Manufacture for central excise requires real control of production; quality checks and trademark use alone do not make the buyer the manufacturer.

Where the agreements showed one party as seller and the other as buyer, with the goods manufactured in the seller's own plant and sold only after manufacture, the buyer was not treated as the manufacturer for central excise purposes. Quality stipulations, sample testing, approval before release, and affixation of foreign trade marks were held to be safeguards for conformity and not control over the manufacturing process. The Court therefore held that the buyer did not fall within Section 2(f) of the Central Excises and Salt Act, 1944, and the excise demand requiring a licence was unsustainable.

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Issues: Whether, on the terms of the agreements, the petitioner was the manufacturer of the goods for purposes of central excise or merely the buyer of goods manufactured by the seller.

Analysis: The agreements described the parties as seller and buyer, recorded that the seller manufactured the contract products in its own plant, and contemplated sale of those products to the petitioner after manufacture. The buyer's stipulations as to quality, testing of samples, and approval before release were treated as safeguards to ensure conformity with standards and not as indicators of control over the manufacturing process. The affixation of the foreign trade marks did not alter the identity of the goods or convert the buyer into the manufacturer. The Court also found support in the earlier Gujarat High Court decision on the same arrangement.

Conclusion: The petitioner was not the manufacturer under Section 2(f) of the Central Excises and Salt Act, 1944, but only the buyer of the goods manufactured by Cibatul Ltd.; the excise demand to require a licence was unsustainable.

Ratio Decidendi: A buyer does not become the manufacturer merely because it prescribes quality standards, tests samples, or requires approval before release, where the goods are in fact manufactured by another party in its own plant and sold as such.

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