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2015 (4) TMI 353 - SUPREME COURT

2015 (4) TMI 353 - SUPREME COURT - 2015 (318) E.L.T. 578 (SC) - SSI Exemption - Determination of turnover - Exclusion of goods manufactured under the brand name of others - Use of words such as HM, PAL, KH - Held that:- Once in respect of those goods where brand name of other party is used on manufactured goods and that other party is not a SSI unit, exemption is not available, it would lead to inevitable result that the value of such goods cannot be added as well, while considering the value of .....

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g their proper trade mark/ brand name thereupon. On this basis, it is mentioned that the Notification in question would not apply - This reasoning of the CEGAT is contrary to the law laid down by this court in 'Kohinoor Elastics (P) Ltd. v. Commissioner of Central Excise, Indore' [2005 (8) TMI 115 - SUPREME COURT OF INDIA].

Value of the goods meant for “HM”, “PAL”, “KH”, etc. could not have been included while considering as to whether the appellant is entitled to the benefit of the .....

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For the Petitioner : Ms. Neeru Vaid For the Respondent : Mr. B. Krishna Prasad JUDGMENT A. K. SIKRI, J. The appellant herein was engaged in the manufacture of certain articles from vulcanized rubber as bushes for use in the motor vehicles. Indubitably, the appellant is a Small Scale Industrial unit (hereinafter referred to as 'SSI' for short). The appellant has its own brand name VIR and has been manufacturing these products under the said brand name and supplying the same to various cu .....

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f its own goods under the brand name VIR , the appellant claimed SSI benefit in terms of Notification No. 1/93 which provides for exemption from payment of excise duty on fulfillment of certain conditions. It is admitted case that the appellant fulfils all the conditions mentioned in the aforesaid notification except one, in respect of which the dispute has arisen. This condition under the notification stipulates that the aggregate value of clearances in the preceding financial year should be le .....

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pellant had been using the brand name of the automobile industries while carrying out their job work and even clearing those goods on payment of excise duty, the turnover in respect of these goods should not be included while arriving at the figure of ₹ 3 crores. To put it otherwise, submission was that it is only in respect of VIR brand goods, which is the proprietory brand of the appellant, the value of clearances in the preceding year should be taken into consideration and if, that is d .....

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- 4. The exemption contained in this notification shall not apply to the specified goods bearing a brand name or trade name, whether registered or not, of another person, except in the following cases: - (a) where such 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 .....

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mission; or (ii) a State Khadi and Village Industry Board; or (iii) the National Small Industries Corporation; or (iv) a State Small Industries Development Corporation; or (v) A State Small Industries Corporation. 5.This notification shall come into force on the 1st day of April, 1999. Explanation.- For the purposes 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 .....

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red or not of another person, except in certain cases which are mentioned therein. The brand name or trade name is defined to mean a brand name or trade name whether registered or not, that is to say, a name or a mark such as a symbol, monogram, label, signature or invented word, etc., 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 pe .....

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work only for other companies and using their brand name on the goods manufactured? Was it permissible to seek exemption of notification in such circumstances? This issue has been considered time and again by this court in number of judgments. In a recent judgment dated 11.03.2015 pronounced by this very Bench in the case of 'Commissioner of Central Excise, Jamshedpur v. M/s. Tubes & Structurals and Another' [Civil Appeal Nos. 7955-7956 of 2003], after taking note of two earlier jud .....

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3 dated 28.2.1993 where the words mentioned are the exemption contained in this Notification shall not apply to the specified goods, bearing a brand name or trade name (registered or not) of another person. This para 4 was amended vide Notification No. 59/94-CE dated 1.3.1994 and the word affixes was substituted by the word bearing . The reason for this substitution is explained in para (iii) of para J of the changes 1994-95 dealt with changes in the SSI scheme . This is so stated in para 10 of .....

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ective of whether the brand name owner himself is SSI unit or not, such goods shall not be eligible for the concession. Another implication of this amendment is that the requirement of affixation or brand name by the SSI unit has been changed and now the only condition is that the goods cleared by SSI unit bearing a brand name of another person shall not be eligible for the concession irrespective of the fact whether the brand name was affixed by the SSI unit or that, the input material used by .....

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pose for substituting the word affixing by the word bearing . Going by the aforesaid consideration this Court held in Australian Foods (India) (P) Ltd. case that after this amendment in para 4 it was not necessary that there has to be affixation of the name or mark on the goods. Applying the ratio of this case to the facts of the present case, the irresistible conclusion is to hold that the impugned order of the CEGAT is untenable and not in accordance with law. We may mention that while giving .....

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ar. We, however, find that the CEGAT has given two other reasons to deny the relief to the appellant. In its order it has observed that letters such as HM and PAL , no doubt, were initials of the buyers of the goods and they constitute the brand name as well, however, what was indicated was only initials with the sole purpose to identify the goods for particular automobile company. After the supply of these goods, the said automobile companies were affixing their proper trade mark/ brand name th .....

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cified goods and some person using such name or trade between such specified goods and some person using such name or mark cannot be read dehors clause 4. They have to be read in the context of clause 4. The word used indicates use by the manufacturer. It is the manufacturer, in this case the appellant, who is applying/affixing the brand/trade name on the goods. Thus, the words for the purpose of indicating refers to the purpose of the manufacturer (appellant). The course of trade is of that man .....

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he purpose of indicating a connection between the goods manufactured by him and his customer. The other reason given by the CEGAT is that HM and PAL are not the brand names. Here again, it has fell into legal error. Similar contention was rejected by this Court in 'Commissioner of Central Excise, Trichy v. M/s. Grasim Industries Ltd.'[2005 (3) SCR 466] in the following words: - In our view, the Tribunal has completely misdirected itself. The term brand name or trade name is qualified by .....

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