Franchise-based manufacturing still qualified for excise exemption until the notified item was deleted, and the denial was quashed.

A franchise arrangement and quality-control conditions imposed by the trade mark owner did not, by themselves, make the petitioner a manufacturer acting for and on behalf of the franchisor. The court treated the petitioner as an independent manufacturing concern and held that exemption under Notification No. 80/80-CE, as amended by Notification No. 50/81-CE, remained available until the Government deleted the relevant item from the notification. On that basis, the impugned communication denying exemption was quashed, and the exemption ceased only from 28 February 1982 onward.

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Issues: Whether the petitioner was entitled to exemption under Notification No. 80/80-CE, as amended by Notification No. 50/81-CE, and whether the communication denying such exemption was liable to be quashed.

Analysis: The petitioner was treated as an independent manufacturing concern notwithstanding the franchise arrangement and the conditions imposed by the trade mark owner to maintain product standard and quality. Mere compliance with such conditions did not convert the petitioner into a manufacturer working for and on behalf of the franchisor. On that basis, the exemption under the relevant notification remained available to the petitioner up to the date when the Government deleted the relevant item from the notification.

Conclusion: The petitioner was entitled to the exemption and the impugned communication was quashed; the benefit ceased only from 28 February 1982 onward.

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