TMI Blog2017 (4) TMI 849X X X X Extracts X X X X X X X X Extracts X X X X ..... or trade name is not intended for the purpose of indicating a connection in the course of trade between such specified goods and the person using such name or mark, then the same may not fall within the definition of the expression brand name or trade name under the Explanation under paragraph 5 of the Exemption Notification - It is this essential requirement of establishment or existence of a connection in the course of trade between the specified goods and their manufacturer that has been overlooked by the Department as well as by the CESTAT. Hence, we are of the considered view that the first question of law is to be answered in favor of the appellants. Whether the Tribunal and the respondents were right in denying the benefit of the CBEC Circular bearing No.52/52/94, dated 01-9-1994 to the appellants? - Held that: - if a brand name is not owned by any particular person, the use thereof will not deprive a unit of the benefit of the small scale exemption scheme. This applies not only to locks but to all other goods specified in N/N. 1/93-C.E - if certain names are available in the market freehold for anyone to use, the industry cannot be taken to be manufacturing goods under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t be treated as selling branded items within the meaning of paragraph 4 of the Exemption Notification. In so far as Maheswari Industries was concerned, one Mr. S.S. Maniyar was examined to show that he did not own any brand name or trade mark. He was cross-examined by the officials of the Department. Similarly, in the case of Annapurna Industries, one Rahmatullah who sold the moulds was examined. 7. However, the Additional Commissioner of Customs passed an Order-in-Original No.38/2006, dated 16-01-2007, in the case of Maheswari Industries. Similarly, he passed an Order-in-Original No.46/2006, dated 14-02-2007 in the case of Annapurna Industries. By these Orders-in-Original, the demand was confirmed and a penalty was also imposed. 8. The appellants filed independent appeals. By an order dated 26-9-2007, the Commissioner (Appeals) confirmed the demand of excise duty, but reduced the penalty to the extent of ₹ 10 lakhs for each of the appellants. 9. As against the confirmation of demand, the appellants filed appeals in Excise Appeal Nos.3/2008 and 4/2008. As against the order of the Commissioner (Appeals) in reducing the quantum of penalty by ₹ 10 lakhs, the Depar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... so as to be eligible for the grant of exemption, are not disputed by the Department. But the stand of the Department is that the cases of the appellants would fall within the exclusion contained in para-4 of the Exemption Notification. 15. Paragraph-4 of the Exemption Notification made it clear that the benefit of the Notification will not apply to specified goods bearing a brand name or trade name, whether registered or not, of another person. The expressions brand name and trade name are defined in the Explanation under para-5 of the Exemption Notifications. The definitions contained in the Explanation read as follows: (A) brand name or trade name means a brand name or a 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; (B) where the specified goods manufactured by a manufacturer bear a brand name or trade name, w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ands with which AI manufactured the said goods, are owned by him. The said brands are being embossed on the said chairs. In addition, AI are affixing the labels containing the said brand names, as evidenced by the labels recovered from them (Annexure C1-2) and the labels affixed on the seized goods. 17. Similarly, the reasons stated in para-8.1 of the show cause notice issued to Maheswari Industries reads as follows: 8.1. On verification of the above mentioned records and the depositions made by the concerned persons, it is observed that M/s. Maheswari Industries have manufactured and cleared plastic moulded chairs of Maruti and Blossom brands (their own brands) up to November 2003. They have exclusively manufactured and cleared Maniyar brand plastic moulded chairs, baby chairs and stools from December 2003 onwards. Maniyar brand belongs to M/s. Maniyar Plast Limited, Jalgaon, who also manufacture the same goods with same brand. This fact is confirmed as varieties of the said goods mentioned in the stock statements maintained by Shri Pavan Soni and Shri Anand Sarda and the varieties mentioned at page 1 (price list of M/s. Maniyar Plast Ltd) of record Sl. No.2 are same. This f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by such other manufacturer or trader. 19. Therefore, it is clear that a person may be taken to be manufacturing specified goods, bearing a brand name or trade name only if the name, mark or symbol used as such, is intended to indicate a connection in the course of trade between such specified goods and some person using such mark or name. If the use of the brand name or trade name is not intended for the purpose of indicating a connection in the course of trade between such specified goods and the person using such name or mark, then the same may not fall within the definition of the expression brand name or trade name under the Explanation under paragraph 5 of the Exemption Notification. 20. In the light of the definition of the expressions brand name and trade name, given in the Explanation under the para-5 of the Exemption Notification, the Adjudicating Authority ought to have proved in the case of Annapurna Industries that the names Rosekamal, Lalkamal etc., had a connection in the course of trade between plastic moulded chairs and Rahmatullah. Similarly the revenue ought to have proved in the case of Maheswari Industries that the use of the name Maniyar was with an int ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amal and Rosekamal etc. He claimed to have imported the moulds, which also had these names inscribed in the moulds. Therefore, there was no claim either by Rahmatullah or by the Department that in the mind of the public a connection in the course of trade had been established between the specified goods and Rahmatullah. The same is the case in respect of Maniyar also. 25. It is this essential requirement of establishment or existence of a connection in the course of trade between the specified goods and their manufacturer that has been overlooked by the Department as well as by the CESTAT. Hence, we are of the considered view that the first question of law is to be answered in favour of the appellants. 26. As a matter of fact even in cases where the registered proprietor of a trade mark had assigned it in favour of an Independent Manufacturer, the Supreme Court took a position that the benefit of exemption cannot be denied. This was in the case of Commissioner of Central Excise, Bangalore v. OTTO Bilz (India) Pvt. Ltd. 2015 (324) E.L.T. 430 (SC) In that case, the trade mark BILZ was owned by a German company and they had assigned it in favour of the Assessee which was a small ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cale industry was actually manufacturing clutch plates and covered assembles under its own brand name Ace along with the symbol and logo of TATA. Therefore, the Supreme Court came to the conclusion that it was a clear case of use of a brand name belonging to another person. Therefore, the said decision is of no avail to the respondents. 32. We should point out at this juncture that the object of the Exemption Notification is to confer a benefit upon small scale industries having a turnover of less than the prescribed limit. The purpose of the notification is to encourage small scale industries. But at the same time the notification sought to exclude small ancillary units of Big Industrial Houses which had a brand name or a trade name. These are the days when huge Industrial Houses outsource the production of their products to small units. When these small scale industries actually work on the wings of Big Industrial Houses, they cease to require any protection or exemption. The object of Para 4 of the Exemption Notification in excluding Small Scale Industries manufacturing goods bearing a brand name or trade name, is to deny the benefit of exemption to those units which have the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... racts of the opinion of the Law Ministry are reproduced below :- Perusal of the said explanation (Explanation IX to the Notification No.1/93-C.E.) will show that to satisfy the requirements of brand name or trade name, it is necessary that the trade name must 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 or identity of that person. Unless connection between the trade name and the person with whom that trade name is to be identified can be established, the requirement of brand name or trade name as provided for in the said notification will not be satisfied. It is an admitted case of the department that in respect of locks, the units are making locks bearing the same name or mark even though there is no person who claims ownership to that mark or name. The names being used in the manufacture of locks by these small scale units do not belong to any particular manufacturer and any unit is free to use any name. Therefore, in our view, even without the issue of Notification of 4th/11th May, 1994 units which are using trade name or brand name, which does not belong to any person, were el ..... X X X X Extracts X X X X X X X X Extracts X X X X
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