Brand-name manufacture and excise exemption: arms-length supply without purchaser control was insufficient to deny relief.

Excise exemption eligibility under the small-scale notifications depended on whether the manufacturer satisfied the prescribed conditions, and mere later sale of goods under the purchaser's brand name was not enough to show manufacture for and on behalf of that purchaser. The arrangement was treated as arms-length because there was no material showing purchaser control over manufacture, supply of raw materials, or financial assistance, and references to specifications, approved samples, and periodic account settlement were insufficient to support the departmental view. On that basis, the conclusion that the goods were manufactured for and on behalf of the purchaser was unsustainable, and the exemption remained available.

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Issues: Whether the petitioners were manufacturing the goods for and on behalf of the brand-name purchaser so as to lose the benefit of the excise exemption notifications.

Analysis: The exemption under the relevant notifications depended on the manufacturer satisfying the prescribed small-scale conditions. The mere fact that the petitioners' goods were later sold under the purchaser's brand name did not, by itself, establish that the manufacture was carried on for and on behalf of that purchaser. The agreement showed an arms-length arrangement, with no material indicating control over manufacture, supply of raw materials, or financial assistance by the purchaser. The material relied on by the Department, including reference to specifications, approved samples, and periodic account settlement, was insufficient to support the conclusion reached by the Assistant Collector.

Conclusion: The finding that the goods were manufactured for and on behalf of the purchaser was unsustainable, and the petitioners remained entitled to the exemption.

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