Principal-to-principal manufacture by independent contractors bars excise duty demand on the recipient of materials.

Manufacture of RCC poles by contractors under a principal-to-principal contractual arrangement did not justify fastening central excise duty on the assessee. The Tribunal treated the contracts as identical to those already examined in earlier appeals, where it had found the contractors were independent contractors and not hired workmen. Because the contractual terms and evidence were the same, that earlier finding governed the present matter as well, and the duty demand under the central excise demand provision could not be sustained against the assessee.

---

---

Issues: Whether the contractors engaged in manufacture of RCC poles were independent manufacturers on a principal-to-principal basis, so that duty demand could not be sustained against the assessee.

Analysis: The contract terms in the present matter were found to be the same as those examined in the earlier appeals of the assessee, where the Tribunal had already held that the contractors were not hired workmen but independent contractors acting on a principal-to-principal basis. Since the evidence and contractual arrangement were identical, the earlier finding governed the present appeals as well. On that basis, the duty demand raised against the assessee under the central excise demand provision could not be sustained.

Conclusion: The issue was decided in favour of the assessee and against the Revenue; the impugned orders were set aside and the duty demand failed.

Ratio Decidendi: Where manufacture is carried out by independent contractors under a principal-to-principal contractual arrangement, the demand for excise duty cannot be fastened on the recipient of the materials as the manufacturer.

---