Pathak, J. - (1.) This appeal by special leave is directed against the judgment and order dated Aug. 31, 1976 of the High Court, of Punjab and Haryana allowing a group of writ petitions filed by the respondents against the levy of excise duty.
(2.) The respondent, Messrs. Food Specialities Limited, Moga is a Company registered under the Indian Companies Act. 1956. It entered into a number of agreements with Messrs. Nestle's Products (India) Limited, a subsidiary of a foreign company, Messrs. Nestle's Holdings Limited, to manufacture for and on behalf of Messrs. Nestle's Products (India) Limited (hereinafter referred to as "Nestle's") sweetened condensed milk, soluble coffee" baby milk food, milk powders and infant cereal foods for sale in India by Nestle's under certain trade-marks in respect of which the latter was registered as the sole registered user in India. The agreements stipulated that the respondent would manufacture the goods and supply them to Nestle's in such quantities as Nestle's might specify from time to time subject to a prescribed minimum and maximum, and Nestle's was obliged to buy the products so manufactured by the respondent. The products were manufactured by the respondent in accordance with detailed quality specifications supplied by Nestle's, and the price of the products was determined under the agreements free on rail at Moga or free on lorry at factory. The respondent enjoyed no interest in the trade marks and labels and undertook not to sell any of those products to any person other than Nestle's.
(3.) The products manufactured by the respondent were subject to excise duty under the said Central Excises and Salt Act, 1944. The respondent disputed the value of the goods determined by the excise authorities for the purpose of the levy, and a number of questions were raised in that context. The controversy was processed through the statutory channels provided by the Act and ultimately the respondent filed writ petitions in the High Court. The High Court found in favour of the respondent and quashed the orders of the excise authorities and the Government of India impugned in the writ petitions.;