Full Judgment Text
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NOS 6788-6789 OF 2005
Unison Electronics Pvt. Ltd. and Anr. ….Appellants
Versus
Commissioner, Central Excise, Noida ….Respondent
J U D G M E N T
Dr. ARIJIT PASAYAT, J.
1. In these appeals challenge is to the order passed by the Customs,
Excise & Service Tax Appellate Tribunal, New Delhi (in short ‘CESTAT’).
The basic issue is whether the appellants are clearing excisable goods
manufactured by them bearing the brand name of another person.
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2. Background facts in a nutshell are as follows:
The SSI Exemption Notification which provides exemption to the
excisable goods manufactured by a SSI unit provides that the exemption
shall not apply to goods bearing the brand name or trade name, whether
registered or not, of another persons. Explanation to Notification defines the
brand name as a name or mark, such as a symbol, monogram, label,
signature or invented word or writing which is used in relation to the
specified goods for the purpose of indicating a connection in the course of a
trade between specified goods and some person using such name or mark
with or without any indication of the identity of that person.
According to the appellants they manufacture ice-cream makers
cooler and Popcorn makers and avail of the benefit of SSI Exemption
Notification and sell ice cream maker in their own brand name “CREMICA”
and sell the same to different customers including United Tele Shopping (in
short ‘UTS’) and Tele Shopping Network (in short ‘TSN’) and that in
respect of sale to UTS & TSN the goods were being examined by the
Supervisors of these customers before dispatch from their factory and
stickers bearing UTS/TSN were being affixed and these sticker bear the
words “Checked Sl. No. Do not remove this sticker” and that the
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Department has treated the words UTS and TSN as brand name belonging
to other and has disallowed the benefit of small scale exemption
notification. It was submitted that the words UTS and TSN are not brand
names but are the abbreviations of the name of the marketing companies
which does not amount to use of the brand name.
Stand of the department was as follows:
It has not been controverted by the appellants that the excisable goods
before clearance from their factory premises bear stickers of UTS/TSN and
as per definition of the brand name given in SSI Exemption Notification,
“brand name” means any name, symbol, monogram, label, signature or
invented word or writing which indicates connection in the course of trade
between excisable goods and same person using such name and that the
words UTS/TSN mentioned on the packaging of the products indicate the
connection in the course of trade with UTS and TSN.
After considering the rival stands the CESTAT concluded as follows:
“A perusal of the sample shown by the learned
consultant at the time of hearing revealed that the sticker
mentions that it has been put after checking the quality
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of the product manufactured by the appellants. In fact the
sticker reads as under:
TSN
Tele Shopping Network
UTS
United Teleshopping
Quality at your doorstep
Accordingly, the CESTAT upheld the demand of duty and penalty
imposed on the appellant-company, but the separate penalty imposed on the
Director of the company was set aside.
3. In support of the appeals, learned counsel for the appellants submitted
that the brand names do not apply to the same goods. It essentially is the
brand name of another person.
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4. Learned counsel for the respondent on the other hand supported the
judgment and submitted that even if it is conceded for the sake of arguments
that brand names related to other person, that is really of no consequence.
5. The Notification in question reads as follows:
“In exercise of the powers conferred by sub-section (1) of
Section 5A of the Central Excise Act, 1944 (1 of 1944), the
Central Government, being satisfied that it is necessary in the
public interest so to do, and in super session of the notification
of the Government of India in the Ministry of Finance
(Department of Revenue) No.7/97-Central Excise dated the 1st
March, 1997, hereby exempts clearances, specified in column
(2) of the Table below, for home consumption, of the excisable
goods of the description specified in the Annexure appended to
this notification (hereinafter referred to
\“the specified goods”), from so much of the duty of excise
leviable thereon which is specified in the Schedule to the
Central Excise Tariff Act, 1985 (5 of 1986), as is in excess of
the amount calculated at the rate specified in column (3) of the
said Table against such clearances.
