A manufacturer is entitled to exemption from excise duty under Notification No. 211/77-C.IL, dated July 4, 1977.

Satyeshwar Roy, J.

1. The petitioner, a private limited company, is a manufacturer of soft drinks in its factory at Adityapur in the district of Singhbhum. Initially it was manufacturing Coca (Cola) and Fanta Orange. It entered into an agreement on 25th December, 1977 with respondent No. 5, Modern Bakeries (India) Ltd. for manufacturing non-alcoholic beverage known as "77". The sole manufacturing, selling and distributing agent of the composition for preparation of "77" was respondent No. 5. The agreement entered into by and between the petitioner and respondent No. 5 is annexure 1 to the writ petition. According to the order dated 18th September, 1978 of respondent No. 2 contained in annexure 7, as the petitioner was manufacturing "77" for and on behalf of respondent No. 5, it was not entitled to exemption issued under Rule 8(1) of the Central Excise Rules, 1944 (the Rules) on 4th July, 1977 copy of the notification issued under that rule is annexure 2.

2. In this application, the petitioner has prayed for issuance of appropriate writ for quashing annexure 7 on the ground that in terms of annexure 1, the petitioner was itself a manufacturer of soft drink "77" and was not manufacturing it for and on behalf of respondent No. 5. It was, therefore, entitled to avail the exemption granted under annexure 2.

3. All the parties relied upon annexure 1 in support of their respective contention. The decision of this case will, therefore, depend on the correct interpretation of annexure 1 to find out whether the petitioner was a manufacturer of soft drink "77".

4. The petitioner has a factory in Adityapur and the same is registered under the Indian Factories Act, 1948, registration No. being 18540/SBM. The petitioner is solely responsible for the engagement and supervision of the employees for its factory and in every respect it has full control over the activities carried on at that factory. Before manufacturing "77" it was also manufacturing other soft drinks in that factory. The petitioner in terms of annexure 1 agreed to manufacture "77" in its factory at Adityapur. Under annexure 1 respondent No. 5 agreed to sell to the petitioner the composition which was used for manufacturing "77". Respondent No. 5 was the sole manufacturing, selling and distributing agent of that composition. For the manufacture of the soft drink "77", in addition to the said composition, other articles and chemicals like sugar, carbon dioxide, high flow super cell, caustic soda, flakes, etc., were also necessary which were purchased by the petitioner from the market. Bottles for bottling the soft drink and crown corks were also purchased by the petitioner from the market. Respondent No. 5 had no control over the petitioner or its factory at Adityapur. Since respondent No. 5 allowed the petitioner to use the trade mark "77" owned by respondent No. 5 the latter was entitled to ensure the quality of the soft drink. In annexure 1 the territory within which the petitioner was entitled to sell "77" so manufactured in its Adityapur factory, was defined, According to the petitioner it was a manufacturer as defined under the Central Excises and Salt Act, 1944 (the Act). Respondents Nos. 1 to 3 in their counter-affidavit admitted that the soft drink

"77" was manufactured by the petitioner at the Adityapur factory, but contended that the same was manufactured on behalf of respondent No. 5. The terms of annexure 1 would show that the petitioner was manufacturing "77" on behalf of respondent No. 5. In support of these assertions the respondents quoted some of the terms and conditions of Annexure 1 in the counter respondent quoted some of the terms and conditions of annexure 1 in the counter-affidavit. Respondent No. 5 filed another counter-affidavit in which it admitted the case of the petitioner. It stated that it had no control over or supervision in the factory of the petitioner situate at Adityapur and it was in no way concerned with the manufacture of soft drin