Trade mark use under a franchise does not displace manufacturer status for excise exemption purposes

An assessee manufacturing aerated waters in its own factory under a franchise arrangement remained the manufacturer for excise purposes, because independent licensing and assessment, absence of any ownership or partnership link with the brand owner, and production on its own account were determinative. The use of another concern's trade mark and compliance with franchise conditions did not make the brand owner the manufacturer or show that the goods were produced for and on behalf of that owner. The exemption under Notification No. 82/74 was therefore available, and the review was not warranted.

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Issues: Whether the assessee, manufacturing aerated waters under a franchise arrangement and using the brand name of another concern, could still be treated as the manufacturer for purposes of the exemption under Notification No. 82/74, and whether the production could be regarded as being for and on behalf of the brand name owner.

Analysis: The exemption under Notification No. 82/74 applied to aerated waters manufactured with total equivalent power not exceeding 10 H.P. The assessee was independently licensed and assessed under the central excise, income-tax and sales tax laws, had no partnership or ownership interest in the brand owner, and manufactured the goods in its own factory on its own account. The conditions imposed by the franchise arrangement and the use of the trade mark did not alter the legal character of the assessee as the manufacturer. Trade mark ownership and manufacturing under a franchise do not, by themselves, make the brand owner the manufacturer or show that the goods were produced for and on behalf of that owner.

Conclusion: The assessee remained the manufacturer for excise purposes, the production was not for and on behalf of the brand owner, and the exemption under Notification No. 82/74 was available. The review was therefore not warranted.

Ratio Decidendi: A person who manufactures excisable goods on its own account in its own factory remains the manufacturer for excise purposes, and the mere use of another's trade mark or compliance with franchise conditions does not convert the brand owner into the manufacturer or defeat a power-based exemption.

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