of Central Excise, Trichy Vs. M/S Grasim Industries Ltd  Insc 240 (12 April 2005)
N. Variava, Dr. Ar. Lakshmanan & S. H. Kapadia S. N. Variava, J.
Appeals are filed against the Judgment of the Customs, Excise and Gold (Control)
Appellate Tribunal (CEGAT) dated 14th October, 1999. The Respondents are a subsidiary
of one M/s Grasim Industries Ltd. On the bags of cement manufactured by them
the Respondents use the following words:
by Dharani Cements Ltd. A Subsidiary of Grasim Industries Ltd."
Tribunal has, following the earlier Judgments of the Tribunal in the cases of Chemguard
Coatings Pvt. Ltd. vs. Commissioner of Central Excise, Chennai reported in 2000
(116) ELT 43 and Nippa Chemicals (Pvt.) Ltd. vs. Collector of Central Excise,
Madras reported in 1998 (100) ELT 490, and a Judgment of this Court in the case
of Astra Pharmaceuticals (P) Ltd. vs. Collector of Central Excise, Chandigarh
reported in 1995 (75) ELT 214 (S.C.), held that the benefit of Notification No.
5/98 CE dated 2nd June, 1998 is not lost by the Respondents because they show
on their product the name of the holding company, namely M/s. Grasim Industries
consideration of these Appeals, it is first necessary to set out Notification
5/98 CE dated 2nd June,
1998, which reads as
No. 5/98-C.E., dated 2-6-1998 Effective rate of duty for specified goods of
Chapters 13 to 96 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, hereby
exempts excisable goods of the description specified in column (3) of the Table
below or column (3) of the said Table read with the relevant List appended
hereto, as the case may be, and falling with the Chapter, heading No. or
sub-heading No. of the Schedule to the Central Excise Tariff Act, 1985 (5 of
1986) (hereinafter referred to as the said Schedule), specified in the
corresponding entry in column (2) of the said Table, from so much of the duty
of excise leviable thereon which is specified in the said Schedule, as is in
excess of the amount calculated at the rate specified in the corresponding
entry in column (4) of the said Table, subject to the relevant conditions
specified in the Annexure to this notification, and referred to in the
corresponding entry in column (5) of the said Table.
For the purposes of this notification, the rate specified in column (4), is ad
valorem rate, unless otherwise specified.
or heading No. or sub- heading No.
of goods Rate Conditions (1) (2) (3) (4) (5) 1. 13 Lac Nil - 9. 2502.29 All
goods manufactured in.
using vertical shaft kiln, with installed (I) capacity certified as not
exceeding 300 tonnes per day or 99,000 tonnes per annum and the total
clearances of cement produced by the factory, in a financial year, shall not
exceed 1,09,500 tonnes;
using rotary kiln, with installed capacity (II) certified as not exceeding 600 tonnes
per day or 1,98,000 tonnes per anum and the total clearances of the cement
produced by the factory, in a financial year, shall not exceed 2,20,000 tonnes.
Rs. 2 per tonne 2 Condition Conditions No. 1. If the manufacturer of the food
preparations produces a certificate from an officer not below the rank of a
Deputy Secretary to the Government of India or not below the rank of a Deputy
Secretary to the State Government concerned to the effect that such food
preparations have been distributed free to the economically weaker sections of
the society under a programme duly approved by the Central Government or the
State Government concerned, within five months from the date of clearance of
such gods or within such further period as the Assistant Commissioner of
Central Excise may allow in this regard.
the cement manufacturer produces to the Assistant (i) Commissioner of Central
Excise a certificate issued by an officer not below the rank of Director of
Industries in the State Government indicating the installed capacity of the
explanation under this notification shall be (ii) applicable upto a maximum
quantity of ninety-nine thousand tones in a financial year. For computing the
quantity of ninety-nine thousand tonnes in a financial year, the clearances of
cement effected under any other notification shall be included.
