Full Judgment Text
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CASE NO.:
Appeal (civil) 4424 of 2004
PETITIONER:
Commnr. of Central Excise, Raipur
RESPONDENT:
M/s. Hira Cement
DATE OF JUDGMENT: 02/02/2006
BENCH:
S.B. Sinha & P.K. Balasubramanyan
JUDGMENT:
J U D G M E N T
S.B. SINHA, J : .
This appeal under Section 35L(b) of the Central Excise Act, 1944 (for
short "the Act") is directed against a final judgment and order dated
22.1.2004 passed by the Customs, Excise & Service Tax Appellate Tribunal,
New Delhi in Appeal No. 145/2004-B whereby and whereunder the appeal
preferred by the Appellant herein was dismissed.
The basic fact of the matter is not in dispute. The assessee is one M/s.
Hira Cement. It carries on business of manufacture of cement in the town of
Raipur. It is a small-scale industry (SSI) being a proprietory concern of one
Shri Suresh Agrawal. Another industry, known as M/s. Hira Industries
Limited, is also a manufacturer of cement having a factory in the town of
Jagdalpur which is situated at a distance of about 300 kms. from Raipur.
Hira Industries Limited was incorporated and registered under the
Companies Act on or about 20th October, 1983 whereas the Respondent
herein was set up in the year 1988. Hira Industries Limited is not a SSI unit.
The unit of the Respondent was earlier known as Bajrang Bali Cement
whereas that of Hira Industries Limited was known as Jai Bajrang Cement
Ltd. The capacity of production of the Respondent’s cement industry is
about 60 tonnes per day whereas that of Hira Industries Limited is 150
tonnes per day.
As a SSI unit, the Respondent herein claimed exemption from
payment of excise duty in terms of a notification dated 28.2.1993. The said
notification was issued under Section 5A of the Act; paragraph 4 whereof
reads as under:
"4. 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 of exemption under this notification:
Provided that nothing contained in this paragraph shall be
applicable to the specified goods which are component
parts of any machinery or equipment or appliances and
cleared from a factory for use as original equipment in
the manufacture of the said machinery or equipment or
appliances and the procedure set up out in Chapter X of
the said Rules is followed:
Provided further that nothing contained in this paragraph
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shall be applicable to the specified goods where a
manufacturer affixes the specified goods with a brand
name or trade name (registered or not) of the Khadi and
Village Industries Commission or of the State Khadi and
Village Industries Board."
"Brand name" or "trade name" has been defined in Explanation IX of
the said notification in the following terms :
"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 indication
of the identify of that person."
The Respondent herein states :
"Hira Industries Ltd. is thus a Limited company run by
Shri B.L. Agrawal and other Directors whereas Hira
Cement is a proprietorship concern owned by Shri Suresh
Agrawal. Shri Suresh is the nephew of Shri B.L.
Agrawal and that was the main reason for which both the
units were held to be related parties. However, there is
no other nexus or relation between Hira Industries Ltd.
and Hira Cement. Shri B.L. Agrawal and Shri Suresh
Agrawal are not even falls within the ambit of definition
of Relatives as defined under Section 6 of the companies
Act, read with Schedule 1A of the Act.
The Hira Industries Ltd. has hired a portion of premises
of Hira Cement for maintaining its Registered Office at
Raipur and a small godown for keeping its goods. Hira
Industries Ltd. used to purchase Cement from Hira
Cement and for catering to the needs of its Raipur
customers Hira Industries Ltd. used to keep those goods
in the said godown. Accordingly, the Registered Office
and Telephone Numbers of Hira Industries Ltd. and
Office Address and Telephone Numbers of Hira Cement
happened to be the same. Both the entities were
operating independently."
The Appellant contends that the Respondent, herein was not entitled
to claim the benefit of SSI exemption on the ground that the same would not
apply to the specified goods bearing a brand name of another person, in view
of the fact that the Respondent has been using the brand name of said Hira
Industries Limited.
Further contention of the Appellant is that the said Hira Industries
Limited being engaged in the manufacture of cement with the brand name of
Hira Cement which demonstrates the financial interrelationship of both the
concerns as belonging to a group of industries, known as Hira Group of
Industries.
