Job-work excise liability follows the actual manufacturer; mere supply of raw materials does not shift duty to the principal.

In a bona fide job-work arrangement, central excise duty attaches to the person who actually manufactures the goods, not to the party that merely supplies raw materials or tools. Where the contract worker manufactures at its own premises with its own labour, machinery and resources, and the parties are structured as independent contractors, the supplier of inputs is not treated as the manufacturer. Ownership of the goods is not decisive, and the cited notifications did not shift liability to the input supplier. The demand against the appellant was therefore unsustainable, and liability remained with the contract manufacturer.

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Issues: Whether excise duty on goods manufactured by the contract manufacturer on job-work basis was recoverable from the appellant, who supplied raw materials and tools but did not itself undertake the manufacturing activity.

Analysis: The manufacturing activity was carried out by the contract manufacturer at its own premises with its own labour, machinery and resources, while the appellant merely supplied inputs and certain tools. The agreement described the parties as independent contractors, showing that the relationship was not one of agent and principal. Under the scheme of central excise, duty attaches to the person who actually undertakes manufacture, and ownership of the goods is not decisive. The relied upon notifications did not shift the duty liability to the supplier of raw materials in the absence of manufacture by that supplier. The precedents applied by the Tribunal consistently held that, in a genuine job-work arrangement, the job worker is the manufacturer and the duty liability remains on the job worker unless a valid statutory mechanism transfers that liability.

Conclusion: Excise duty was not recoverable from the appellant; the contract manufacturer was liable, and the demand against the appellant was unsustainable.

Ratio Decidendi: In a bona fide job-work arrangement, central excise duty is payable by the person who actually manufactures the goods, and mere supply of raw materials or ownership of the goods does not make the principal manufacturer liable.

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