Job worker arrangements and manufacturer status cannot be presumed from raw material supply or ownership alone.

Mere supply of raw materials, retention of title in inputs and finished intermediates, bearing transportation costs, or absence of a written contract did not by themselves make the appellants the manufacturers of moulding powder and master batches. The decisive issue was whether the processing units were independent job workers or mere dummies; the record showed that they had their own factories, machinery and labour, and the department failed to prove direct control, supervision or any camouflage arrangement. The rule that a raw material supplier is not, for that reason alone, the manufacturer was applied, and the duty demand was unsustainable.

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Issues: Whether the appellants could be treated as the manufacturers of moulding powder and master batches on the footing that the job workers were only hired labour or dummies, thereby making the duty demand sustainable against the appellants.

Analysis: The decisive question was the true legal character of the arrangements between the appellants and the processing units. The majority found no reliable evidence that the job workers were dummy concerns or that the dealings were anything other than independent commercial transactions. Mere supply of raw materials by the appellants, retention of ownership in the materials and finished intermediate goods, bearing of transportation charges, or absence of a formal written contract did not by themselves establish manufacture by the appellants. The record showed that the job workers had their own factories, machinery and labour, and the department had not proved direct control, supervision, or a camouflage arrangement. The rule that a supplier of raw material is not, for that reason alone, the manufacturer was applied.

Conclusion: The appellants were not liable to be treated as the manufacturers of the intermediate goods on the facts proved, and the demand of duty raised on that basis could not be sustained.

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