Central excise liability follows the manufacturer, so duty could not be shifted to a buyer when job workers performed the manufacture.

Central excise liability follows the manufacturer, so duty cannot be recovered from a buyer who merely receives and sells finished goods where cutting, stitching, packing and trade-mark affixing were done by job workers. On the facts noted, the appellant did not itself carry out the processing, and no provision then in force fastened liability on the principal for the relevant period. Rule 7AA of the Central Excise Rules, 1944, was unavailable to sustain the demand. The duty demand and penalty were therefore not sustainable, and consequential relief followed.

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Issues: Whether the excise duty demand could be sustained against the appellant when the cutting, stitching, packing and trade-mark affixing activities were undertaken by job workers and the appellant merely received and sold the packed dress material.

Analysis: The liability to pay central excise duty follows the manufacturer. On the facts found, the actual processing and packing were carried out by the job workers, while the appellant only received the finished packs and sold them in the market. Even assuming the goods were dutiable and the activities amounted to manufacture, the demand could not be shifted to the appellant in the absence of a provision fastening such liability on the principal for the relevant period. Rule 7AA of the Central Excise Rules, 1944, on which reliance was placed, was not available to support the demand for the period in question.

Conclusion: The duty demand against the appellant was not sustainable.

Final Conclusion: The appeal succeeded and the impugned order confirming duty and penalty was set aside, with consequential relief to the appellant.

Ratio Decidendi: In the absence of a specific statutory provision fastening excise liability on the principal, duty cannot be recovered from the buyer where manufacture, if any, is undertaken by job workers.

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