Manufacturer status in bottling arrangements depends on actual production on one's own account, not trade mark control alone.

In a franchise and trade mark-controlled bottling arrangement, the entity that purchased the composition and ingredients and carried out the manufacturing, bottling, distribution and marketing on its own account was treated as the manufacturer for excise purposes. Mere retention of trade mark rights and quality controls by the supplier did not shift the character of manufacturer to that supplier under the statutory definition in Section 2(f) of the Central Excises and Salt Act, 1944. On that basis, the petitioner was held entitled to the exemption under Notification No. 211/77-Central Excise, and the excise order withdrawing the exemption was set aside.

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Issues: Whether the petitioner-company was the manufacturer of the soft drink Rs. 77 for purposes of excise duty and, if so, whether it was entitled to the exemption under Notification No. 211/77-Central Excise dated 4-7-1977.

Analysis: The agreement showed that the petitioner purchased the composition and other ingredients and carried out the entire manufacturing, bottling, distribution and marketing operations on its own account. The supplier of the concentrate retained only trade mark and quality-related controls, which did not make it the manufacturer. The statutory definition of manufacturer under Section 2(f) of the Central Excises and Salt Act, 1944 covered a person who engages in production or manufacture on his own account. The materials on record and the cited decisions supported the view that mere supply of an ingredient under a franchise or trade mark arrangement does not shift the character of manufacturer to the supplier.

Conclusion: The petitioner-company was the manufacturer of Rs. 77 and was entitled to the benefit of the exemption notification.

Final Conclusion: The impugned excise order withdrawing the exemption was set aside, and the writ petition succeeded.

Ratio Decidendi: In a franchise or trade mark-controlled bottling arrangement, the entity that carries out the actual manufacture on its own account remains the manufacturer for excise purposes, and trade mark or quality restrictions by the supplier do not by themselves make the supplier the manufacturer.

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