Job-work on supplied materials does not make a processor the manufacturer for excise penalty and rule-violation liability.

Job-work confined to stitching and printing HDPE woven sacks from materials supplied by principals did not amount to manufacture by the petitioners under excise law. Because they did not own the raw material or produce the goods on their own account, they were only labour contractors and could not be treated as manufacturers for penalty, confiscation, or breach of excise rules. The show cause notice against them was therefore quashed, while issues relating to exemption and confiscation against the actual manufacturer were left open.

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Issues: Whether the petitioners, who carried out only stitching and printing of HDPE woven sacks on job-work basis from materials supplied by principals, could be treated as manufacturers and made liable for penalty, confiscation, and breach of excise rules.

Analysis: The definition of manufacture under Section 2(f) of the Central Excises and Salt Act, 1944 extends to processes incidental or ancillary to completion of a manufactured product and includes a person who produces goods on his own account or through hired labour. On the facts, the petitioners did not own the raw material, did not produce the goods on their own account, and merely performed stitching and printing for labour charges on behalf of principals. The liability under the excise machinery provisions therefore depended on whether they were in fact the manufacturers. As they were only job workers, the notice could not proceed against them as manufacturers; the question whether the goods were exempt and the stage of confiscation as against the actual manufacturer was left open.

Conclusion: The petitioners were not manufacturers and were not liable for penalty or for breach of the excise rules. The show cause notice against them was quashed.

Ratio Decidendi: A person who merely performs job-work on materials belonging to another, without producing goods on his own account, is not the manufacturer for excise purposes and cannot be proceeded against as such for penalty or rule violations.

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