COMMISSIONER OF CENTRAL EXCISE, CALCUTTA v. M-S. EMKAY INVESTMENTS (P.) LTD. AND ANR

Citation: [2004] SUPP. 6 S.C.R. 761

Court: Supreme Court of India

Bench: S.N. VARIAVA, AR. LAKSHMANAN, S.H. KAPADIA

Case summary

COMMISSIONER OF CENTRAL EXCISE, CALCUTTA v. M-S. EMKAY INVESTMENTS (P.) LTD. AND ANR.pdf

Judgment text

COMMISSIONER OF CENTRAL EXCISE, CALCUTTA v. MIS. EMKAY INVESTMENTS (P. ) LTD. AND ANR. DECEMBER 8, 2004 [S. N. VARIAVA, DR. AR. LAKSHMANAN AND S. H. KAPADIA, JJ. ) Central Excise Tariff Act, 1985; Sub-heading 4408. 90/Central Excise -- and Salt Act, 1944; Section 4/Central Excise Rules, 1944; Rules 9(1), 52A, 173B, 173C, 173F, 173G(2) & 226/Exemption Notification No. 175186-CE and Explanation VIII thereunder : Assessees! Firm using brand/logo owner by other manufacturer of plywood on the plywood manufactured by them-Benefit of ememption . Notification-Eligibility for-Held : Assessees used logo owned by another . lareg-scale manufacturer-By doing so they contravened the relevant excise rules for the use of logo and became ineligible for grant of benefit of the exemption Notification.

The questions which arose for determination is these appeals were as to whether the respondents/assessees, manufacturer of plywood using the logo of another large-scale manufacturer of plywood in addition to their own brand/logo have made themselves disentitled to the benefit of small scale industries exemption Notification No. 175/86-CE and as to whether the markings or inscriptions on the goods should ht> considered as the brand name of a firm, and if these are used by others, whether it would come within the mischief of Clause 7 read with Explanation VIII of the Notification.

It was contended by the appellant that assessees/firm by using a registered logo, owned by a large-scale manufacturer, on the goods manufactured by t~em, became ineligible to the benefit of Small Scale Industries Exemption Notification; that since assessees used the logo so as to influence the trade, provision ofExplanation VIII to the Notification is attracted; and that the exemption provisions in ta"xing statute should be construed strictly. . ,.

Respondents submitted that the benefit ofthe exemption Notification could not be denied on the ground ofaffixing on the goods manufactured by them a symbol/monogram owned by other manufacturer/person; that the Customs Excise & Gold (Control) Appellate Tribunal rightly found the markings on the goods manufactured by them and other manufacturer are entirely different; that the markings so used by them could not create deception in the course of trade; and that there was no visual or phonetic similarity between the logos used by them, vis-a-vis used by the other manufacturer. Answering the questions in the affirmative and allowing the appeals, the Court HELD: 1. 1. The impugned goods admittedly contained a registered logo belonging to and owned by another firm. Thus it was a clear case where the impugned goods were admittedly affixed with registered logo/ trade mark of other persons and hence not eligible to S. S. I. exemption. ]) (768-B] 1. 2.

The Tribunal has erred in not appreciating that to attract the provision of clause 7 of Notification No. 175/86-CE, it is sufficient that product contained a trade mark/logo of another ineligible person and whether the product also contained the brand name/trade name/logo of the manufacturer, would not and cannot alter such positic:·. --, ilis interpretation ofExplanation VIII as advanced by the Tribunal does not appear to be correct in law and in fact. It was imperative that by using the registered logo belonging to other firm on their own product, Respondent No. 1 fulfilled the purpose of indicating a relation between the products and the logo owner so as to influence the traC:e and therefore, the provision of Explanation VIII were fully satisfied so far. as the instant case was concerned. The finding of the Tribunal to the contrary is wrong and hence set aside. (768-C, D, E] 1. 3. The first respondent, a manufacturer of plywood classifiable under sub-heading 4408.

90 of the Schedule to the Central Excise Tariff Act, 1985 (5 of 1985) have contravened the provisions of Rules 9(1), I 73B, 173C read with Section 4 of the Central Excise and Salt Act, 1944 and Rules 173F; 17,3G(2) read with Rules 52A and 226 of the Central Excise Rules, 1944, by way of suppressing the material fact of use of brand/logo on their goods which is actually owned by the other firm, C. C. E. , CALCUTTA v. MIS. EMKAYINVESTMENTS (P) LTD. [DR. LAKSHMANAN, J. ] 763 a large-scale manufacturer of plywood, and thereby becoming ineligible for the . benefit of exemption granted under Notification No. 175/86-CE. The goods so available in the market with the brand/logo ofanother firm established a connection between the goods and the brand name holder Q without indicating the identity of that person which conforms to Explanation VIII of the Notification. [768-F, G, H; 769-D) Commissioner ofCentral Excise, Trichy v. Rukmani Pakkwell Traders, (2004) 165 E. L. T. 481 (S. C.

