1980 (2) TMI 288 - HC - Central Excise

Summary

Issues:
1. Interpretation of agreements as sale or manufacturing contracts.
2. Determination of the status of the petitioner as a manufacturer under Section 2(f) of the Central Excises and Salt Act.
3. Application of the definition of "manufacture" to the petitioner's control and direction over the goods' manufacture.
4. Analysis of the petitioner's liability for excise license based on the agreements.
5. Consideration of whether affixing trade marks changes the manufacturer of the products.

Detailed Analysis:
1. The judgment deals with the interpretation of agreements between the petitioner and Cibatul Ltd. to ascertain if they were sale agreements or manufacturing contracts. The petitioner contended that it was a purchaser, while the respondents argued that the petitioner was the manufacturer. The court analyzed the terms of the agreements to determine the nature of the relationship between the parties.

2. The court examined the definition of "manufacturer" under Section 2(f) of the Central Excises and Salt Act to decide if the petitioner fell within this definition. The respondents claimed that the petitioner had control and direction over the goods' manufacture based on clauses in the agreements, while the petitioner argued against being classified as a manufacturer.

3. The judgment delved into the application of the definition of "manufacture" to the petitioner's role in the goods' production. The court rejected the argument that quality control measures and approval rights granted to the petitioner elevated them to a manufacturer, emphasizing that these were safeguards to ensure product quality, not indicative of manufacturing control.

4. The court addressed the petitioner's liability for an excise license based on the Superintendent of Central Excise's communication regarding the necessity of a license. The petitioner disputed this requirement, leading to the filing of the petition to challenge the trade notice and related letters from the Superintendent.

5. The judgment considered the impact of affixing trade marks on the products and whether this altered the manufacturer of the goods. The court rejected the contention that the petitioner became the manufacturer once the products entered the stream of trade with the petitioner's trade marks, emphasizing that the products remained the same despite the branding.

In conclusion, the court ruled in favor of the petitioner, accepting their argument that they were buyers, not manufacturers, of the goods. The petition was allowed, setting aside the trade notice and related letters, with no costs imposed on the petitioner. The judgment provides a detailed analysis of the agreements, legal definitions, and the petitioner's role in the goods' production to reach a conclusive decision on the issues presented.