Central Excise, Mumbai Vs. Kalvert Foods India Pvt. Ltd. & Ors.
appeals arise out of Judgment and Order passed by the Customs, Excise and Gold (Control)
Appellate Tribunal, New Delhi Bench [for short "CEGAT"] on 02.08.2002
whereby the Tribunal had allowed the appeals filed by the respondents holding that
the respondents were not guilty of clandestine removal of excisable goods and
also that the goods of the respondent no. 1 were not excisable inasmuch as they
were not packed in containers under a brand name.
entering into rival contentions of the parties, it would be necessary although
in a nutshell to look into the facts of the case leading to filing of the present
respondent No. 1, M/s. Kalvert Foods India Pvt. Ltd. is a company (in short hereinafter
referred to as 'the Company') engaged in the manufacture of P & P Food
Products, such as, assorted jams, pickles, squashes, cooking sauces, chutneys, syrups,
synthetic vinegars etc. The company is also trading in sugar, salt and pepper by
packing into small packs. The respondent No. 2, Shri Yunus A. Kalvert is the
Managing Director of the Company.
22.11.2000, on receiving information that respondents were indulging in clandestine
removals of its finished P & P food products without payment of Central
Excise Duty, the revenue authorities searched the factory premises of the respondent
no. 1. Searches were also carried out at the premises of its distributors/wholesale
dealers/traders of respondent no. 1 situated in and around Mumbai and other
the search conducted at the premises of the respondent no. 1 several
incriminating documents, articles and records were found. A huge quantity of
finished goods were also found lying in the factory premises. Further, it was also
noticed that there was one tempo parked inside the factory premises loaded with
cartons containing the excisable goods manufactured by the said company and was
about to leave the factory premises. On inquiry from the driver of the said tempo
it was found that the driver was not in possession of any documents relating to
the goods loaded in the said tempo. On inspection of invoices at the premises
of the respondent no. 1, it was also found that there were two invoices with
the same serial number, in respect of different products. The officers took
stock of the goods in the factory and it was found that the finished goods
lying in the factory were in excess of the stock shown and accounted for in the
allegation against the respondent is that the goods found lying excess in the stock
than what were entered into RGI register, valued at Rs. 7,33,668/- and the same
search was also carried out at the premises of the dealers/traders, to whom the
company allegedly supplied the finished goods. The goods found lying in those
premises to the value of Rs. 6,22,946/- were also seized on the ground that
they were not duty paid.
the search was carried out by the officers on 28-11-2000, at the premises of M/s.
Relish Trading Company (in short 'RTC')/the selling agent of the
respondent-company, M/s. Sai Krupa, a partnership firm of the Managing Director
of the respondent No. 1; and at the premises of sole proprietor of RTC and records
pertaining to the sale and purchase of the goods lying in the offices of these
companies, were seized. It revealed to the searching officers that, in fact, the
respondent-company had cleared jams, syrup, sauces, pickles, etc., from the factory
premises to the above said selling agents without payment of duty, but had
shown those clearances as that of the sugar, in the invoices and had also cleared
the branded goods to the dealers/traders.
completion of the entire process a show cause notice was issued to the Company
and its Director. Such notices were also issued to the proprietor of M/s. RTC,
its partner and M/s. Sai Krupa Corporation. Through notices issued, duty demand
was raised from the company and penalty was also proposed to be imposed on the
company. Reply was filed by the respondents to the aforesaid show cause
adjudicating authority, namely, the Commissioner of Central Excise, Mumbai, passed
an order dated 27.02.2002, holding that the respondent no. 1 with the
connivance of the respondents 2 and 3 have deliberately attempted to pass off excisable
goods as non-excisable goods with an intent to evade payment of excise duty.
Consequently, the Commissioner confirmed the duty demand and ordered confiscation
of the seized goods and also imposed penalty equivalent to the amount of duty
on the company and also directed to pay interest on the excise duty etc.
aggrieved by the aforesaid order, respondents filed appeals before the CEGAT. The
said appeals were heard and Tribunal passed the judgment and order on
02.08.2002, which is impugned herein. The Tribunal by its order set aside the findings
of the Commissioner of Central Excise, Mumbai holding that the respondents were
not guilty of clandestine removal of excisable goods and also that the goods of
respondent no. 1 were not excisable inasmuch as they were allegedly not packed
in containers under a brand name and therefore not required to pay any excise
present appeals are directed and preferred against the said judgment and order on
which we heard learned counsel appearing for the parties.
learned counsel appearing for the parties have painstakingly and extensively taken
us through the relevant documents on record to which reference shall be made during
the course of our discussion hereinafter. However, before we record our findings
and the conclusions on the issues raised, we must also deal with the tariff headings
and some of the documents which are relevant for our purpose and material
available on record.
the years with which we are concerned in these appeals are 1996-97, 1997-98 and
1998-99. So far the year of 1996-97 is concerned the relevant entry for our
purpose is 20.01 and sub-heading 2001.00 under Chapter 20 of the Central Excise
Tariff of India 1996-97 (incorporating rates of Central Excise & Service Tax).
