Job-work manufacturing status turns on who actually carries on production, not merely who supplies raw materials.

In a job-work arrangement, the mere supply of raw materials by the customer does not, by itself, make the customer the manufacturer for exemption or duty purposes. Where the petitioners carried on independent manufacturing in their own factory, employed their own staff, and also worked for other customers, they remained the actual manufacturers despite receiving materials from another company. The assumption that they were merely job workers and therefore required to take out an L-4 licence was based on an unwarranted factual premise. The denial of exemption, insistence on licence and duty, and the departmental action were held unjustified.

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Issues: Whether the petitioners, who manufactured fan-guards on job work basis for another company and received raw materials from that company, could be treated as mere job workers or whether the supplying company was the manufacturer for the purpose of denying exemption from licence and excise duty.

Analysis: The petitioners carried on an independent manufacturing activity in their own factory, employed their own staff, and also manufactured fan-guards for other customers. The mere supply of raw materials by a customer under a job-work arrangement did not justify the conclusion that the customer, and not the petitioners, was the manufacturer. The assumption that the petitioners were not entitled to the exemption and were bound to take out an L-4 licence was therefore based on an unwarranted factual premise.

Conclusion: The denial of exemption and insistence on licence and duty was unjustified; the issue was decided in favour of the petitioners.

Final Conclusion: The petition succeeded and the impugned departmental action was quashed, with the rule made absolute and consequential relief granted.

Ratio Decidendi: In a job-work arrangement, the mere supply of raw materials by the customer does not, by itself, make the customer the manufacturer; the actual manufacturer is the person carrying on the manufacturing activity in its own unit.

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