); Commissioner ofCentral Excise Chandigarh- ] v. Mahanna Dairis, (2004) 166 E. L. T. 23 (S. C. ) and Commissioner of Central Excise Chandigarh-Ilv. Bhalla Enterprises, (2004) 173 E. L. T. 225 (S. C. ), relied on. Astra Pharmaceuticals (P) Ltd. v. Collector of Central Excise, Chandigarh (1995) 75 E. L. T. 214 (S. C. ), held inapplicable. B. H. E. L. Ancillary Association v. Collector ofCentral Excise, (1990) 49 E. L. T. 33 (Mad. ), approved. 2. The respondents who are the manufacturers of plywood under their own brand name are disentitled to the benefit of Small Scale Industries Exemption Notification No. 175/86-CE by using logo indicating logo of another firm on their product along with their own brand name. [775-F) CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 2360-2361 of 1999. From the Judgment and Order dated 9. 6. 98 of the Central Excise Customs and Gold (Control) Appellate Calcutta in F. O. Nos. A-593-A 594/ CAL/98 in A. Nos. E-246, E-279 of 1992. G. E.

Vahanvati, Solicitor General, A. Subba Rao, Devadatt Kamat and B. Krishna Prasad for the Appellant. C. Hari Shanker, V. J. Francis and Anupan Mishra for the Respondents. The Judgment of the Court was delivered by DR. AR. LAKSHMANAN, J. : Both the above appeals are filed against the common judgment passed by the Central Excise & Gold (Control) .. Appellate Tribunal, Calcutta in Appeal Nos. E-246/92, E-279/92 and Order No. A-593-594 CAL/98 dated 9:6. 1998 reported in 2000(124)E. L. T. 741. Both the appeals are against the same and common impugned judgment. Both the above appeals are being disposed of by this common judgment. Briefly stated, the facts of the case are as under: The respondents-Mis Emkay Investments Private Limited and M/s Plyking who are engaged in the manufacture of plywood classifiable under sub-Heading 4408. 90 of the Schedule Act, 1985.

The said factory was visited by the Central Excise Officers who found that the respondents are ·also using the brand/logo "MERINO" along with the brand name "Pelican" on the plywood being manufactured by them and the officers of the De'partment entertained a view that as the logo of"MERI_NO" is also being shown on the plywood being manufactured by them, apart from their own logo of "Pelican" and as the owner of the brand "MERINO" i. e. M/s. Merinoply and Chemicals Ltd. , is a large scale manufacturer ofplywood not entitled to the benefit ofsmall scale exemption Notification No. 175/86-CE dated l . J. 1986, as amended, the respondents were also not entitled to the benefit of the said exemption Notification in view of clause 7 of the same. The second respondent- M/s. Plyking is one of the traders from whose premises plywood was seized by the officers of the Central Excise.

On adjudication, the Commissioner ofCentral Excise, Calcutta vide his impugned order held that the logo indicating "MERINO" in a specific manner was the brand name used by M/s. Merinoply and Chemicals Ltd. Who were not eligible for the grant of benefit of Notification No. 175/86- CE and as such denied the benefit to the first respondent firm and accordingly confiscated the seized plywood. The officers also confiscated 223 pieces of plywood from the business premises ofM/s Plyking - the second respondent herein. The respondents as appellants contended before the authorities that though the word "MERINO" is written in the same style as written or. the plywood manufactured by Mis Merinoply and Chemicals Ltd. , nevertheless the same will not imply any relation of goods by the respondents under the brand name of"MERINO". They also submitted that the brand name ofM/ s Merinoply and Chemicals Ltd. is "TUFFPLY" and "MERINO".

The Departmental represent~tives countered the arguments of the respondents by arguing that "MERINO" is the brand name and logo registered C. C. E. , CALCUTTA v. MIS. EMKAY INVESTMENTS (P) LTD. [LAKSHMANAN, J. ) 765 and owned by Mis Merinoply and the affixation of the same on the product would disentitle the respondents firms from the benefit of Notification in terms ofclause 7 read with Explanation VIII as Mis Merinoply and Chemicals Ltd. being a large scale unit, are not entitled to the exemption Notification No. 175/86-CE, clause 7 would be attracted and the respondents firms would become ineligible for exemption. The Commissioner of Central Excise by his order dated 31. 3. 1992 ordered confiscation of seized goods. The respondents herein filed appeals before the CEGAT against the order ofthe Commissioner. The CEGAT, by the impugned order, allowed the appeal filed by the respondents herein. Aggrieved by the said order, the appellants preferred these two appeals. We heard Mr. G. E.

Vahanvati, learned Solicitor General, appearing for the appellant and Mr. C. Hari Shankar, learned counsel, appearing for respondent No. I. Respondent No. 2 did not engage a lawyer to represent their case. They sent their counter affidavit by post. The dispute, in the instant case, is as to whether the respondents who are manufacturers of plywood under their own brand name "Pelicon" have made themselves disentitled to the benefit of small scale exemption Notification No. 175/86-CE by using a logo indicating "MERINO" on their products along with their brand name. The next question which arises is as to whether the markings or inscriptions should be considered as the brand name of Mis Merinoply and Chemicals Ltd. and will come within the mischief of Clause 7 read with Explanation VIII of the Notification, as contended by the Department.

