Excise duty and penalty cannot be imposed beyond the show cause notice, especially where job workers are independent manufacturers.

Duty liability could not be fastened on the appellants because the show cause notices did not propose recovery from them, and the adjudication orders travelled beyond the scope of the notices. The demand was therefore unsustainable and set aside. Penalties also failed because the structurals were manufactured and erected by independent job workers, and no evidence showed those job workers to be dummies or facades of the appellants. On that footing, a supplier of raw materials was not treated as the manufacturer, so the excise penalties were likewise set aside. The impugned orders were quashed, with liberty to proceed lawfully against the job workers if warranted.

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Issues: (i) Whether the duty demand raised against the appellants was sustainable when the show cause notices did not propose such demand against them. (ii) Whether penalties could be imposed on the appellants when the structurals were manufactured and erected by independent job workers and no evidence showed the job workers to be dummies or facades.

Issue (i): Whether the duty demand raised against the appellants was sustainable when the show cause notices did not propose such demand against them.

Analysis: The notices and the adjudication orders proceeded on the footing that the structurals were manufactured by the job workers. Since the notices did not propose recovery of duty from the appellants, fastening the duty liability on them in the orders went beyond the scope of the notices and could not be sustained.

Conclusion: The duty demand against the appellants was not sustainable and was set aside.

Issue (ii): Whether penalties could be imposed on the appellants when the structurals were manufactured and erected by independent job workers and no evidence showed the job workers to be dummies or facades.

Analysis: The settled position applied was that a supplier of raw materials is not the manufacturer unless the job workers are shown to be mere dummies or facades of the supplier. No such evidence was produced. In these circumstances, there was no basis to hold the appellants guilty of contravention of the cited excise rules or to justify penalty.

Conclusion: The penalties imposed on the appellants were not sustainable and were set aside.

Final Conclusion: The impugned orders were quashed and the appeals were allowed, while leaving open any lawful action against the job workers if otherwise warranted.

Ratio Decidendi: A duty demand or penalty cannot be sustained against a person when the show cause notice did not propose such liability against that person, and a supplier of raw materials is not treated as the manufacturer unless the job workers are proved to be mere dummies or facades.

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