Bottler treated as actual manufacturer where trade mark owner kept only quality-control restrictions, securing excise exemption.

A bottler using its own factory, labour and materials, while purchasing the soft-drink composition from the trade mark owner, was treated as manufacturing on its own account because the owner exercised only quality-control and territorial restrictions to protect the mark. Those restrictions did not create an agency relationship or make the trade mark owner the manufacturer under section 2(f)(iv) of the Central Excises and Salt Act, 1944. On that footing, the bottler was the actual manufacturer for purposes of the exemption notification issued under rule 8(1) of the Central Excise Rules, 1944, and the excise exemption applied.

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Issues: Whether the petitioner manufactured the soft drink on its own account or on behalf of the trade mark owner, and whether it was therefore entitled to the excise exemption under the notification issued under rule 8(1) of the Central Excise Rules, 1944.

Analysis: The agreement showed that the petitioner purchased the composition from the trade mark owner, used its own factory, labour, and materials, and had no control exercised over its manufacturing operations by the trade mark owner. The restrictions in the agreement were directed to protecting the trade mark and maintaining quality, and did not create an agency in favour of the trade mark owner. On that basis, the trade mark owner could not be treated as a manufacturer within section 2(f)(iv) of the Central Excises and Salt Act, 1944, and the petitioner was the actual manufacturer for purposes of the exemption notification.

Conclusion: The petitioner was the manufacturer on its own account and was entitled to the exemption.

Final Conclusion: The impugned excise order was quashed and the writ application was allowed with costs.

Ratio Decidendi: Where a bottler manufactures goods in its own factory using materials purchased from the trade mark owner, and the trade mark owner retains only quality-control and territorial restrictions to protect its mark, the bottler is the manufacturer and not an agent of the trade mark owner for excise purposes.

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