Job work manufacture test: goods completed only after final finishing by principal supplier, making duty and penalty unsustainable

Processed pre-cured tread rubber was not treated as fully manufactured at the job worker's end because essential finishing operations, including de-flashing, hardness and uniformity testing, and final inspection, were completed by the principal suppliers before despatch. The factual matrix showed that the job worker performed substantial processing and received only job charges, but the goods were not marketable when returned from the job worker. Applying Rule 57F(2) and Rule 57F(3)(b), and the governing test of whether goods had reached a fully manufactured stage, duty and penalty against the job worker were held unsustainable.

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Issues: Whether the processed pre-cured tread rubber was fully manufactured at the hands of the job worker or only after further processing by the raw material suppliers, and whether duty and penalty were therefore sustainable against the job worker.

Analysis: The processing chain showed that the job worker performed substantial operations, but the raw material suppliers retained and completed essential finishing processes such as de-flashing, testing for hardness and uniformity, and final inspection before despatch. The job worker received only job charges and the goods were not shown to be marketable at the stage when returned by the job worker. Rule 57F(2) and Rule 57F(3)(b) contemplated removal of inputs or partially processed goods for further manufacture and return, and the factual matrix indicated that the manufacturing process was not complete at the job worker's end. The conclusion was supported by the principles governing job work and manufacture as reflected in the cited precedents, including the test whether the goods had reached a fully manufactured and marketable stage.

Conclusion: The job worker was not the manufacturer of the fully finished goods, and the impugned demand and penalty were unsustainable.

Ratio Decidendi: Where substantial manufacturing activity is performed by a job worker but essential finishing and marketability-related processes are completed only by the principal supplier, the goods are not treated as fully manufactured at the job worker's end for duty purposes.

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