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AI Drafter - (New and Powerful) ✕ Generate professional replies, appeals, opinions to Show Cause Notices, assessment orders, audit objections, and other legal communications using TaxTMI's AI Drafter.
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Issues: (i) Whether the petitioners manufactured the radios on their own account and sold them to the buyer on a principal-to-principal basis so as to remain eligible for the small-scale exemption under the notification; (ii) Whether the existence of an alternative statutory remedy barred interference under Article 226.
Issue (i): Whether the petitioners manufactured the radios on their own account and sold them to the buyer on a principal-to-principal basis so as to remain eligible for the small-scale exemption under the notification.
Analysis: The decisive factors were ownership and control of the factory, plant, machinery, labour, and manufacturing process, together with the nature of the commercial arrangement. The radios were made in the petitioners' factory, sold at an arm's length price, and the petitioners remained the manufacturer notwithstanding the use of the buyer's brand name and the limited supply of some components. The materials showed that the buyer's participation did not convert the petitioners into a mere job worker or manufacturer on behalf of the buyer. On that footing, the foundation of the excise order treating the buyer as the real manufacturer could not stand.
Conclusion: The petitioners were independent manufacturers, and the denial of the exemption on the footing that they manufactured on behalf of the buyer was unsustainable.
Issue (ii): Whether the existence of an alternative statutory remedy barred interference under Article 226.
Analysis: Although the availability of appellate remedies is a relevant restraint on writ jurisdiction, that rule is not absolute. The challenge was treated as one raising jurisdictional illegality, and the matter had remained pending for years with interim orders already operating. In those circumstances, the Court declined to non-suit the petitioners on the ground of alternative remedy.
Conclusion: The writ petition was maintainable and the Court declined to relegate the petitioners to the statutory appellate remedy.
Final Conclusion: The excise order was quashed, the petitioners were held entitled to the benefit of the exemption, and the rule was made absolute with consequential discharge of the bank guarantees.
Ratio Decidendi: For excise purposes, a unit that owns and controls the manufacturing set-up and sells the finished goods on a principal-to-principal basis is the manufacturer on its own account, and the buyer's brand name or limited supply of components does not by itself establish manufacture on behalf of the buyer.
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