Indisputably, 10 show-cause notices were issued by the
Superintendent/ Assistant Commissioner concerned upon the Respondent
calling upon it to show cause as to why the SSI exemption granted to it
should not be disallowed and the duty which was not paid for the period
December, 1993 and December, 1997 should not be recovered. In the said
proceedings, the Respondent was held to be not entitled to such exemption.
However, on an appeal made by the Respondent, by an order dated
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28.12.2001, the Commissioner dropped the proceedings inter alia relying on
or on the basis of a decision of the Tribunal in Emkay Investment Pvt. Ltd.
v. Commissioner [2000 (124) ELT 741 (Tribunal)], holding :
"Thus, I hold that both firms were not using common
brand name on the packings of their products which will
disentitle the notice from benefit of exemption under
Notification 1/93-CE dtd. 28.2.93 as amended, 7/97-CE
dtd. 1.3.97 (Superseded by Notification No. 16/97-CE
dtd. 1.4.97) and 38/97-CE dtd. 27.6.97 etc. by merely
alleging that they have used the brand name of another
firm, i.e., M/s. Hira Industries Ltd., Jagdalpur. Hence, I
find that there is no justification in demand of duty of Rs.
49,77,206/- from the noticee for the concerned period
alleged in the Show Cause Notices listed in para \026 I of
this order by disallowing the benefit of exemption
notification No. Notification 1/93-CE dtd. 28.2.93 as
amended, 7/97-CE dtd. 1.3.97 (superseded by
Notification No. 16/97-CE dtd. 1.4.97) and 37/97-CE
dtd. 27.6.97 etc. to the Noticee."
As regard the question that the Respondent and the said Hira
Industries Limited are related persons to each other, it was held that they are
separate juristic persons. An appeal thereagainst was preferred by the
Appellant before the Tribunal and by reason of the impugned judgment, the
same was dismissed.
The Tribunal upon comparing the logos of both Hira Cement and Hira
Industries Limited observed:
"A perusal of the logo and brand name used by the
respondents clearly reveals that their brand name is
"BBC CEMENT", whereas the brand name of M/s. Hira
Industries Ltd. is "HIRA CEMENT". Merely, because
the logo is similar in both the cases, it cannot be alleged
by the Revenue that the respondents are using the brand
name of another person for the purpose of attracting the
mischief of para 4 of the Notification. In the present
matter, the Revenue has not established that the brand
name used by M/s. Hira Industries Ltd. is used by the
Respondents. There is a substantial force in the
submissions of the learned Advocate for the respondents
that the words ’Hira Cement’ written on their bags of
cement is the name of their company and not the brand
name of M/s. Hira Industries Ltd\005"
It is not in dispute that the Appellant in its notice dated 20th/22nd May,
1992 mentioned that a proceeding was initiated against the Respondent as
also the said Hira Industries Limited as regard valuation of the goods
wherein ultimately by an order dated 21.9.2001, the Commissioner dropped
the proceedings. It is also not in dispute that in the appeal preferred by the
Appellant, herein before the Tribunal questioning the order dated
28.12.2001, the assessee objected to the maintainability of the appeal by
filing a cross-objection before the Tribunal. The Commissioner in its earlier
order dated 21.9.2001 opined:
"d) On comparing the two bags submitted by the two
noticees No. 1 and 2 which was submitted by them
during the course of personal hearing on 3.9.2001, it is
clear that notice No. 1’s brand name ’BBC’ was more
prominent on their bags whereas in case of bags of
noticee No. 2 brand ’HIRA’ with a logo of diamond on
top is more prominent. This fact may be further
corroborated with samples and drawings of HDPE/ Jute
bags submitted by noticee No. 1 to the Assistant
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Collector Central Excise & Customs, Anupam Nagar
Raipur under their letter No. HC: 91-92 dtd. 4.2.92
enclosing the photocopies of the documents. Hence
noticee No. 1 M/s. Hira Cement (firms name) have used
only brand name ’BBC’ on their products. They have not
used Hira Cement as their brand name which is being
alleged in the show cause notice belongs to noticee No.
2. Noticee No. 2 sold their products with brand name
’HIRA CEMENT’ with diamond logo/ mark on the top.