the clearances of cement effected on payment of duty at the rate of Rs. 350 per
tonne shall not be taken into account for computing the above mentioned
quantity of ninety-nine thousand tonnes.
exemption under this notification shall not be (iii) applicable to, cement
manufactured from such clinker which is not
within the same factory and
bearing a brand name or trade name (whether registered or not) of another
Explanation. For the purpose of condition (ii),
"brand name" or "trade name" means a brand name or trade
name, whether registered or not, that is to say, a name or a mark, such as a
symbol, monogram, signature, or invented words or any writing which is used in
relation to a product for the purpose of indicating, or so as to indicate, a
connection in the course of trade between the product and some person using
such name or mark with or without any indication of the identity of that
person." The Appellants contended that the Respondents were using the name
of M/s. Grasim Industries Ltd. with the purpose of indicating a connection
between the product i.e. the cement manufactured by them, and M/s Grasim
Industries Ltd. which is a well known cement manufacturer. In reply, it has not
been denied that M/s. Grasim Industries Ltd. is a well known cement
manufacturer. It has also not been denied that the purpose of putting the name
"M/s. Grasim Industries Ltd." was to show a connection between the
product and M/s. Grasim Industries Ltd. However, what has been contended is
that the words "M/s. Grasim Industries Ltd." are neither a brand name
nor a trade name. It is contended that mere use of the name of a company does
not amount to using a brand name or trade name of some other company.
Commissioner, by his Order dated 19th May, 1999, held that the Respondents were not entitled to the benefit
of the Notification. It was held that they were liable to pay a differential
duty of Rs. 47,74,961/- and a penalty of Rs. 10,00,000/- under Rule 173Q of the
Central Excise Rule, 1944. The Respondents filed an Appeal before the CEGAT
which, as stated above, has been allowed on the basis of Judgments referred to
from the Judgments relied upon by the Tribunal, some other Judgments of the
Tribunal, taking a similar view, have also been cited before us. It was
submitted by Mr. Vellapally, on behalf of the Respondents, that based on the
Judgment of this Court in Astra Pharmaceuticals (P) Ltd.'s case (supra) the
Tribunal has consistently been holding that the benefit of such Notification is
not lost by use of the name of a company. It was submitted that most of the
Judgments of the Tribunal were not appealed against by the Department. It was
submitted that as no Appeal had been filed against those Judgments, the
Department should not be allowed to discriminate by filing an Appeal in this
support of this submission reliance was placed upon the Judgment of this Court
in the case of Berger Paints India Ltd. vs. Commissioner of Income Tax,
Calcutta reported in 2004 (165) ELT 488 (S.C.), wherein this Court has held
that if the Revenue has not challenged the correctness of the law laid down earlier
and accepted it in the case of one assessee then it is not open to the Revenue
to challenge the correctness in other cases without a just cause.
was also placed upon an unreported Judgment passed in the case of Suptd. Of
Central Excise vs. D.C.I. Pharmaceuticals Pvt. Ltd. in Civil Appeal No. 6862 of
1999 dated 22nd
in this case, we find that the Court refused to interfere because there was an
earlier Judgment which had not been challenged in the case of concerned assessee
find some substance in this submission. However, Mr. Dutta points out to us
that no Affidavit in Reply had been filed in these Appeals. He submits that no
such contention had been taken in advance. He states that he is therefore not
in a position to make a statement as to whether or not Appeals were filed
against the various Judgments of the Tribunal shown to this Court. He submits
that time should be given to him in order to find out whether Appeals were
filed or not.
contention was taken up by Mr. Vellapally after a full day of argument and only
after finding that this Court was against him on merits. It is not just a legal
submission but is based on a factual situation which would require checking.
After a full hearing this Court is not going to adjourn this case. As no such
contention was taken earlier by filing any Affidavit in Reply we do not propose
to dismiss these Appeals on this ground. Even otherwise, we find that in all
Judgments, relied upon, the Tribunal has taken a patently erroneous view. It
becomes necessary for this Court to clarify the law so that the erroneous
Judgments of the Tribunal do not remain binding precedents.
