Job-work manufacturing places excise duty liability on the processor, not the merchant manufacturer, under central excise law.

In a job-work manufacturing arrangement, excise duty liability attaches to the processor as the manufacturer under section 2(f) of the Central Excises and Salt Act, 1944, not to the merchant manufacturer. Where this legal position applies, proceedings seeking to fasten duty on the merchant manufacturer cannot be sustained, and the corresponding penalty also falls.

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Issues: Whether duty could be confirmed from the merchant manufacturer when the processor/job worker was the manufacturer for the purpose of central excise.

Analysis: The Supreme Court rulings relied upon established that, in a job-work arrangement, the processor is the manufacturer within the meaning of section 2(f) of the Central Excises and Salt Act, 1944 and not the merchant manufacturer. Once that legal position applies, proceedings fastening duty liability on the merchant manufacturer cannot be sustained.

Conclusion: The duty demand and consequential penalty against the merchant manufacturer were unsustainable and the appeal was allowed.

Final Conclusion: The impugned order was set aside and appropriate relief was to follow.

Ratio Decidendi: In a job-work manufacturing arrangement, excise duty liability attaches to the processor as the manufacturer, and not to the merchant manufacturer, under section 2(f) of the Central Excises and Salt Act, 1944.

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