Brand name of the both the firms are different. These are
not further substantiated during the course of
investigation and facts brought on the record.
e) Thus, I hold that both the noticees were not using
common brand name on the packings of their product
which will disentitle the noticee No. (1) from benefit of
exemption under notification No. 175/86 by merely
alleging that they have used the brand name of noticee
No. 2. Hence, I find that there is no justification in
demand of duty of Rs. 326357.75 from noticee No. 1 for
the period 21.6.91 to December, 91 by way of
disallowing the benefit of exemption notification No.
175/86 CE to noticee No. 1"
However, in the said proceedings, penalties of Rs. 50,000/- and Rs.
25,000/- were imposed against the Respondent and the said Hira Industries
Limited, respectively.
An appeal thereagainst was preferred by the Respondent to the extent
of demand confirmed on the ground of alleged related person under Section
4 of the Act. The said appeal was dismissed. An appeal preferred
thereagainst by the Respondent before this Court was also dismissed. The
contention of the Respondent in the aforementioned situation is that the said
order dated 21.9.2001 attained finality and, thus, having been accepted by
the Appellant, the present appeal was not maintainable.
Mr. G.E. Vahanavati, learned Solicitor General appearing on behalf of
the Appellant would, at the outset, draw our attention to the fact that the
decision of the Tribunal in Emkay Investment (supra) has expressly been
reversed by a 3-Judge Bench of this Court in Commissioner of Central
Excise, Calcutta v. Emkay Investments (P) Ltd. and Another [(2005) 1 SCC
526] stating:
"15. We have gone through the common order passed by
the Tribunal. In our view, the Tribunal has erred in not
appreciating that to attract provision of clause 7 of
Notification No. 175/86-CE, it is sufficient that the
product contained a trade mark/logo of another ineligible
person which was fully satisfied in the instant case and
whether the product also contained the brand name/trade
name/logo of the manufacturer would not and cannot
alter such position. Likewise, the interpretation of
Explanation 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 "MERINO" belonging
to M/s Merinoply and Chemicals Ltd. on their own
product 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 provisions of Explanation VIII were fully
satisfied so far as the case on hand was concerned. The
finding of the Tribunal to the contrary, in our opinion, is
wrong and liable to be set aside."
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It was submitted that in that view of the matter the impugned
judgment of the Tribunal and the order of the Commissioner cannot be
sustained. As regard the cross-objection filed by the Respondent, it was
urged that the order of the Commissioner dated 21.9.2001 having a limited
effect, the same will not debar the Appellant from maintaining an appeal. In
any event, the law having been declared by this Court, the decision of the
Commissioner must give way to the decision of this Court.
Mr. R. Santhanan, learned counsel appearing on behalf of the
Respondent, on the other hand, would submit that once the said order dated
21.9.2001 attained finality, the Appellant did not have any locus standi to
maintain an appeal before the Tribunal and consequently this appeal. It was
further contended that a finding of fact has been arrived at by the
Commissioner as also the Tribunal to the effect that it is not the assessee
who had been using the brand name of the said Hira Industries Limited and
as if Hira Industries Limited was using the brand name of Hira Cement
belonging to the Respondent herein, the assessee cannot be blamed therfor,
the impugned judgments should not be interfered with. Drawing our
attention to various distinctive features in the respective logos of the
Respondent as also the said Hira Industries Limited, the learned counsel
urged that the question must be adverted to keeping in view of the fact that
the dispute does not relate to trade mark and in that view of the matter if the
said Hira Industries Limited had been using the premises belonging to the
Respondent as also the telephones which are installed therein or had been
selling cement from it, the same by itself cannot be a ground for holding that
the Respondent had been using the brand name of the said Hira Industries
Limited. It was submitted that in fact the said Hira Industries Limited had
been purchasing cement from the Respondent.
The purport and object of grant of exemption to a SSI unit is clear
and unambiguous. It can be availed of, provided that they satisfy the
conditions precedent therefor. The criteria for determining the eligibility of
an entrepreneur for becoming entitled to have the benefit of exemption
notification, it is well-settled, must be construed strictly. [See Tata Iron and
Steel Co. Ltd. v. State of Jharkhand and Others, (2005) 4 SCC 272 and
Government of India & Ors. v. Indian Tobacco Association, 2005 (6)
SCALE 683].