Judgments of the Tribunal appear to be based upon the Judgment of this Court in
Astra Pharmaceuticals Ltd.' case (supra).
in the impugned Judgment Astra Pharmaceuticals Ltd.'s case has been relied
upon. In our view, the Tribunal is misconstruing and misunderstanding the
Judgment of this Court in Astra Pharmaceuticals Ltd.'s case.
Pharmaceuticals Ltd.'s case the question was whether the Appellants (therein)
were liable to pay duty on Dextrose Injection manufactured by it under Tariff
Item 14E. The said Tariff Item read as follows:
of Goods Rate of duty Basic Special Excise 14E Patent or Proprietary Medicines
not containing alcohol, opium, Indian Hemp or other narcotic drugs or other
narcotics other than those medicines which are exclusively ayurvedic, unani, sidha
the basic duty chargeable Explanation : I "Patent or proprietary
medicines" means any drug or medicinal preparation, in whatever form, for
use in the internal or external treatment of, or for the prevention of ailments
in human beings or animals, which bears either on itself or on its container or
both, a name which is not specified in a monograph in a Pharmacopoeia Formulary
or other publications notified in this behalf by the Central Government in the
Official Gazette, or which is a brand name, that is a name or a registered
trade mark under the Trade and Merchandise Marks Act, 1958 (43 of 1958) or any
other mark such as a symbol, monogram, label, signature or invented words or
any writing which is used in relation to that medicine for the purpose of
indicating or so as to indicate a connection in the course of trade between the
medicine and some person, having the right either as proprietor or otherwise to
use the name or mark with or without any indication of the identity of that
'Opium', "Indian Hemp", "Narcotic Drugs" and 'Narcotics'
have the meanings respectively assigned to them in Section 2 of the Medicinal
and Toilet Preparations (Excise Duties) Act, 1955 (16 of 1955)." To be
immediately noted that in Astra Pharmaceuticals Ltd.'s case this Court was
considering the phrase "Patent or proprietary medicines". In our case
and the other cases earlier dealt with by the Tribunal the phrase under
consideration is "brand name or a trade name". The subject matter of
Tariff Item 14E and the Notifications being considered are completely
different. Whilst interpreting the phrases "brand name or trade name"
an interpretation given in respect of "Patent or proprietary
medicines" can be of no assistance. Even otherwise, there is a considerable
difference between the Explanation to Tariff Item 14E and the Explanation in
the concerned Notification.
explanation to Tariff Item 14E provides that the patent or proprietary medicine
must, amongst other things, be a brand name i.e. a name or a registered trade
mark under the Trade and Merchandise Marks Act. In the Explanation under
consideration the "brand name or a trade name" may be registered or
unregistered. The registration need not be only under the Trade and Merchandise
Marks Act. Undoubtedly, the words "any other mark such as a symbol,
monogram, label, signature or invented words or any writing which is used in
relation to that medicine for the purpose of indicating or so as to indicate a
connection in the course of trade between the medicine and some person"
are almost identical. But in the Explanation to Tariff Item 14E they are used
in the context of a "Patent and proprietary medicine" which must be a
name or a registered trade mark under the Trade and Merchandise Marks Act. In the
Explanation to the concerned Notifications these words are used in the context
of a "Brand name or a trade name". These words, when used in the
context of a "Patent or a proprietary medicine" assume a completely
different context from that when they are used in the context of a "Brand
name or a trade name" which may be registered or not.
the Explanation to Tariff Item 14E nowhere uses the words "trade
name". As is commonly known, a trade name can be a name in which or by
which a person or body carries on their trade. It would, if the context so permits,
include the name of a company. In the context of a "trade name" the
words "a name" and "or any writing" would cover the name of
a company so long as it is used in relation to the product and is used for the
purpose of indicating a connection in the course of a trade between the product
and other person.
been set out hereinabove, in this case there is no denial that M/s. Grasim
Industries Ltd. were manufacturer of cement. There is also no denial that the
purpose of using the words:
by Dharani Cements Ltd.
