Independent contractor fabrication shifts excise manufacturing liability to the contractor, not the customer, absent master-servant control.

Fabrication undertaken by an independent contractor on a principal-to-principal basis makes the contractor, not the customer, the manufacturer for central excise purposes when the contractor uses its own materials, machinery, labour and design. Mere storage and issue of raw materials from the customer's premises does not by itself create a master-servant relationship or show the customer exercised the control and supervision needed to shift manufacturing liability. On the facts described, the contractor carried out the manufacturing activity, so the customer was not liable to excise duty on the fabricated aluminium ductings and air grills.

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Issues: Whether the appellants were the manufacturers of the aluminium ductings and air grills fabricated at their premises and consequently liable to pay central excise duty on the goods.

Analysis: The contract and surrounding facts showed that the fabrication work was undertaken by ACCO as an independent contractor on a principal-to-principal basis, using its own materials, machinery, technical know-how, labour and design, and supplying the finished system against payment. Mere storage and issue of raw materials by the appellants from their premises did not establish that ACCO were hired labourers or that the appellants exercised the kind of control and supervision needed to create a master-servant relationship. The material on record supported the view that ACCO, and not the appellants, carried out the manufacturing activity. The reasoning was consistent with the principle that supply of raw materials by itself does not make the recipient the manufacturer where the contractor operates independently.

Conclusion: The appellants were not the manufacturers of the ductings and air grills and were not liable to pay excise duty on the fabricated items.

Ratio Decidendi: Where fabrication is undertaken by an independent contractor on a principal-to-principal basis, with the contractor using its own resources and without a master-servant relationship, the contractor is the manufacturer for excise purposes and mere supply or storage of raw materials by the customer does not shift that liability to the customer.

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