Job worker treated as manufacturer for excise purposes; duty applies on clearance value under a loan licence arrangement.

Where a loan licence holder supplies raw material and specifications but the job worker carries out the manufacturing process in its factory, the job worker is treated as the manufacturer for excise purposes. Duty is payable on the value at which the job worker clears the goods to the loan licence holder. The Tribunal followed its earlier decisions on this arrangement and noted that the position had been affirmed by the Supreme Court, bringing the issue to finality. On that basis, the demand against the assessee did not succeed and the order in its favour was sustained.

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Issues: Whether the goods were manufactured by the respondent as a job worker for the loan licence holders, and whether duty was payable on the value at which the goods were cleared by the job worker to the loan licence holders.

Analysis: The arrangement showed that the loan licence holders supplied the raw material and specifications, while the respondent carried out the manufacturing process in its factory and cleared the goods on payment of duty. The Tribunal relied on its earlier decisions holding that in such a case the job worker who performs the manufacturing activity is the manufacturer for excise purposes. It also noted that the earlier view had been affirmed by the Supreme Court, bringing the issue to finality.

Conclusion: The respondent was correctly treated as the manufacturer, and duty was payable on the value at which it cleared the goods to the loan licence holders.

Final Conclusion: The demand and the Revenue's challenge failed, and the order in favour of the assessee was sustained.

Ratio Decidendi: Where a job worker undertakes the manufacturing process for a loan licence holder using supplied raw material and specifications, the job worker is the manufacturer for excise purposes and duty is payable on the value of clearance by the job worker.

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