3. For the purpose of determining the aggregate value of
clearances, the following clearances shall not be taken into
account, namely :-
(a) any clearances, which are exempt from the whole of the
excise duty leviable thereon (other than an exemption based on
quantity or value of clearances) under any other notification or
on which no excise duty is payable for any other reason;
(b) any clearances bearing the brand name or trade name of
another person, which are ineligible for the grant of this
exemption in terms of paragraph 4 below :
(c) any clearances of the specified goods which are used as
inputs for further manufacture of any specified goods within
the factory of production of specified goods. Such clearances
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of specified goods used as inputs shall be deemed to be exempt
from the whole of the duty of excise leviable thereon:
(d) any clearances of strips of plastics used within the factory
of production for weaving of fabrics or for manufacture of
sacks or bags made of polymers of ethylene or propylene.
4. The exemption contained in this notification shall not apply
to goods bearing a brand name or trade name, whether
registered or not, of another person, except in the following
case:-
(a) where the specified goods, being in the nature of
components or parts of any machinery or equipment or
appliances, are cleared for use as original equipment in the
manufacture of the said machinery or equipment or appliances
by following the procedure laid down in Chapter X of the
Central Excise Rules, 1944. Manufacturers, whose aggregate
value of clearances of the specified goods for use as original
equipment does not exceed rupees thirty lakhs in a financial
year, may submit a declaration regarding such use instead of
following the procedure laid down in Chapter X of the said
rules;
(b) where the goods bear a brand name or trade name of Khadi
and Village Industries Commission or of the State Khadi and
Village Industry Board or the National Small Industries
Corporation or the State Small Industries Development
Corporation or the State Small Industries Corporation;
5. Explanation — For the purpose of this notification :-
(a) “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;
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(b) where the specified goods manufactured by a manufacturer
bear a brand name or trade name, whether registered or not, of
another manufacturer or trader, such specified goods shall not,
merely by reason of that fact be denied to have been
manufactured by such other manufacturer or trader.”
6. In Commissioner of Central Excise, Trichy v. Rukmani Pakkwell
Traders (2004 (11) SCC 801) it was noted as follows:
“5. The Tribunal then proceeds on the basis that the exemption
can be denied only if the trade mark or brand name is used in
respect of the same goods for which the trade mark is
registered. In coming to this conclusion we are afraid that the
Tribunal has done something which is not permissible to be
done in law. It is settled law that exemption notifications have
to be strictly construed. They must be interpreted on their own
wording. Wordings of some other notification are of no benefit
in construing a particular notification. Clause 4 of this
notification and the Explanation (set out hereinabove) make it
clear that the exemption will not apply if the specified goods
(i.e. scented supari) bear a brand or trade name of another
person. Neither in clause 4 of the notification nor in
Explanation IX is it provided that the specified goods must be
the same or similar to the goods for which the brand name or
trade name is registered. The Tribunal has, in adopting the
above reasoning, effectively added to the notification words to
the effect “brand name or trade name in respect of the same
goods”. This is clearly impermissible. It is to be seen that there
may be an unregistered brand name or an unregistered trade
name. These might not be in respect of any particular goods.
Even if an unregistered brand name or trade name is used, the
exemption is lost. This makes it very clear that the exemption
would be lost so long as the brand name or trade name is used
irrespective of whether the use is on same goods as those for
which the mark is registered.
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6. 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” show 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 word “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.”
7. Similarly, in Commissioner of Central Excise, Chandigarh-I v.
Mahaan Dairies (2004 (11) SCC 798) in paras 6 and 8 it was noted as
follows:
“6. We have today delivered a judgment in CCE v. Rukmani
Pakkwell Traders (2004 (11) SCC 801) 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.
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8. It is settled law that in order to claim benefit of a
notification, a party must strictly comply with the terms of the
notification. If on wording of the notification the benefit is not
available then by stretching the words of the notification or by
adding words to the notification benefit cannot be conferred.
The Tribunal has based its decision on a decision delivered by
it in Rukmani Pakkwell Traders v. CCE (1999 (109) ELT 204
(CEGAT). We have already overruled the decision in that case.
In this case also we hold that the decision of the Tribunal is
unsustainable. It is accordingly set aside.”
8. Further in Commissioner of Central Excise, Calcutta v. Emkay
Investments (P) Ltd. and Anr. (2005 (1) SCC 526) this Court stated the
position in law as follows:
“7. The dispute, in the instant case, is as to whether the
respondents who are manufacturers of plywood under their
own brand name “Pelican” 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 M/s 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
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another person who is not eligible for the grant of
exemption 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
indication of the identity of that person.’