Clause 7 reads as follows: "The exemption contained in this Notification shall not apply to the specified goods where a manufacturer affixes the specified goods with a brand name or trade name (registered or not) of another person who is not eligible for the grant ofexemption under this Notification. " Explanation VIII of Clause 7 reads as follows: "Brand name" or "trade name" shall mean a brand name or trade name whether registered or not, that is to say a name or a mark, such as symbol, monogram, label, signature or invented word or writing which is used in relation to such specified goods for the purpose of indicating, or so as to indicate, a connection in the course of trade between such specified goods and some person using such name or mark with or without any indic. ation of the identity of that person. " Mr. G. E.

Vahanvati, learned Solicitor General, submitted that the impugned goods admittedly contained the registered logo "MERINO" belonging to and owned by M/s Merinoply and Chemicals Ltd. Thus it was a clear case where the impugned goods were admittedly affixed with registered logo/trade mark ofthe other person not eligible to S. S. I. exemption. According to the learned Solicitor General, the CEGAT erred in not appreciating that to attract provision ofclause 7 ofNotification No. 175/86-CE, it is sufficient that product contained a trade mark/logo ofanother ineligible person which was fully satisfied in the present case and whether the product also contained a brand name/trade name/ logo of the manufacturer would not and cannot alter such position. Arguing further, learned Solicitor General, contended th. at the interpretation of Explanation VIII as advanced by the Tribunal does not appear correct in law and fact.

It was imperative that by using the registered logo "MERINO" belonging to M/s Merinoply and Chemicals Ltd. on their own products, the first respondent herein, M/s Emkay Investments Ltd. fulfilled the purpose of indicating a relation between the said products and the logo owner so as to influence the trade and, therefore, the provision of Expla; -~tion VIII were fully satisfied so far as the present case was concerned. ·. earned Solicitor General also submitted that the exception or exempting p1,•vision in taxing statute should be construed strictly and does not open to the Court or to the Tribunal to ignore conditions prescribed in . ·p the exemption l' 'tification. In support of I is submissions, learned Solicitor General, relied on the following judgment:;: l. B. HE. L. Ancillary Association v. Collector ofCentral Excise, (1990) 49 E. L. T. 33 (Mad. ) 2. Commission -,. ofCentral Excise, Trichy v. Rukmani Pakkwell Traders, (2004) 165 E. L. T. 48l(S. C. ) 3.

Commissioner of Central Excise, Chandigarh-Iv. Mahaan Dairies, (2004) 166 E. L. T. 23 (S. C. ) , ftrade between such specified goods and ~HEL using such name or hY. 1rk with or without a·ny indication of the identity of BHEL. Here, there is no symbol, no monogram, no label and no signature <if any nature much less of BHEL found on the components C. C. E. , CALCUTTAv. M/S. EMKAYINVESTMENTS (P) LTD. [LAKSHMANAN, J. ] 775 manufactured by the Units. The markings or inscriptions found on the components may amount to invented words or writings. But the markings or inscriptions have not been and are not being used by BHEL at all. They have been used and are being used by the Units and Units alone, may be pursuant to the contractual requirements between BHEL and the Units even as per the averments in the counter affidavit ofrespondents 1to3. The markings or inscriptions, individually or cumulatively do not go to constitute a name or . ,j mark such as symbol, ~onogram etc.

of BHEL, used by BHEL in ·I : . relation to the components manufactured by the Units. They may have a purpose to serve. But certainly they do not by themselves constitute a name or mark used by BHEL. But the stress, which we could spell out cumulatively from the language used in Explanation VIII, is that the name or mark such as symbol, monogram e·tc. should have been used by BHEL for the purpose of indicating or so as to indicate a connection in the course of trade between the components and BHEL using such name or mark. It is true that by D. a bare looking at the inscriptions or markings or by a bare visual inspection, there need not be an indication ofthe identity ofBHEL. But fundamentally these markings or inscriptions do not go to constitute a name or mark of BHEL; much less used by BHEL in relation to such components. There is a faltering with regard to the satisfaction ofthe primary ingredient required by Explanation VIII.

" Accordingly the High Court allowed the appeals and set aside the order of the learned single Judge. For the foregoing reasons, we allow the appeals and set aside the order p dated 9. 6. 1998 passed by the CEGAT impugned in these appeals and answer the issues involved in favour of the appellant and hold that the respondents who are the manufacturers of plywood under their own brand name Mis Pelican are dise"ntitled to the benefit of small scale exemption Notification No. 175/86-CE dated 1. 3. 1986 by using logo indicating "MERINO" on their product along with their brand name. However, in the' facts and circumstances of the case there glfall be no ' order as to ·costs. S. K. S. Appeals allowP4.