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Judgment
S. Ramalingam, J.—All these write petition were filed at the stage when show cause notices were issued to the petitioner based on Trade on
Notice 197/88, dated 7-10-1988 which stated that if the inputs are supplied by the principal manufacturer for the manufacture of goods on job
work basis, then the same should be treated as goods manufactured by the supplier of raw-materials (i.e. the principal manufacturer) and duty
liability to be decided accordingly.
During the pendency of these writ petitions, the Supreme Court had occasion to consider the validity of the above Trade Notice and had upheld
the decision of the Central Excise and Gold Control Appellate Tribunal in the case of Collector of Central Excise, Cochin v. Kerala State
Electricity Board 1990 (47) ELT A161 wherein it has been held that the supplier of raw material will not becomes the manufacturer by the mere
fact that the raw materials were being supplied by him and the same were to be utilised in the manufacture of articles to the specification of the
supplier and that the manufactured articles were to be returned to the supplied. Hence, by another Trade Notice No. 156/90 dated 4-9-1990 the
Government had clarified the position as follows :-
If the relationship between the raw material supplier and the job worker is one of principal to principal, then job worker will be the actual
manufacturer. If from the facts of the case and the terms of agreement between the raw material supplier and job worker, it can be established that
job worker is a dummy unit or is just a hired labour of the raw material supplier, then the raw material supplier would be the principal manufacturer
and the job worker would be his workman or hired labour"".
In law and in effect, Trade Notice 156/90 dated 4-9-1990 has the effect of superseding the earlier Trade Notice 197/88 dated 7-10-1988.
Consequently, the show cause notices already issued cannot be enforced further. However, it is open to the respondents to issue, if they so desire,
fresh cause notices on the strength of Trade Notice No. 156/90 dated 4-9-1990. The Writ Petitions are ordered accordingly in the above terms.
No costs.