8. 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 of the other person not eligible to SSI
exemption. According to the learned Solicitor General, CEGAT
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 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 that 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 Explanation VIII were fully satisfied so far as the
present case was concerned. Learned Solicitor General also
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submitted that the exception or exempting provision in a taxing
statute should be construed strictly and it is not open to the
court or to the tribunal to ignore conditions prescribed in the
exemption notification.
9. In support of his submissions, learned Solicitor General,
relied on the following judgments:
1. B.H.E.L. Ancillary Assn. v. CCE (1990 (49) ELT 33 (Mad)
2. CCE v. Rukmani Pakkwell Traders (2004 (11) SCC
801
3. CCE v. Mahaan Dairies (2004 (11) SCC 798)
4. CCE v. Bhalla Enterprises (2004 (173) ELT 225
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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9. Considering the position involved in Reiz Electrocontrols (P) Ltd. v.
Commissioner of Central Excise, Delhi-I (2006 (6) SCC 213) the position
was re-iterated as follows:
“8. So far as the views regarding non-eligibility are concerned
view expressed by this Court in several cases needs to be
noted.
9. In Commissioner of Central Excise, Chandigar-I v. Mahaan
Dairies [2004 (166) ELT 23 (SC)] it was noted (in para 6) as
follows:
“We have today delivered a judgment in
Commissioner of Central Excise, Trichy v.
Rukmani Pakkwell Traders – 2004 (165) E.L.T.
481 (S.C.) (Civil Appeal Nos. 3227-3228/1998)
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 Notification.”
10. In Union of India v. Paliwal Electricals (P) Ltd. and
Another [(1996) 3 SCC 407] it was noted (in paras 10 and 11)
as follows:
“10. We are of the opinion that while examining
the challenge to an exemption notification under
the Central Excise Act, the observations in the
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decisions aforesaid should be kept in mind. It
should also be remembered that generally
speaking the exemption notification and the terms
and conditions prescribed therein represent the
policies of the Government evolved to subserve
public interest and public revenue. A very heavy
burden lies upon the person who challenges them
on. the ground of Article 14. Unless otherwise
established, the court must presume that the said
amendment was found by the Central Government
to be necessary for giving effect to its policy
(underlying the notification) on the basis of the
working of the said notification and that such an
amendment was found necessary to prevent
persons from taking unfair advantage of the
concession. In fact, in this case, the explanatory
note appended to amending notification says so in
so many words. If necessary, the Court could have
called upon the Central Government to establish
the reasons behind the amendment. (It did not
think it fit to do so.) It is equally necessary to bear
in mind, as pointed out repeatedly by this Court,
that in economic and taxation sphere, a large
latitude should be allowed to the legislature. The
courts should bear in mind the following
observations made by a Constitution Bench of this
Court in R.K. Garg v. Union of India [1981 (4)
SCC 675]: (SCC pp. 690-91, para 8)
“Another rule of equal importance is that laws
relating to economic activities should be
viewed with greater latitude than laws touching
civil rights such as freedom of speech, religion
etc. It has been said by no less a person than
Holmes, J. that the legislature should be
allowed some play in the joints, because it has
to deal with complex problems which do not
admit of solution through any doctrinaire or
strait-jacket formula and this is particularly true
in case of legislation dealing with economic
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matters, where, having regard to the nature of
the problems required to be dealt with, greater
play in the joints has to be allowed to the
legislature. The Court should feel more
inclined to give judicial deference to legislative
judgment in the field of economic regulation
than in other areas where fundamental human
rights are involved. Nowhere has this
admonition been more felicitously expressed
than in Morey v. Doud [354 US 457 (1957)]
where Frankfurter, J. said in his inimitable
style:
‘In the utilities, tax and economic
regulation cases, there are good reasons
for judicial self-restraint if not judicial
deference to legislative judgment. The
legislature after all has the affirmative
responsibility. The courts have only the
power to destroy not to reconstruct.
When these are added to the complexity
of economic regulation, the uncertainty,
the liability to error, the bewildering a
conflict of the experts, and the number of
times the Judges have been overruled by
events—self-limitation can be seen to be
the path of judicial wisdom and
institutional prestige and stability.’
