1979 (7) TMI 98 - HC - Central Excise

Summary

Issues:
Interpretation of the term 'manufacturers' under Section 2(f) of the Central Excises and Salt Act, 1944 based on the affixation of brand names to products by individual manufacturers.

Analysis:
The petitioners, engaged in manufacturing machine tools, entered agreements with individual manufacturers who supplied products bearing the petitioners' brand name. The Superintendent of Central Excise considered the petitioners as manufacturers due to the affixation of their brand name on the products, prompting the petitioners to challenge this classification. The petitioners argued that this interpretation extended the definition of 'manufacturers' under Section 2(f) of the Act. The court agreed, citing precedents from the Gujarat and Patna High Courts, which held that affixing a brand name does not automatically make the buyer a manufacturer. The court emphasized that other factors, beyond brand name affixation, should be considered to determine if the petitioners are the actual manufacturers.

The respondents contended that the agreements implied the petitioners were the real manufacturers. However, the court found the Superintendent's decision solely based on brand name affixation to be erroneous and not supported by the law. The court clarified that while brand name usage could be a factor, it alone cannot classify the petitioners as manufacturers. The court highlighted that the Department should consider all relevant factors, including the agreements with individual manufacturers, to ascertain if the petitioners exerted control over the manufacturing process. The court quashed the letter from the Superintendent and restrained any action based solely on brand name affixation.

Ultimately, the court ruled in favor of the petitioners, emphasizing that the Superintendent's decision was misconceived and lacked legal basis. The court's decision protected the petitioners from being classified as manufacturers solely due to brand name affixation, affirming that such a factor alone is insufficient to establish manufacturing status. The judgment did not award costs to either party, considering the circumstances of the case.