TaxTMI 
TaxTMI 
2026 (3) TMI 1056
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....3.07.2015 (Annexure A/2) by the Customs, Central Excise and Appellate Tribunal, New Delhi. Facts of the case, in short, are as follows:- 2. M/s. ACE Caldrey, Ltd., Katni Refractory Bricks, Katni/respondent was engaged in the manufacture of branded Aluminum Fire Bricks and other refractory materials from its factory at Katni. The respondent had granted "Franchise" for the manufacture of goods of specifications, design and quality described by them to some other small manufacturing units located at Katni and nearby areas, under the Notarised Agreements executed in the month of August 1994. The pattern of awarding the work of manufacturing of Fire Bricks of specifications, design and quality provided by the respondent and dispatched to i....
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....d the appeal and set aside the impugned Order-In-Original. Thereafter, the Commissioner filed this appeal under Section 35-G(1). This appeal came to be admitted on the following substantial questions of law on 25.09.2017:- "(A) Whether on the basis of facts and circumstances of the case the activity conducted by the respondent/assessee is taxable under the category of 'Franchise Service' especially when the respondent/assessee has received a sizable amount under the name and guise of "Incremental Cost/Opportunity Cost" against the activities defined in Section 65(47) of Finance Act, 1994? (B) Whether the agreement has been misread by the Tribunal inasmuch as the agreement reads that the party No.1/assessee has agre....
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....nd quality as specified by party No.1 in their purchase order has made a request for getting franchise; And whereas the party no.1 has agreed to grant franchise to the party no. 2 on specified condition that they shall manufacture the firebricks on the specification, design and quality as directed by party no.1 and shall dispatch the firebrick only to such customers of party no.1 has specified in their purchase orders; And whereas the party no.2 has agreed to supply the firebricks on the terms and conditions of party no. 1 and to the customers of party no.1 alone on the price directed by party no.1 and shall reimburse the incremental cost to party no.1 as mentioned in the purchase orders/Annexure by way of payment of oppor....
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....to pay to the franchisor, directly or indirectly, a fee; and (iv) the franchisee is under an obligation not to engage in selling or providing similar goods or services or process, identified with any other person. 10. The Finance Act, 2005 has substituted the definition for a special term "Franchise" w.e.f., 16.06.2005, which is reproduced below:- "'Franchise' is an agreement by which the franchisee is granted representational right to sell or manufacture goods or to provide service or undertake any process identified with franchisor, whether or not a trade mark, service mark, trade name or logo or any such symbol, as the case may be, is involved." 11. According to which, 'Franchise' is an agreement, ....
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....the manufacturers. We find that the manufacturers have issued invoices where the goods were shown to be sold to the appellant and the consignee is the person to whom the goods were consigned as per the direction of the appellant. The appellant in turn sent the invoice to the consignee- customer in which the total value shown was the aggregate of the value of the goods plus various taxes shown in the invoice of the manufacturer raised on the appellant. From this it is evident that as far as the manufacturer is concerned the goods were sold to the appellant and were consigned only to those persons whom the appellant directed the manufacturer to consign them to. The manufacturer did not have any right to sell these goods directly to any custom....
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....ara. 10. We find that CESTAT in the case of M/s Skol Breweries Ltd, (supra) involving similar circumstances has held as under : "8. Having considered the rival submissions, we find that as per the agreement between the parties, the risk of manufacture and sale lies with the appellant in respect of the Foster Brand beer got manufactured by it from FIPL. It is evident from the contract that FIPL is only responsible for bottling, packing and dispatch as per the specification, terms, formula etc. as laid down by the appellant. Further FIPL is bound to charge the price from the notified Identer of the appellant as fixed by the appellant. Only for the risks associated with the manufacturing process fastened on FIPL (CBU), it can....