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Franchise manufacturing and trade mark controls did not make aerated drinks goods manufactured on behalf of brand owners.
Quality and specification requirements in a franchise arrangement did not make the manufacturer act on behalf of the trade mark owner. Where the assessee purchased concentrates and essences, manufactured aerated waters on its own account, bore independent tax status, and merely affixed the Fanta and Campa marks, the goods were not treated as manufactured for Coca-Cola Export Corporation or Pure Drinks Pvt. Ltd. The legal character of the manufacturer remained unchanged despite brand controls, and the assessee succeeded on that issue.
Manufacture on behalf - affixing of trademark not changing legal character - franchise agreement and quality control stipulations - independent manufacturer and assessee - dropping review and upholding orderinappealManufacture on behalf - affixing of trademark not changing legal character - franchise agreement and quality control stipulations - independent manufacturer and assessee - Whether the aerated beverages (Fanta and Campa) manufactured by the party were manufactured for and on behalf of the trademark owners (CocaCola Export Corporation and Pure Drinks) or were manufactured by the party on its own account. - HELD THAT: - The Government accepted the party's contentions and found that the party purchased beverage concentrates (Fanta) and essence (Campa) and manufactured the aerated water on its own account. The existence of franchise or trademark conditions obliging the manufacturer to adhere to quality, specifications and standards does not convert the manufacturer's independent legal character into that of an agent manufacturing on behalf of the trademark owner; such stipulations are consistent with protection of the trademark owner's standards and do not amount to interference with the working or legal character of the manufacturer. Independent assessment under Sales Tax and Incometax laws and charging of Central Sales Tax on purchases support the conclusion that the party was an independent manufacturer and not manufacturing for and on behalf of the trademark owners. The mere affixing of the brand name on the product and the use of similar durable bottles does not establish that the goods were manufactured for and on behalf of the brand owner; factual occurrences of bottle interchangeability do not alter the legal nature of manufacture. The Government relied on the ratio of the Gujarat High Court decision in M/s. Cibatul v. Union of India as relevant authority for this conclusion. [Paras 4]The aerated beverages were manufactured by the party on its own account and not for and on behalf of the trademark owners; affixing the trademarks or compliance with franchise quality stipulations did not alter the party's status as an independent manufacturer.Dropping review and upholding orderinappeal - Whether the review proceedings should be sustained or dropped and whether the orderinappeal should be upheld. - HELD THAT: - Having accepted the party's substantive contentions and found no basis to infer that the goods were manufactured on behalf of the trademark owners, the Government concluded there was no merit in revising the earlier appellate conclusion. The review of the earlier order produced no reason to disturb the orderinappeal. [Paras 5]The orderinappeal is upheld and the review proceedings are dropped.Final Conclusion: The Government upheld the orderinappeal, concluded that Punjab Beverages Limited manufactured Fanta and Campa on its own account (and not for the trademark owners), and accordingly dropped the review proceedings.
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