Full Judgment Text
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REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 9157 OF 2003
Commnr. Of Central Excise, Hyderabad IV Appellant(s)
VERSUS
M/s. Stangen Immuno Diagnostics Respondent(s)
J U D G M E N T
A.K. SIKRI, J.
The respondent herein is the manufacturers of
composite diagnostics or laboratory regents and
pharmaceutical goods. It is registered as a small scale
industrial unit (SSI unit). The respondent was using the
brand name 'Stangen' on the goods manufactured by it. It is
an admitted case that this brand name 'Stangen' was affixed
on the packing of the goods and even on the goods
manufactured. The respondent started availing the benefit
of exemption/concessional rate of duty under Notification
No.175/86-CE dated 1.3.1986 which grants exemption or
concessional rate of excise duty to the SSI units.
Signature Not Verified
Digitally signed by
Suman Wadhwa
Date: 2015.03.31
16:31:47 IST
Reason:
2. However, in the year 1997 a show cause notice was
issued to the respondent by the appellant/Excise Department
stating that the respondent is wrongly claiming the benefit
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of the aforesaid Notification inasmuch as use of the brand
name 'Stangen' and also the logo belonged to Dr.K.Anji
Reddy, Chairman of Dr.Reddy's Laboratories (DRL). It was
stated that DRL is the manufacturer of bulk drugs falling
under Chapter 30 of the Central Excise Tariff Act, 1985,
and the trade mark 'Stangen' and related logo are used on
the printed labels foils of the P & P medicine manufactured
by DRL and also appear on the classification list filed by
the DRL. On this basis in the show cause notice it was
mentioned that the respondent was not entitled to the
benefit of concessional rate of duty under the aforesaid
Notification inasmuch as para 7 of the said Notification
denied exemption in those cases where the manufacturer (SSI)
affixes the specified goods with a brand name or trade name,
registered or not, of another person who is not eligible for
grant of exemption under this Notification. Explanation VIII
to the said Notification which defines brand name reads as
under:-
“ Explanation VIII - “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 identity of that person.
3. The respondent replied to the aforesaid show cause
notices in which it was admitted that Dr.K.Angi Reddy is the
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Chairman of Dr. Reddy Group of Industries which includes the
respondent Company as well as DRL. The defence, however,
was that Dr. K.Angi Reddy had not assigned the trade mark
either to the respondent firm or any other manufacturer. It
was also mentioned that the respondent as well as the DRL
are Public Limited Companies having separate legal entities
of their own with their own independent spheres of
activities. In this behalf the contention was that DRL
manufactured altogether different products than the products
mentioned by the respondent Company. A plea was also raised
that Dr. K.Angi Reddy in his individual capacity was not a
manufacturer within the meaning of said expression as
defined in the Central Excise Act. By raising the aforesaid
submissions request was made to drop the proceedings. The
aforesaid argument raised by the respondent persuaded the
Adjudicating Authority who dropped the proceedings.
4. Challenging the said order, the Department filed an
appeal before the Customs, Excise and Gold (Control)
Appellate Tribunal (CEGAT). The contention of the
Department was that dropping of the proceedings by the
Commissioner only on the ground that the goods manufactured
by the respondent are different from the goods manufactured
by DRL was untenable as it is not a relevant factor at all.
However, this plea of the Department did not even prevail
with the CEGAT which has, vide impugned judgment dated
31.12.2003, dismissed the appeal observing that the goods
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manufactured by the assessee were different from the goods
manufactured by DRL and as per the settled law the use of
brand of another would attract only when that the
Commissioner had reached an erroneous finding with regard to
the goods being different. This order of the CEGAT is
assailed in the present proceedings.
5. We have already taken note of para 7 of Notification
No.175/86-CE as well as definition of brand name appearing
in Explanation VIII contained in the said Notification. As
far as para 7 is concerned, it states that the benefit of
exemption would not apply to the specified goods where a
manufacturer affixes the specified goods with brand name or
trade name (registered or not) of another person who is not
eligible for grant of exemption under this Notification. As
per this, in order to deny the exemption under this
Notification, the Department has to show that on the goods
which are manufactured by the manufacturer i.e. the SSI,
the brand under or trade name of another person is affixed
and that another person is not eligible for grant of
exemption in this Notification. In other words, when that
other person whose brand name or trade name is used by the
SSI is not itself a SSI, then the user is not entitled to
exemption under the said Notification.
