Job work exemption applies only to labour-oriented processing on customer-supplied material, not substantial self-material manufacture.

Notification No. 119/75-C.E. applies only to genuine job work where the customer supplies the material and the processor charges mainly for labour, even if minor incidental additions such as thread, buttons or lining are used. The exemption does not extend to activity that is in substance ordinary manufacture from mixed or predominantly self-procured inputs, especially where the job worker contributes substantial own materials and produces a different finished article. The decisive test is whether the transaction remains labour-oriented processing on customer-supplied goods rather than full-fledged manufacture. On that construction, the exemption is confined to the category of job work contemplated by the notification's explanation.

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Issues: Whether Notification No. 119/75-C.E. granting exemption to goods manufactured in a factory as job work applies where the job worker uses substantial materials of its own and returns a different finished product, or whether it is confined to cases where the customer supplies the material and the job worker mainly renders labour with only minor additions.

Analysis: The Notification was issued under Rule 8(1) and its explanation defines job work as work where an article intended to undergo manufacturing process is supplied by the customer and returned after such process on charging only for the work done. The expression "manufacture" in Section 2(f) of the Act is wider than its ordinary meaning, but the crucial emphasis in the Notification is on genuine job work. Minor additions by the job worker, such as thread, buttons, lining, or similar incidental items, do not destroy the character of job work. However, where the worker contributes substantial own materials and manufactures a product that is not essentially the customer's article processed for work charges alone, the exemption does not apply. The same article need not be returned in the same trade description, but the transaction must still be one of labour-oriented processing on customer-supplied material and not a full-fledged manufacture from mixed or predominantly self-procured inputs.

Conclusion: The Notification is available only to genuine job work of the kind contemplated by the explanation, and not where substantial own materials are used so that the activity becomes ordinary manufacture outside the exemption.

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