Chapter 20 relates to preparations of vegetables, fruits, nuts or other parts
of plants and it prescribes "Nil" rate of duty for the goods
mentioned in this sub-heading 2001.00. Description of goods in the said
sub-heading is as under:"preparations of vegetables, fruit, nuts or other parts
of plants, including jams, fruit jellies, marmalades, fruit or nut puree and fruit
or nut pastes, fruit juices and vegetable juices, whether or not containing added
sugar or other sweetening matter put up in unit containers and bearing a brand
20 of the Central Excise Tariff of India 1998-99 (incorporating rates of Central
Excise & Service Tax as in operation on 2nd June, 1998) prescribes 8%
excise duty for the goods mentioned under sub heading 2001.
Description of goods
mentioned in sub-heading 2001.10 is as under: "preparations of vegetables,
fruit, nuts or other parts of plants, including jams, fruit jellies,
marmalades, fruit or nut puree and fruit or nut pastes, fruit juices and vegetable
juices, whether or not containing added sugar or other sweetening matter put up
in unit containers and bearing a brand name”. What is brand name is also
explained in the notes included in Chapter 20 to the following
effect:""brand name" means a brand name, whether registered or not,
that is to say, a name or a mark, such as a symbol, monogram, label, 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".
21, of the Central Excise Tariff of India 1998-99 (incorporating rates of
Central Excise & Service Tax as in operation on 2nd June, 1998) relates to "Miscellaneous
Edible Preparations". It also prescribes 8% excise duty for the goods mentioned
under sub heading 2103.10. Description of goods mentioned in sub-heading
2001.10 is as under: "Sauces, ketchup and the like and preparations therefore;
fixed condiments and mixed seasonings; mustard flour and mead and prepared mustard
put up in unit containers and bearing a brand name"Sub-heading 2108.20 prescribes
18% excise duty for "Edible preparations, not elsewhere specified or including
Sharbat" under Chapter 21. Sub-heading 2203.00 also prescribes 18% excise
duty for "Vinegar and substitutes for vinegar obtained from acetic
acid" under Chapter 22.
the search operation carried out by the appellants several incriminating articles
were found with brand name "Kalvert Anchor" or "Kalvert" in
assorted forms which were manufactured by M/s. Kalvert Foods (I) P. Ltd. During
the course of investigation statement of Shri Yunus A. Kalvert, Managing
Director of respondent company was recorded under Section 14 of the Central
Excise Act, 1944, who inter alia deposed that the respondent company was engaged
in the manufacture of P & P food products like jams; pickles; syrups; vinegars
etc. bearing their brand name "KALVERT ANCHOR" and the other Directors
of the company viz. Shri Akbar Ali Kalvert, his father and Shri Irshad Y.
the course of arguments learned counsel appearing for the respondent submitted before
us that although the aforesaid statements of Managing Director of the Company
and other persons were recorded during the course of judicial proceedings but
the same were retracted statements, and therefore, they cannot be relied upon.
However, the statements were recorded by the Central Excise Officers and they
were not police officers. Therefore, such statements made by the Managing Director
of the Company and other persons containing all the details about the
functioning of the company which could be made only with personal knowledge of the
respondents and therefore could not have been obtained through coercion or
duress or through dictation. We see no reason why the aforesaid statements made
in the circumstances of the case should not be considered, looked into and
are of the considered opinion that it is established from the record that the
aforesaid statements were given by the concerned persons out of their own volition
and there is no allegation of threat, force, coercion, duress or pressure being
utilized by the officers to extract the statements which corroborated each other.
Besides, the Managing Director of the Company on his own volition deposited the
amount of Rs. 11 lakhs towards excise duty and therefore in the facts and circumstance
of the present case, the aforesaid statement of the counsel for the respondents
cannot be accepted. This fact clearly proves the conclusion that the statements
of the concerned persons were of their volition and not outcome of any duress.
the course of arguments our attention was also drawn to the statement of Managing
Director of the Company where he had admitted the fact of clandestine clearance
of excisable goods and therefore has voluntarily come forward to sort out the
issue and to pay the Central Excise duty liability and that he has paid Central
Excise duty voluntarily under TR6 Challans totaling to Rs. 11,00,000/- on
various dates. Similarly statement of Miss Vinita M. Khanolkar - proprietor of
RTC was also recorded under Section 14 of the Central Excise Act, 1944 along
with Shri Shekhar Mogaviera - Production Supervisor of M/s. Kalvert Foods India
Pvt. Ltd. Statements of various other persons were also recorded under Section 14
of the Central Excise Act.
