Excise liability on job work depends on the actual manufacturer, not ownership of goods, where no valid exemption applies.

In central excise, liability for duty on job-work activity turns on who actually performs the manufacturing process, not on ownership of the goods. The reasoning applied the Larger Bench view that transferring chemicals from tankers into drums and affixing labels may place duty liability on the job worker if the activity amounts to manufacture, and that Cenvat or movement provisions do not by themselves create an exemption or shift the duty burden. On the stated facts, the principal supplier had not discharged duty and the exemption framework was not satisfied, so the demand against the appellant was held unsustainable and set aside, while the question whether the activity itself amounted to manufacture was left open.

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Issues: Whether the activity carried out by the job worker amounted to manufacture attracting excise duty and, if so, whether the principal supplier or the job worker was liable to pay the duty.

Analysis: The dispute turned on who is treated as the manufacturer for central excise purposes when the entire activity of transferring chemicals from tankers into small drums and affixing labels is undertaken by a job worker. The reasoning adopted the Larger Bench view that, for excise purposes, liability follows the person who actually undertakes the manufacturing activity and the ownership of goods is not decisive. The decision further distinguished provisions dealing with movement of inputs and Cenvat credit from provisions that create or shift duty liability, and held that the job-work arrangements under the cited credit rules do not by themselves grant exemption from duty. Since the principal manufacturer had not discharged duty on the final products and the facts did not satisfy the exemption framework relied upon, the duty liability, if any, rested on the job worker and not on the appellant.

Conclusion: The appellant was not liable to pay the excise duty demand raised in the case; the demand was unsustainable and liable to be set aside. The question whether the activity itself amounted to manufacture was left open.

Ratio Decidendi: In central excise, duty liability attaches to the person who actually carries out the manufacturing activity, and absent a valid exemption that shifts the burden, the ownership of the goods does not determine liability.

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