In Commissioner of C. Ex., Trichy v. Rukmani Pakkwell Traders
[2004 (165) ELT 481 : (2004) 11 SCC 801], the expression "such brand
name" was considered holding:
"7. The Tribunal had also held that under the Notification
the use must be of "such brand name". The Tribunal has
held that the words "such brand name" shows that the
very same brand name or trade name must be used. The
Tribunal has held that if there are any differences then
the exemption would not be lost. We are afraid that in
coming to this conclusion the Tribunal has ignored
Explanation IX. Explanation IX makes it clear that the
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, code number, design number, drawing
number, symbol, monogram, label, signature or invented
word or writing. This makes it very clear that even a use
of part of a brand name or trade name, so long as it
indicates a connection in the course of trade would be
sufficient to disentitle the person from getting exemption
under the Notification. In this case admittedly the brand
name or trade name is the words "ARR" with the
photograph of the founder of the group. Merely because
the registered trade mark is not entirely reproduced does
not take the Respondents out of Clause 4 and make them
eligible to the benefit of the Notification."
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In Commissioner of Central Excise, Chandigarh-I v. Mahaan Dairies
[2004 (166) ELT 23], the same view was reiterated. The views expressed
therein have also been reiterated in Commissioner of Central Excise,
Calcutta v. Emkay Investments (P) Ltd. and Another (supra).
The ratio of the decisions referred to hereinbefore shortly stated is that
if the manufacturer uses some brand of its own, it would be entitled to, but it
would not be, for one reason or the other, it had been using the brand of
another. The learned Commissioner or the learned Tribunal, as noticed
supra, did not have the occasion to consider the question in the light of the
aforementioned decisions of this Court.
Emkay Investment (supra) which was the basis for the decision of the
Commissioner has expressly been overruled by this Court. The cross-
objections filed by the Respondent, herein before the Tribunal also had not
specifically been adverted to as the matter relating to maintainability of the
appeal preferred by the Appellant, herein before the Tribunal does not
appear to have been discussed nor any reference thereto has been made in
the concluding paragraph of the judgment.
Before us, the parties have placed the entire facts. We may also place
on record that it has been conceded before us by the learned counsel
appearing on behalf of the Respondent that the earlier order dated 26.9.2001
shall not operate as a res-judicata but, as noticed hereinbefore, the only
contention raised was that once the Revenue accepts a judgment, it cannot
raise the said question once again.
Although some decisions to this effect have been cited by Mr.
Santhanan, we are of the opinion that the matter should be considered afresh
by the Tribunal upon considering all aspects of the matter. We refrain
ourselves from going into the said question. We may, however, notice that a
Bench of this Court in Government of W.B. v. Tarun K. Roy and Others,
[(2004) 1 SCC 347] stated:
"\005Non-filing of an appeal, in any event, would not be a
ground for refusing to consider a matter on its own
merits. (See State of Maharashtra v. Digambar.)
In State of Bihar v. Ramdeo Yadav wherein this
Court noticed Debdas Kumar1 by holding:
"4. Shri B.B. Singh, the learned counsel for the
appellants, contended that though an appeal
against the earlier order of the High Court has not
been filed, since larger public interest is involved
in the interpretation given by the High Court
following its earlier judgment, the matter requires
consideration by this Court. We find force in this
contention. In the similar circumstances, this Court
in State of Maharashtra v. Digambar and in State
of W.B. v. Debdas Kumar had held that though an
appeal was not filed against an earlier order, when
public interest is involved in interpretation of law,
the Court is entitled to go into the question.""
As we intend to remit the matter back to the Tribunal, we should not
make any observation at this juncture which would affect the merit of the
matter one way or the other. We may also be misunderstood. Suffice it to
say that having regard to the definition of the brand name as contained in
Explanation IX to the notification dated 28.2.1993, the matter requires fresh
consideration by the Tribunal upon taking into consideration the fact of the
matter. If, however, the Tribunal comes to the conclusion or is of the
opinion that further investigation in facts may be necessary, it may pass such
order or orders as it may think fit and proper.
This appeal is allowed and the impugned judgment is set aside and the
matter is remitted to the Tribunal for consideration of the matter afresh in the
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light of the observations made hereinbefore. No costs.