6. Explanation VIII defines that brand name or trade
name. As per this explanation, it would be a name or a
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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 the trade between such specified
goods and some person using such name or mark with or
without any indication of the identity of the person.
Therefore, what follows from the reading of this Explanation
is that if the brand name is used in relation to the
specified goods indicating a connection in the course of the
trade between such specified goods and some other person
using the name, it would fit the description and the matter
would be covered by the mischief of Explanation VIII. It is
no where stated that brand name which is the name of other
person and is being used by the SSI which is claiming
benefit has to be in relation to same goods. Therefore,
that could not have been reason to drop the proceedings and
the CEGAT was not justified in dismissing the appeal of the
Department on this ground.
7. The aforesaid principle of law is no more res integra
and has been decided by this Court authoritatively in couple
of judgments. In Commissioner of Central Excise,
Chandigarh-I Vs. Mahaan Dairies (2004) 11 SCC 798 this Court
while interpreting the similar nature of definition of brand
name or trade name, held as under :
“We have today delivered a judgment in CCE
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v. Rukmani Pakkwell Traders wherein we have
held in respect of another notification
containing identical words that it makes no
difference whether the goods on which the
trade name or mark is used are the same in
respect of which the trade mark is
registered. Even if the goods are
different, so long as the trade name or
brand name of some other company is used the
benefit of the notification would not be
available. Further, in our view, once a
trade name or brand name is used then mere
use of additional words would not enable the
party to claim the benefit of the
notification.
8. It is clear from the above that the Court was of the
view that even if the goods are different, so long as brand
name or trade name of some other Company is used, the
benefit of Notification would not be available. To the same
effect is the judgment of this Court in the case of
Commissioner of Central Excise, Chandigarh-II vs. Bhalla
Enterprises (2005 (8) SCC 308) wherein aforesaid judgment in
Mahaan Dairies was followed by reiterating the same
principle.
9. At this stage, Mrs. Neelima Tripathi, learned counsel
appearing for the respondent, had made a plea before us to
the effect that on the facts of this case the respondent
would still be entitled to exemption. Her case in this
behalf was that the respondent had been using the aforesaid
name and logo since 1986, and the show cause notice
pertained to the year 1988. On the other hand the said trade
name and logo was being registered in favour of Dr. K.Angi
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Reddy only in the year 1989. Her submission, thus, was that
in its own independent right the respondent had been using
the said trade name and logo as an owner thereof and
therefore, would be entitled to exemption even if the same
was used by the DRL and it is a case where both the parties
were using the same trade mark and logo simultaneously in
there own rights. What is argued is that the respondent was
not using the trade mark/logo or brand name of DRL but it
was its own and therefore would not come within the mischief
of para 4 of the Notification.
10. We would like to observe that if the aforesaid
contention of the respondent is factually correct, viz. The
respondent used the brand name as the owner thereof itself,
and was not using the brand name as belonging to DRL and
authorized by DRL, then the submission of Ms. Tripathi is
legally tenable.
11. Condition No.4, as already noted above, stipulates
that the exemption contained in this Notification would not
be given to a person in respect of goods where 'brand name'
or 'trade name' of another person is used i.e. the goods
bearing the 'brand name' or 'trade name' which belongs to
some other person. It is immaterial whether such 'brand
name' or 'trade name' is registered or not. However,
Explanation IX gives a unique and particular definition to
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the term 'brand name' or 'trade name'. It is clear from the
reading of the said explanation that the definition of
'brand name' or 'trade name' contained therein is concerned
with a particular name or mark which is used to indicate, in
the course of trade, a connection between such specified
goods as satisfying the criterion provided in aforesaid
condition 4 and the manufacturer which is using such name or
mark with or without any indication of the identity of
itself. The central idea contained in the aforesaid
definition is that the mark is used with the purpose to show
connection of the said goods with some person who is using
the name or mark. Therefore, in order to qualify as 'brand
name' or 'trade name' it has to be established that such a
mark, symbol, design or name, etc. has acquired the
reputation of the nature that one is able to associate the
said mark, etc. with the manufacturer. We are supported in
this view by series of judgments of this CourtIn Tarai Food
Ltd. v. CCE, (2007) 12 SCC 721, the expression “brand name”
was explained in the following terms:
“7. The words brand name connotes such
a mark, symbol, design or name which is
unique to the particular manufacture
which when used on a particular product
would establish a connection between
the product and the manufacturer.
xx xx xx
9. Furthermore the definition of the
words 'brand name' shows that it has to
be a name or a mark or a monogram, etc.