Subsidiary of Grasim Industries Ltd." was with an intention of indicating
a connection between the product i.e. the cement and M/s Grasim Industries Ltd.
In such cases, clearly the Respondents were using a trade name of some other
company with the purpose of indicating a connection in the course of trade
between the product and that person. The Respondents were therefore clearly not
entitled to the benefit of the Notification. The decision of the Tribunal is
therefore clearly erroneous and requires to be set aside.
was made to certain decisions of the Tribunal which are now required to be
taken note of.
case of Nippa Chemicals (Pvt.) Ltd.'s case (supra) the question was whether the
Appellants (therein) were entitled to the benefit of Notification No.
175/86-C.E. dated 1st
March, 1986. That
Notification also contained an explanation (being Explanation VIII) which in
terms is identical to the Explanation under consideration by us. The Appellants
therein used the following words:
IN INDIA BY NIPA CHEMICALS LTD., In
Collaboration with Nihon Parkerizing Co. Ltd., Japan. 46, Garuda Buildings, Cathedral
IN INDIA BY Goodlass Nerolac Paints Ltd.,
GANPATRAO KADAM MARG, LOWER
Tribunal held that the use of these words did not preclude the Appellants
(therein) from availing of the benefit of the Notification. To be immediately
noted that in that case it was neither admitted nor proved that the words were
used to indicate a connection between the product and Nihon Parkerizing Co.
Ltd. The Tribunal so notes. Had the Tribunal based its decision on this aspect
no fault could have been found. However, the Tribunal then goes on to hold as
It is further mentioned in the above said explanation by stating that the name
or a mark means a symbol, monogram, label, signature or invented word or
writing which is used in relation to such specified goods for the purpose of
indicating the above said connection. The writings in the above said case, in
our opinion cannot come within the purview of symbol. It cannot also be a
monogram. The same cannot be a label or a signature. It cannot be an invented
word in view of the fact that these are names of the company but are comprised
of two/three words.
The learned JDR stated that this will come within purview of "name".
But in order to come within the purview of 'name', we have to again look into
the definition of "brand name" and the elaboration given therein. The
elaboration given therein is 'symbol, monogram, label, signature or invented
word or a writing'. We have already ruled out that it does not come within the
purview of a mark or a symbol or a monogram or label or any invented word in
view of the reasons furnished above.
The next question is whether it comes within the purview of a writing which is
used in relation to such specified goods for the purpose of indicating a
connection in the course of the trade. In this connection, we have to look into
the definition of "WRITE" & "WRITING" in the OXFORD
DICTIONERY. The same are defined as follows:- Write (r-) v. (past t. Wrote,
past part, Wri'tten). Form symbols representing letter(s) or word(s) esp. on
paper, parchment, etc., with pen, pencil, brush, etc., form (such symbols), set
(words etc.) down in writing, express in writing; chronicle, make record or
account of; convey (message, information, etc.) by letter; engage in writing or
authorship; produce writing; ~ down, set down in writing; write in
disparagement or depreciation of;
(total, assets, etc.) to lower amount; ~ off, record cancelling of (bad debt,
depreciated stock, etc.); reckon as lost or worthless; ~- off (n.) something
that must be regarded as total loss or wreck, failure; ~ out, make written copy
of; transcribe in full or detail; ~ up, write full account or record of; give
full or elaborate description of; commend by appreciative writing, praise in
writing; ~-up (n.) review or report. Writing (r-) n. (esp.) Written document;
(piece of) literary work; personal script, handwriting; put in ~, write down;
the Writings, = HAGIOGRAPHA; ~- case, case holding writing materials; ~-desk,
desk; ~-master, instructor in penmanship; the yellow-hammer (from marks like
scribbling on eggs); ~-paper, paper for writing on with ink, esp. note-paper;
is therefore seen that these are certain words enumerated to project the name
of the two particular companies and they do not come within the purview of
"Writing" or "name". These are mere printed words
indicating the names of two companies. Therefore, in our view, these will never
come within the purview of "brand name" in view of the fact that they
do not come within the meaning of "name" or "mark" which is
elaborated in the explanation to "brand name" and this being the
position, the arguments of the learned DR cannot be accepted. .........."
