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M/S. M.G. Shahani & Co. (Delhi) Ltd. vs Collector Of Central Excise, New Delhi on 8 August, 1994
cites
Collector Of Central Excise vs Mysore Lamp Works Ltd. on 26 November, 1992
The department has not disputed the fact that M/s. MGS manufacture the goods in their own factory and have all the infrastructure for the said manufacturing activity. It is also not the case of the department that there was any relationship between is M/s. MGS and M/s. CP other than that of the seller and buyer. it has also not been alleged that the brand names belonged to M/s. MGS or that M/s. CP were obliged to incur any expenditure on advertisement and publicity at the instance of M/s. MGS. The case of the Collector of Central Excise v. Kerala Electric Lamp Works Ltd. decided by the Tribunal has been relied by the learned Counsel and I find that this decision supports the case of the notice. The distinction drawn by the learned Counsel in the matter of treating v manufacturer brand owner' and v buyer brand owner' situations with reference to various judgments is well laid down and taken care of. I do not find any reason to disagree with the said proposition
I observe that the letters under reference mention about terms and conditions of purchase. These terms and conditions are contained in printed form of which reference will be made later. In the letters dated 17.1.85 and 2.5.85, it is clearly spelt out that M/s. MGS will have no right to sell the goods under the brand name of Palmolive to any body other than M/s. CP and M/s. MGS will not be entitled to use the brand name on any other goods manufactured by MGS. This puts restriction on M/s. MGS regarding the use of brand name of Palmolive to any other party except to M/s. CP and further this also stipulates that brand name Palmolive cannot be used on any goods manufactured by M/s. MGS. However, more important than that is the condition regarding how M/s. MGS will procure the raw material and in the event of goods failing to be of the specifications the manner of disposal thereof. It is clear that MGS have been manufacturing goods on their own account from raw material purchased by them from the market. The goods to be supplied have to be as per specifications enclosed with the order. The buyer (M/s. CP) will be entitled to reject the goods in case they are not upto the specifications. From these conditions, it is clear that neither M/s. MGS is a hired labour of M/s. CP nor are they a front company of CP. The right of rejection of goods by CP clearly establishes that the M/s. CP and M/s. MGS are two separate entities and the transaction of sale and purchase between them is on a principal to principal basis.
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