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which is used in relation to a
particular product and which
establishes a connection between the
product and the person. This name or
mark, etc. cannot, therefore, be the
identity of a person itself. It has to
be something else which is appended to
the product and which established the
link.”
12. Thus, what is necessary is that the said mark is of the
nature that it establishes connection between the product and the
person. To the same effect is the judgment of Supreme Court in CCE
Vs. Grasim Industries ltd., (2005) 4 SCC 194 wherein this Court
observed as under:
“15.........In our view, the Tribunal
has completely misdirected itself. The
term "brand name or trade name" is
qualified by the words "that is to
say". Thus, even though under normal
circumstances a brand name or a trade
name may have the meaning as suggested
by the Tribunal, for the purposes of
such a Notification the terms "brand
name or trade name" get qualified by
the words which follow. The words which
follow are "a name or a mark". Thus
even an ordinary name or an ordinary
mark is sufficient. It is then
elaborated that the "name or mark" such
as a "symbol" or a "monogram" or a
"label" or even a "signature of
invented word" is a brand name or trade
name. However, the contention is that
they must be used in relation to the
product and for the purposes of
indicating a connection with the other
person. This is further made clear by
the words "any writing". These words
are wide enough to include the name of
a company. The reasoning given by the
Tribunal based on a dictionary meaning
of the words "write" and “writing” is
clearly erroneous. Even the name of
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some other company, if it is used for
the purposes of indicating a connection
between the product and that company,
would be sufficient. It is not
necessary that the name or the writing
must always be a brand name or a trade
name in the sense that it is normally
understood. The exemption is only to
such parties who do not associate their
products with some other person. Of
course this being a Notification under
the Excise Act, the connection must be
of such a nature that it reflects on
the aspect of manufacture and deal with
quality of the products. No hard and
fast rule can be laid down however it
is possible that words which merely
indicate the party who is marketing the
product may not be sufficient. As we
are not dealing with such a case we do
not express any opinion on this aspect.
16. This Court has, in the case of
Royal Hatcheries Pvt. Ltd. v. State of
A.P., 1994 Supp (1) SCC 429, already
held that words to the effect "that is
to say" qualify the words which
precede them. In this case also the
words "that is to say" qualify the
words "brand name or trade name" by
indicating that these terms must
therefore be understood in the context
of the words which follow. The words
which follow are of wide amplitude and
include any word, mark, symbol,
monogram or label. Even a signature of
an invented word or any writing would
be sufficient if it is used in
relation to the product for purpose of
indicating a connection between the
product and the other person/company.”
13. Likewise, in CCE Vs. Bhalla Enterprises, (2005) 8 SCC 308
this Court was eloquent in observing that as per the aforesaid
Notification, the assessee will be debarred only if it uses on the
goods, in respect of which exemption is sought, the same/similar
brand name with the intention of indicating a connection with the
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assessees goods and such other person or uses the name in such a
manner that it would indicate such connection.
14. All these judgments were taken note by this Court in a
recent case in Nirlex Spares (P) Ltd. Vs. Commissioner of Central
Excise, (2008) 2 SCC 628. On the facts of that case, the Supreme
Court was of the opinion that the assessee had not offended
condition no.4. In that case, the goods were manufactured by the
assessee and the Marketing Company which was its marketing agent.
On the packing of goods, brand names of the assessee “INTATEX” and
“INTACO” were clearly and prominently printed. In between these two
brand names, a hexagonal shape/design, which was claimed by the
Department to be the brand of the Marketing Company, was also
printed. In this backdrop, the question was as to whether the
assessee company was using the said hexagonal shape/design of other
person. On the facts of that case, the Court found that there was
nothing on record to show that the said hexagonal shape/design
belonged to or was owned by the Marketing Company and thus they had
permitted the assessee to use the same on the corrugated boxes. The
Court also found that the hexagonal design/shape could not be said
to be descriptive enough to serve as an indicator of nexus between
the goods of the assessee and the Marketing Company. On this basis,
it was concluded that the alleged monogram could not be the brand
name or trade name of the Marketing Company.