The court must always remember that ‘legislation
is directed to practical problems, that the economic
mechanism is highly sensitive and complex, that
many problems are singular and contingent, that
laws are not abstract propositions and do not
relate to abstract units and are not to be measured
by abstract symmetry’ that exact wisdom and nice
adaptation of remedy are not always possible and
that judgment is largely a prophecy based on
meagre and uninterpreted experience’. Every
legislation particularly in economic matters is
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essentially empiric and it is based on
experimentation or what one may call trial and
error method and therefore it cannot provide for
all possible situations or anticipate all possible
abuses. There may be crudities and inequities in
complicated experimental economic legislation but
on that account alone it cannot be struck down as
invalid. The courts cannot, as pointed out by the
United States Supreme Court in Secy. of
Agriculture v. Central Roig Refining Co. [ 94 L
Ed 381 : 338 US 604 (1950)] be converted into
tribunals for relief from such crudities and
inequities. There may even be possibilities of
abuse, but that too cannot of itself be a ground for
invalidating the legislation, because it is not
possible for any legislature to anticipate as if by
some divine prescience, distortions and abuses of
its legislation which may be made by those subject
to its provisions and to provide against such
distortions and abuses. Indeed, howsoever great
may be the care bestowed on its e framing, it is
difficult to conceive of a legislation which is not
capable of being abused by perverted human
ingenuity. The Court must therefore adjudge the
constitutionality of such legislation by the
generality of its provisions and not by its crudities
or inequities or by the possibilities of abuse come
to light, the legislature can always step in and
enact suitable amendatory legislation. That is the
essence of pragmatic approach which must guide
and inspire the legislature in dealing with complex
economic issues.”
11. The same principle should hold good in the
matter of exemption notifications as well, for the
said power is part and parcel of the enactment and
is supposed to be employed to further the objects
of enactment — subject, of course, to the
condition that the notification is not ultra vires the
Act, and/or Article 14 of the Constitution of India.
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(See P.J. Irani V. State of Madras [(1962) 2 SCR
169]”.
11. In Pahwa Chemicals Private Limited v. Commissioner of
Central Excise, Delhi [2005 (189) ELT 257 (SC)] it was held as
follows at para 3:
“Paragraph 4 and Explanation IX of Notification
have been construed by this Court in
Commissioner of Central Excise v. Rukhmani
Pakkwell Traders, 2004 (165) E.L.T. 481; as also
in Commissioner of Central Excise, Chandigarh v.
Mczhaan Dairies, 2004 (166) ELT. 23. In both
these decisions this Court held that Paragraph 4
read with Explanation IX of the notification could
not be construed in the manner as contended by
the assessees, namely, to make it necessary for the
owner of the trade mark/trade name to use the
goods in respect of the specified goods
manufactured by the assessee. We see no reason to
differ with the reasoning of this Court in the
aforesaid decisions. Clause 4 of the Notification
read with Explanation IX clearly debars those
persons from the benefit of the exemption who use
someone else’s name in connection with their
goods either with the intention of indicating or in a
manner so as to indicate a connection between the
assessees goods and such other person. There is no
requirement for the owner of the trade mark using
the name or mark with reference to any particular
goods. The object of the exemption notification
was neither to protect the owners of the trade
mark/trade name nor the consumers from being
misled. These are considerations which are
relevant in cases relating to disputes arising out of
infringement/passing off actions under the Trade
Marks Act. The object of the Notification is
clearly to grant benefits only to those industries
which otherwise do not have the advantage of a
brand name. The decisions cited by the Counsel
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appearing on behalf of the assessees relate to
decisions involving Trade Mark disputes and are
in the circumstances not apposite.”
13. It appears that such a stand was not taken before the
Tribunal. In any event in view of what has been stated by this
Court in Mahaan Dairies’ case (supra) the Tribunal has to
consider the plea. In Mahaan Diaries’ case (supra) it was
observed as follows:
“9. It was however, urged that the respondents
have applied for registration of the Mark
“Mahaan Taste Maker”. We clarify that if and
when they get their mark registered then they
would become entitle to the benefit of the
Notification in accordance with Board’s Circular
No.88/88, dated 13.12.1988.”
10. The conclusions of CESTAT are essentially factual and, therefore,
there is no scope for interference. In view of the factual position noted by
CESTAT and the position in law indicated above, the appeals are dismissed.
No costs.
……………………………………J.
(Dr. ARIJIT PASAYAT)
……………………………………J.
(Dr. MUKUNDAKAM SHARMA)
New Delhi,
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February 13, 2009
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