Commnr.
Of Central Excise, Raipur Vs. M/S. Hira Cement [2006] Insc 58
(2 February 2006)
S.B.
Sinha & P.K. Balasubramanyan 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:
-
"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 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 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 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" 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:
-
"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 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.
-
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." 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." 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:
"Non-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 light of
the observations made hereinbefore. No costs.
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