attention was also drawn by the counsel appearing for the appellant to the
findings recorded by the adjudicating authority to the fact that there have been
recovery of unaccounted finished excisable goods from 8 different dealers in and
around Mumbai and that there have been creation of firms dealing in similar products
from the same premises by the same persons having no capital or machinery and also
that there have been only one tempo invariably used for delivery of excisable goods
from factory to the buyers though some invoices were issued by the firms other than
M/s. Kalvert Foods India Pvt. Ltd. and that there have been use of parallel sets
of invoices of the same serial numbers supported by recovery of a serially numbering
machine and blank invoices without any printed serial numbers.
the basis of the aforesaid material discussed hereinbefore the adjudicating authority
came to the conclusion that the respondent no. 1 with the connivance of respondent
nos. 2 and 3 have been deliberately clandestinely removing excisable goods as non-excisable
goods with intent to evade payment of excise duty. However, the aforesaid judgment
and order passed by the adjudicating authority, namely, the Commissioner of
Central Excise, Mumbai, was set aside by the Tribunal holding that neither the tempo
nor the goods loaded therein could be legally seized and confiscated when the
relevant documents were shown to the officers at the spot. It was also observed
by the Tribunal that it could be said that an attempt was being made to clear those
goods in tempo in a clandestine manner, when the company representative produced
the invoices and other relevant documents in respect thereof. These findings
were arrived at by the Tribunal apparently ignoring the materials which are
considered hereinbefore and referred to.
is no reference about the statement of Miss Vinita M. Khanolkar - sole proprietor
of M/s. RTC, in the judgment of order passed by the Tribunal, when she was
examined under Section 14 of the Central Excise Act, she had clearly stated that
her company bought large quantities of excisable goods from the respondent
company and in turn sold them to its distributors. She also confirmed the documents
seized from her residence which included correspondence with their customers regarding
promotion of the "Kalvert brand" products.
Tribunal also failed to consider and discuss the specific allegation of the appellant
that respondent no. 1 maintained two sets of computerized commercial invoices,
one for excisable products like jams, sauce, syrup etc and the other for non-excisable
goods such as salt, sugar and pepper which were marked as L series. It has also
come on evidence that L series sales for the period 1996-1999 was only made to RTC
in huge quantities and that in the guise of selling salt, sugar and pepper, the
respondent No. 1 was in fact selling excisable goods to RTC. These facts have been
found and taken note of by the adjudicating authority but the same were totally
ignored by the Tribunal.
to the aforesaid reasons and on the basis of the materials available on record
it is clear that the Company was guilty of clandestine removal of excisable goods
as non-excisable goods in order to evade excise duty. It is proved from the
fact that the Managing Director voluntarily came forward to sort out the issue and
to pay the Excise duty and paid Excise duty to the extent of Rs. 11,00,000/- on
different dates. The aforesaid act of the respondent no. 1 was very material and
relevant but the same was also ignored by the Tribunal while arriving at a wrong
according to us the issue with regard to the clandestine removal of excisable goods
as non-excisable goods by the respondent from their premises and selling to its
dealers and distributors is clearly proved from the materials on record.
view of the aforesaid position and since there was clandestine removal of excisable
goods, the period of limitation in the present case would have to be computed
from the date of their knowledge, arrived at upon raids on the premises. In the
present case therefore the extended period of limitation would be available as there
was suppression of facts by the respondents with the intention to evade the
central excise duty inasmuch as they did not account for the manufactured goods
in the prescribed record.
Tribunal has also recorded a finding that the respondents never cleared the
goods in question under any brand name and being unbranded they were chargeable
to NIL rate of duty.
aforesaid finding is also unacceptable. The Managing Director of the respondent
company has himself stated that they have been selling their products under the
brand name "Kalvert" and on the basis of the said statement and other
record found on the articles sold by the respondent company the aforesaid finding
of the Tribunal is wrong and perverse.
Tribunal has also held that because the brand name "Kalvert" was not
registered in their name therefore it cannot be held that respondents were
using `brand name'. The Tribunal further held that the name on the goods
manufactured and cleared by the respondent in the market could at best be termed
as "House mark" and not brand name/trade name.
our considered opinion, the aforesaid findings are also totally wrong and recorded
in violation of the law of Trade Marks. During the course of arguments, our
attention was drawn to a Judgment of this Court in the case of TARAI FOOD LTD. V.
COMMISSIONER OF CENTRAL EXCISE, MEERUT-II, reported in 2007(8) S.T.R. 442 (S.C.).
