Manufacturer liability determined by identity of manufacturer; supplier of inputs not liable where independent contractor manufactures and supplies RMC.

Whether the appellant is the manufacturer of Ready Mix Concrete was resolved by applying the definition of "manufacture" and the job-work concept: manufacturing activities performed by an independent contractor operating batching plant and supplying finished RMC on a principal-to-principal basis make the contractor the manufacturer. The supplier of raw materials who only furnished inputs is not liable for central excise unless the specific conditions of any concessional notification (including any required undertaking) are strictly complied with; the impugned demand was set aside and the appeal allowed.

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Issues: Whether the appellant, who contracted out manufacture and supply of Ready Mix Concrete (RMC) to a contractor and supplied raw materials, can be treated as the manufacturer liable to pay central excise duty for the period June 2013 to January 2016.

Analysis: The contract shows the contractor was engaged to supply, manage and maintain a batching plant and to manufacture and supply RMC to the appellant. The appellant supplied inputs such as sand, jelly, water and cement while the contractor provided machinery, labour and the manufacturing process. The definition of "manufacture" under Section 2(f) of the Central Excise Act, 1944 and the job-work concept under Rule 2(n) of the Cenvat Credit Rules, 2004 were applied. Precedent authority establishes that excise liability ordinarily rests on the manufacturer and can be shifted to the supplier of raw materials only if conditions of the relevant exemption or notification (including any undertaking) are strictly complied with. The appellant also relied on Notification No. 1/2011-C.E. dated 01.03.2011 for concessional duty where CENVAT credit has not been availed, but the primary issue resolved is identity of the manufacturer liable for duty.

Conclusion: The appellant is not the manufacturer of Ready Mix Concrete and therefore cannot be held liable to pay central excise duty, interest or penalty for the impugned period; the impugned order confirming demand is set aside and the appeal is allowed with consequential relief, if any, in accordance with law.

Ratio Decidendi: Where manufacturing activities are performed by an independent contractor supplying finished goods on principal-to-principal basis, excise liability lies on the contractor as manufacturer and cannot be fastened on the supplier of raw materials unless the specific conditions of the exemption/notification (including required undertaking) are strictly fulfilled.

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