Manufacturer status under excise law depends on control over the manufacturing process, not mere supply of raw material.

Printed and cut cloth supplied for stitching into cotton bags did not make the supplier the manufacturer where it had no control over the stitching premises or the stitching process. Applying the excise principle reflected in Ujagar Prints, the CEGAT held that mere supply of material, without control over manufacture, is insufficient to fasten manufacturer status on the supplier. It also found that the Commissioner had misappreciated the facts and circumstances. On those facts, the respondent was not liable to be treated as the manufacturer of the cotton bags, and the appellate order was upheld.

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Issues: Whether the respondent could be treated as the manufacturer of cotton bags for the purpose of excise duty and whether the CEGAT's order allowing the appeal suffered from any illegality warranting reference.

Analysis: The raw material in the form of printed and cut cloth was supplied for stitching by others into bags, but the supplier had no control over the stitching premises or the stitching process. The determination turned on the accepted excise principle that, on the facts found, the person who merely supplies material without control over the manufacturing process is not necessarily the manufacturer. The CEGAT preferred the larger Bench decision in Ujagar Prints over the earlier Division Bench view relied upon by the department and found that the Commissioner had misappreciated the facts and circumstances.

Conclusion: The respondent was not liable to be treated as the manufacturer of the cotton bags on the facts found, and the CEGAT's order was upheld.

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