Job-work control and fabrication of structural items do not by themselves establish hired labour status or excisable manufacture.

Hired labour status requires a master-servant relationship with real control and supervision by the hirer; a processor operating its own factory, machinery and independent job-work arrangement is not treated as hired labour merely because raw material is supplied and no written contract exists. Fabrication of trusses, purlins and similar structural items from supplied sheets, plates, pipes, joints and girders was also treated as not amounting to manufacture for excise purposes, so the duty demand and penalties could not stand. The appeal was allowed with consequential relief.

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Issues: (i) whether the unit processing the material could be treated as hired labourers of the appellant, and (ii) whether fabrication of trusses, purlins and similar items from supplied materials amounted to manufacture attracting excise duty.

Issue (i): whether the unit processing the material could be treated as hired labourers of the appellant

Analysis: Hired labour status depends on the existence of a master-servant relationship with control and supervision by the hirer. The processing unit had its own factory, received material for processing, worked on instructions, and was paid job charges. The record did not establish that it worked under the appellant's control or supervision. Supply of raw material and absence of a written contract were insufficient to establish hired labour status.

Conclusion: The unit was not hired labourers; it was a job-worker, and the contrary finding was unsustainable.

Issue (ii): whether fabrication of trusses, purlins and similar items from supplied materials amounted to manufacture attracting excise duty

Analysis: The processing involved fabrication of items from purchased sheets, plates, pipes, joints and girders. On the authority applied by the Tribunal, such fabrication did not amount to manufacture so as to attract excise duty.

Conclusion: The activity did not amount to manufacture and the duty demand and penalties could not survive.

Final Conclusion: The demand and penalties were set aside and the appeal was allowed with consequential relief.

Ratio Decidendi: A processor with its own factory, machinery and independent operations is not a hired labourer merely because raw material is supplied by the appellant; and fabrication of structural items from such materials does not necessarily amount to manufacture for excise purposes.

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