15. We would also like to reproduce the following observation
from Commissioner of Central Excise, Chandigarh II Vs. Bhalla
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Enterprises, (2005) 8 SCC 308:-
“The apprehension of the assessees that
they may be denied the exemption merely
because some other traders even in a
remote area of the country had used the
trade mark earlier is unfounded.
The notification clearly indicates that
the assessee will be debarred only if
it is uses on the goods in respect of
which exemption is sought, the
same/similar brand name with the
intention of indicating a connection
with the assessees goods and such other
person or uses the name in such a
manner that it would indicate such
connection. Therefore, if the assessee
is able to satisfy the assessing
authorities that there was no such
intention or that the user of the brand
name was entirely fortuitous and could
not on a fair appraisal of the marks
indicate any such connection, it would
be entitled to the benefit of
exemption. An assessee would also be
entitled to the benefit of the
exemption if the brand name belongs to
the assessee himself although someone
else may be equally entitled to such
name.”
These observations bring out two significant aspects namely:-
(1) As per the Notification, the
assessee would be debarred only if it
uses on the goods in respect of which
exemption is sought, the same/similar
brand name with the intention of
indicating a connection with the
assessees goods and such other person
or uses the name in such a manner that
it would indicate such connection. If
there is no such intention or that the
user of the brand name was entirely
fortuitous and could not on a fair
appraisal of the marks indicate any
such connection, it would be entitled
to the benefit of exemption.
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(2) The assessee would also be entitled
to the benefit of exemption if the
brand name belongs to the assessee
himself although someone else may be
equally entitled to such name.
16. Having clarified the real position, we find that
matter is not examined by the authorities below in the right
perspective. The factual aspects can be established only
before the adjudicating authority. Therefore, while setting
aside the judgment, we remit the case back to the
Commissioner, Central Excise to hear the respondent de novo
on the show cause notice which was issued by him and decide
the matter afresh after taking into consideration the law
laid down in the aforesaid judgments. It would be open to
the respondent to place on record whatever material it wants
to place in consonance with the stand already taken in the
reply to show cause notice and opportunity in this behalf
shall be given to the respondent. Respondent shall also be
given oral hearing by the Commissioner before recording its
finding on those issues and deciding the fate of show cause
notice. It would be open to the respondent to press the
plea of limitation as well.
17. The appeal is allowed in the aforesaid terms
with no order as to costs.
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18. It would be open to the respondent to press the
plea of limitation as well.
…............................J.
(A.K. SIKRI)
…............................J.
(ROHINTON FALI NARIMAN)
New Delhi;
Date: 19.3.2015.
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ITEM NO.101 PH COURT NO.13 SECTION III
S U P R E M E C O U R T O F I N D I A
RECORD OF PROCEEDINGS
Civil Appeal No(s). 9157/2003
COMMNR. OF CENTRAL EXCISE, HYDERABAD Appellant(s)
VERSUS
M/S. STANGEN IMMUNO DIAGNOSTICS Respondent(s)
Date : 19/03/2015 This appeal was called on for hearing today.
CORAM :
HON'BLE MR. JUSTICE A.K. SIKRI
HON'BLE MR. JUSTICE ROHINTON FALI NARIMAN
For Appellant(s) Mr. A.K.Sanghi,Sr.Adv.
Ms. Nisha Bagchi,Adv.
Mr. Ritesh Kumar,Adv.
Mr. B. Krishna Prasad,Adv.
For Respondent(s) Mr. Neelima Tripathi,Adv.
Ms. S.Majuvdan,Adv.for
Dr. Kailash Chand,Adv.
UPON hearing the counsel the Court made the following
O R D E R
The appeal is allowed with no order as to costs in
terms of the signed judgment.
(SUMAN WADHWA)
AR-cum-PS
(SUMAN JAIN)
COURT MASTER
(SIGNED REPORTABLE JUDGMENT IS PLACED ON THE FILE)