Kindly refer to your spot memo bearing _________ regarding the above subject.

It has been alleged in your abovementioned memo that the raw material namely pig iron
etc. are sent to the job worker with a view to manufacture ‘ Cast articles of iron’. In your
opinion transformation of a new and different article ‘ cast articles of iron’ is taking place
in the premises of the job worker.

However while making the above allegation you have failed to take into consideration
that the process being undertaken at the factory of job worker is only one of the several
processes for conversion of pig iron into article of cast iron. The processes being
undertaken at our factory are absolutely essential & integral to the whole process of
manufacturing. The process being undertaken at the premises of job worker is just
melting of cast iron & giving it a preliminary or primary shape. But there are several
processes undertaken at our factory which are essential to give the product its final shape.
Without undertaking these processes the product will not attain the specification of the
customer & will not be acceptable to the customer. In other words the product obtained
from the factory of job worker will not be marketable unless it is applied to various
processes at our factory. The various processes being undertaken at our factory & their
function to finish the product & to make the product marketable are illustrated below:-

Herein it would be relevant to quote the ratio of the decision in the case of Bhor
Industries Ltd. Vs. Collector – 1989 (40) E.L.T. ( S.C.) wherein it was decided that
marketability is essential ingredient in order to make the product dutiable.

It would also be relevant to quote the definition in section 2(f) of the C.E. Act, 1944
which states as follows:-
Manufacture includes any process “incidental or ancillary to the completion of a
manufactured product”
Though the processes being undertaken at our factory are not only incidental or ancillary
but absolutely essential to the whole process of manufacturing but the above part of the
definition has been quoted to point out that even the incidental or ancillary processes can
be considered as process of manufacture.

It would also be relevant to quote the definition of manufacture in rule 12 of The C.E.
Rules, 1944 which states “manufacture” includes the process of blending of any goods or
making alterations or any other operation thereon.

As our factory is hundred percent export oriented unit so as per above definition any
operation carried on the product obtained from the premises of the job worker will be a
process of manufacture though in our case processes being carried on, as illustrated
above, at our factory are absolutely essential & integral to the whole process of
manufacturing.

The above establishes that the Nandikeshwari Iron Foundry Pvt. Ltd. ( Unit II ) is the
manufacturer of the article of cast iron & not the job worker.
We hope the above satisfies & clears all your ambiguities.

Thanking You,

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