Excise manufacture and job work: supplier of materials was not the manufacturer where essential processes were done by an independent unit.

For excise purposes, the supplier of cylinders and other raw materials was not treated as the manufacturer of fire extinguishers where the essential processes of filling, fitting, assembly, painting and labelling were carried out by an independent job worker on a principal-to-principal basis. The Revenue accepted that those processes brought into existence a commercially distinct excisable product, but the record showed they were performed by another unit, not by the respondents. In the absence of evidence that the respondents themselves undertook the manufacturing activity, the supplier of materials could not be treated as a second manufacturer for the same goods, and excise liability could not be fastened on them.

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Issues: Whether the respondents, who supplied cylinders and arranged for filling, fitting, assembly, painting and labelling through another unit, could be treated as manufacturers of fire extinguishers for excise purposes.

Analysis: The Revenue itself accepted that the processes of filling carbon dioxide gas and fitting hoses and other components amounted to manufacture and resulted in a commercially distinct product known as fire extinguishers falling under Item 68. It was also stated that these essential manufacturing processes were carried out by M/s. Fire Hose & Appliances (I) Pvt. Ltd., not by the respondents. In such a situation, the supplier of raw materials cannot be treated as the manufacturer when the actual manufacture is undertaken by an independent job worker on a principal-to-principal basis. The existence of a new excisable product and the absence of any evidence that the respondents themselves carried out the manufacturing process negatived the Revenue's case that there could be two manufacturers for the same goods.

Conclusion: The respondents were not the manufacturers of the fire extinguishers and the excise liability could not be fastened on them.

Final Conclusion: The Revenue's challenge to the Collector (Appeals)' finding failed, and the assessee's position on manufacture was upheld.

Ratio Decidendi: Where the essential manufacturing process is performed by an independent job worker on a principal-to-principal basis, the supplier of raw materials is not the manufacturer merely because the finished goods are produced to its specifications.

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