer-provided material and no independent manufacturing beyond that process was shown, excise duty could not be levied on the tailor.

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Issues: Whether garments stitched by the respondents from fabric supplied by customers, or bought by customers from the respondents for stitching, were liable to excise duty.

Analysis: The exemption notification issued under Section 5A(1) of the Central Excise Act, 1944 exempted articles of apparel or clothing accessories manufactured or got manufactured for personal use, including garments stitched by a tailor from material supplied by the customer for the customer's personal use. The special job-work provisions in Rule 7AA of the Central Excise Rules, 1944 and the successor provisions in Rule 4(1) and Rule 4(3) of the Central Excise Rules, 2002 did not displace that exemption. On the facts, the customers supplied the fabric for stitching, and the activity fell within the exempted category; the respondent was not shown to undertake any manufacturing process beyond such tailoring activity so as to attract duty independently.

Conclusion: The stitching activity was exempt from excise duty, and the respondents were not liable to pay duty.

Ratio Decidendi: Where customer-supplied fabric is stitched into garments for the customer's personal use, the exemption notification prevails and excise duty cannot be fastened on the tailor merely because the garments are produced on a job-work basis.

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