Loan licencee treated as manufacturer for exemption; brand name alone does not defeat eligibility.

A loan licencee manufacturing goods under its own supervision and control is treated as the manufacturer for exemption purposes, even if the goods bear another person's brand name. The brand name owner does not become the manufacturer merely because its mark appears on the goods, so the exemption is not defeated on that basis. Earlier Tribunal and Gujarat High Court rulings were followed, while the Revenue's reliance on a Supreme Court decision was distinguished on its facts. Eligibility remains subject to fulfilment of the notification's conditions.

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Issues: Whether a loan licencee manufacturing goods under its own supervision and control could be treated as the manufacturer and claim exemption under Notification No. 175/86-C.E., notwithstanding that the goods bore another person's brand name and the factory belonged to the assessee.

Analysis: The Tribunal held that the concept of a loan licencee is that the goods are manufactured by the loan licencee under its own supervision and control, and not by the owner of the lent factory. The fact that the brand name of Medifield Pvt. Ltd. was affixed did not make the brand name owner the manufacturer for the purposes of exemption. The earlier decisions of the Tribunal and the Gujarat High Court were followed, and the Supreme Court decision relied on by the Revenue was distinguished as inapplicable to the facts. The Tribunal also noted that the loan licencee had been availing the benefit of Notification No. 85/85-C.E. earlier and was therefore eligible to claim the later notification subject to fulfilment of its conditions.

Conclusion: A loan licencee can be treated as the manufacturer for claiming exemption under Notification No. 175/86-C.E. if the notification conditions are satisfied, and the brand name affixed on the goods does not by itself defeat the exemption.

Ratio Decidendi: For exemption purposes, the manufacturer is the person who manufactures under a loan licence with its own supervision and control, and not merely the brand name owner.

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