While placing reliance on the said Judgment, the counsel appearing for the respondents
submitted that what is a `Brand name' is as stated in paragraph 4 of the said
Judgment. He relied on the said definition of `Brand name' and then submitted
that the phrase "New Improved Quick Frozen French Fries" was not held
to be a brand name, and therefore, according to him the brand name of the respondent
company "Kalvert" being a "House Name" could not be termed
as "Brand Name".
our considered opinion, the aforesaid brand name "New Improved Quick
Frozen French Fries" is a descriptive word and the same could not have
been termed and coined either as a "house name" or a "brand name"
under any circumstances. There can be no dispute therefore with regard to the
proposition of law laid down by this Court in the aforesaid decision. We may also
refer to another decision of this Court in Astra Pharmaceutical Pvt. Ltd. V. Collector
of Central Excise, Chandigarh, reported in [1995 (75) E.L.T. 214 (S.C.)]. That was
a case of Pharmaceutical product. In the said decision also the manner and scope
of "Brand name" and distinction between `House mark' and "Product
mark/Brand name" has been brought out. It was stated therein by this Court
that "House mark" which is usually a device in the form of an emblem,
word or both is an identification of the manufacturer which is compulsory under
the Drug Rules. On the other hand, product mark or brand name is invariably a
word or a combination of a word and letter or numeral by which the product is
identified and asked for. In paragraph 6 of the said Judgment, Narayanan's Book
on Trade Marks and Passing-Off was also referred to and since the same may have
a bearing to the facts of the present case, it is extracted herein below: "677A.
House mark and Product mark (or Brand name). In the pharmaceutical business a distinction
is made between a House mark and a Product mark. The former is used on all the
products of the manufacturer. It is usually a device in the form of an emblem, word
or both. For each product a separate mark known as a product mark or a brand name
is used which is invariably a word or a combination of a word and letter or numeral
by which the product is identified and asked for. In respect of all products both
the Product mark and House mark will appear side by side on all the labels, cartons
etc. Goods are ordered only by the product mark or Brand name. The House mark serves
as an emblem of the manufacturer projecting the image of the manufacturer
In the book of "Trade Marks" by Sarkar, the distinction between the expressions
"House mark" and "Product mark" or "Brand name"
has been clearly brought out by way of reference to the decision in Astra Pharmaceutical
Pvt. Ltd. (supra). It is stated therein that "House mark" is used on all
the products of the manufacturer and that it is usually a device or a form of
emblem of words or both. It was also pointed out that for each product a
separate mark known as a "Product mark" or "Brand name" is used
which is invariably a word or combination of word and letter or numeral by which
the product is identified and asked for. It was also stated that in respect of all
products both the "Product mark" and "Brand name" would
appear side by side on all the labels, cartons etc. and that the "House
mark" is used generally as an emblem of the manufacturer projecting the
image of the manufacturer, whereas "Brand name" is a name or trade
mark either unregistered or registered under the Act.
it is not necessary that "Brand name" should be compulsorily
registered. A person can carry on his trade by using a "Brand name" which
is not even registered. But in violation/infringement of trade mark, remedy available
would be distinctly different to an unregistered brand name from that of remedy
available to a registered brand name.
the Tribunal did not consider and properly appreciate the apparent distinction between
the two distinct expressions i.e. "House mark" and "Brand
name" and thereby proceeded to set aside the well-written Judgment passed by
the Commissioner of Central Excise, Mumbai who has recorded his reasons giving
cogent basis for his reasoning.
the book of "Law of Trade Marks" by K.C. Kailasam and Ramu Vedaraman
the distinction between `Product mark' and `House mark' has been beautifully
delineated, which is as under:"It is possible that the proprietor may use several
trade marks in respect of his goods (known as Product mark), besides using a
common mark in all his products to indicate the origin of the goods from the
enterprise (known as House mark). This practice is more predominant in the pharmaceutical
trade. Though both are trade marks and are registrable as such, each has its own
distinct function. While the House mark represents the image of the enterprise from
which the goods emanate, the Product mark is the means by which goods are identified
and purchased in the market place and it the focal point of presentation and advertisement."
view of above discussion, it is clear that what was being used by the respondent
under the expression "Kalvert" was a "Brand name" and not a
"House mark" as sought to be alleged by the respondent and has been wrongly
accepted by the Tribunal. Therefore, the articles of assorted jams, pickles, squashes,
cooking sauces, chutneys, syrups, synthetic vinegars etc. manufactured and sold
by the respondent company under a brand name "Kalvert" were liable to
be charged for excise duty at the rate prescribed in the Excise Law.
Tribunal committed manifest error in coming to its conclusion and therefore the
order passed by the Tribunal is set aside and the order dated 27.02.2002 passed
by the Commissioner of Central Excise, Mumbai is restored.
appeals are allowed to the aforesaid extent but leaving the parties to bear
their own costs.
(Dr. MUKUNDAKAM SHARMA)
(ANIL R. DAVE)
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