In our view, the Tribunal has completely misdirected itself. The term
"brand name or trade name" is qualified by the words "that is to
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.
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 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.
Court has, in the case of Royal Hatcheries Pvt. Ltd. vs. State of A. P.
reported in 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. It is thus clear that the Tribunal's
decision in Nippa Chemicals (Pvt.) Ltd.'s case is clearly erroneous and will
case of Collector of Central Excise, Goa vs. Christine Hoden (I) Pvt. Ltd.
reported in 1999 (113) ELT 591 the question was whether the use of the word
"comfit" with the name "Christine Hoden London, Rome Stockholm"
would disentitle the Respondents therein from the benefit of the Notification.
It was however found, as a matter of fact, that the word "comfit" was
owned by the Respondent. It was on that basis held that the Respondents therein
were entitled to the benefit of Notification. To this extent the Tribunal was
the Tribunal has unnecessarily also gone on to comment as follows:
indication of the foreign company's name does not create any association in the
course of trade between the goods and the foreign company." There would be
no purpose in indicating the foreign company's name in relation to the product
except to indicate a connection between the product and the foreign company.
Therefore, to this extent, the Tribunal is not correct.
case of Commissioner of Central Excise, Hyderabad vs. Sarat Electronics
reported in 2004 (167) ELT 404 the question was whether the Respondents
(therein) were entitled to benefit of Notification No. 1/93-C.E., which
Notification was identical to the one under consideration by us. The
Respondents therein used the words "SARAT" in bold letters following
which the words "A quality product from ITL group" and
"Technical licencee of ITL" were also printed. The Tribunal,
following its earlier decisions, held as follows:
In the facts of the present case, we are of the view that the expression
"ITL" was used to convey the name of the company and not as a trade
mark. It showed that the technical know-how was obtained from Instrument
Techniques Pvt. Ltd. The expression "A quality product from ITL
group" also would not mean that the product was manufactured by Instrument
Techniques Pvt. Ltd.
to us, the facts of the case are more akin to the facts in Weigand India (P)
Ltd. and Chemguard Coatings Pvt. Ltd. rather than Chopra Appliances." In
our view, the Tribunal was clearly erroneous. As indicated above, the
Explanation makes it clear that it need not be a trade name or brand name as
commonly understood. Any name or mark or writing, even the name of a company is
sufficient so long as it is used for the purpose of indicating a connection
between the product and that Company. The use of the words "A quality
product from ITL group" clearly showed an intention to show a connection
between the product and the ITL group. These words indicated that the quality
of the product was the same as that of a product of ITL group. If use of such
words did not disentitle a party from the benefit of the Notification, we fail
to understand what sort of words would disentitle a party. The decision of the
Tribunal in this case is clearly erroneous and will stand overruled.
this view of the matter, we set aside the impugned Judgment and restore the
Order passed by the Commissioner of Central Excise dated 19th May, 1999.
by this Order, the Commissioner has also imposed penalty in a sum of Rs. 10,00,000/-
under Rule 173Q of the Central Excise Rules. While the conclusions of the
Commissioner that the Respondents were not entitled to the benefit of the Notification
are correct, the fact still remains that the Tribunal has in a number of
matters given an interpretation as understood by the Respondent. It therefore
cannot be said that the Respondents could not have taken the view they did. It
cannot be said that they could never have concluded that they were entitled to
the benefit of the Notification.
therefore feel that this is a case where penalty should not be imposed. We
therefore delete the imposition of penalty on the Respondents.
Appeals stand disposed of accordingly. There will be no order as to costs.