1984 (7) TMI 82 - HC - Central Excise

Summary

Issues:
Interpretation of a franchise agreement in regard to the sale of essences.

Analysis:
The judgment involves four Writ Petitions concerning the interpretation of a franchise agreement related to the sale of essences by a bottling company. The petitioners were engaged in manufacturing soft drinks marketed under a registered trademark. The dispute arose when the Assistant Collector of Customs and Central Excise held that the petitioners were not independent manufacturers but mere bottlers, thereby making them liable for duty as they exceeded the exemption limit set in a notification.

The petitioners argued that the franchise agreement did not impose any financial obligations on the supplying company and that they had full control over their manufacturing process, finances, and management. They contended that the agreement was purely for the sale of essences and did not establish an agency relationship between the parties.

The judgment referred to previous High Court judgments that supported the petitioners' argument, emphasizing that the petitioners were independent manufacturers with no agency ties to the supplying company. The court agreed with the view that the petitioners operated independently and were not agents, employees, or partners of the supplying company.

Ultimately, the court ruled in favor of the petitioners, declaring them as independent manufacturers entitled to the exemption under the notification. The Collector's order was set aside, and the petitioners were granted the exemption. The judgment was applicable to all four Writ Petitions, and costs were awarded to the petitioners.