Raw material supplier not treated as manufacturer absent proof of agency, control, or sham job-work arrangement

Mere supply of raw materials to independent units does not make the supplier the manufacturer of the finished excisable goods. Applying Section 2(f), the document states that manufacture cannot be attributed to the supplier unless the department proves that the units were employees, agents, dummy concerns, or otherwise under the supplier's control or supervision. Where the arrangement is genuine and on a principal-to-principal basis, the supplier is not liable for duty, confiscation, fine, or penalty.

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Issues: Whether mere supply of raw materials to independent units for manufacture of excisable goods makes the raw material supplier the manufacturer liable for duty, confiscation and penalty.

Analysis: The appeal concerned steel furniture manufactured by separate units using raw materials supplied by the appellant. The record did not establish that those units were employees, agents, dummy concerns, or units under the appellant's control or supervision. In the absence of proof that the arrangement was a sham or designed to evade duty, the relationship remained one of independent contractors dealing on principal to principal basis. Section 2(f) of the Act was applied to hold that manufacture on one's own account cannot be attributed to the raw material supplier merely because the supplier provided inputs and received the finished goods back from the job workers.

Conclusion: Mere supply of raw materials, without proof of agency, employment, control, or dummy arrangement, does not make the supplier the manufacturer. The appellant was therefore not liable for duty, confiscation, fine, or penalty.

Ratio Decidendi: A raw material supplier is not the manufacturer of excisable goods produced by independent job workers unless the department proves that the workers acted as employees, agents, or sham entities under the supplier's control.

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