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M/s. RDB Textiles Ltd. Versus Commissioner of Central Excise And Service Tax, Kolkata-IV Commissionerate

2018 (2) TMI 825 - SUPREME COURT OF INDIA

SSI Exemption - use of Brand name - denial of exemption on the ground that that affixing the name, logo and particulars of buyers like the FCI and State Governments amounts to affixing on the jute bags a “brand name”. - Held that: - merely because the name of an institution is printed or embroidered on articles would not mean that they would become branded products. A brand name, in addition to the name or logo, would have to be given in order to attract excise duty. Also, mere affixing of t .....

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e present cases. - Appeal allowed - decided in favor of appellant - CIVIL APPEAL NO.8703 of 2015, CIVIL APPEAL NOS.8725-8726 of 2015, CIVIL APPEAL NO.8769 of 2015, CIVIL APPEAL NO.8565 of 2015, CIVIL APPEAL NO.9153 of 2015, CIVIL APPEAL NOS.8894-8895 of 2015, CIVIL APPEAL NOS.8896-8897 of 2015 - Dated:- 13-2-2018 - Mr. R. F. Nariman And Mr. Navin Sinha JJ. CIVIL APPEAL NO.13331 of 2015, CIVIL APPEAL NOS.9242-9243 of 2015, CIVIL APPEAL NO.9087 of 2015, CIVIL APPEAL NO.9249 of 2015, CIVIL APPE .....

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B., Adv., Ms. Aakriti Dawar, Adv., Mr. Sushal Tewari, Adv. And Mr. T. R. B. Sivakumar, AOR For the Respondent(s) : Mr. K. Radhakrishnan, Sr. Adv., Mr. Rupesh Kumar, Adv., Ms. Nisha Bagchi, Adv., Ms. Sunita Rani Singh, Adv., Ms. Pooja Sharma, Adv. And Mr. B. Krishna Prasad, AOR JUDGMENT R.F. NARIMAN, J. 1. The present appeals arise out of a judgment dated 30.6.2015, passed by the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), in which the CESTAT has denied exemption under excise no .....

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In exercise of powers conferred by Section 3(1) of the Jute Packaging Materials (Compulsory Use in Packing Commodities) Act, 1987 (hereinafter referred to as the Jute Act ), the Central Government has issued orders, from time to time, directing the minimum percentage of food grains required to be packed, from raw jute produced in India, in jute bags manufactured in India to protect the jute industry. 3. At the same time, in exercise of powers conferred by Section 3 of the Essential Commodities A .....

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pply is to take place, prices of jute bags and other particulars are given. Such prices are exclusive of excise duty. The aforesaid requisition orders are then followed by the issuance of supply orders wherein, inter alia, further details of the prices, delivery period, terms of delivery and markings are mentioned. 4. Shri S.K. Bagaria and Shri Neeraj Kaul, learned senior counsel appearing on behalf of the appellants, referred us to the demands that have been made based, on the amended exemption .....

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, it will be clear that a brand name is a name or a mark which is used in relation to a product for the purpose of indicating a connection in the course of trade between the product and some person using such name or mark. According to learned counsel, using the name of the buyer/procurer of food grains is obviously not a brand name that results in indicating a connection in the course of trade between the jute bag and the said buyer. They argued that the show cause notices proceeded on the foot .....

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nd that, therefore, the show cause notice, the Commissioner s order as well as the CESTAT s order are all incorrect. They further relied upon a letter dated 18.3.2011 and a Ministry of Finance circular dated 21.6.2011 to buttress their submissions. According to them, the Commissioner has not referred to these documents at all and the CESTAT merely brushes away the aforesaid documents, which go to the root of these cases. They also cited decisions on how such circulars are binding on the departme .....

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se, the brand name had to be used by small scale units and could not be used by a third party, which was found to be the case on the facts of that case. According to them, therefore, the CESTAT was wholly incorrect in its finding that a brand name had been used on the facts in these cases. 5. Shri Radhakrishnan, learned senior counsel appearing on behalf of the Revenue, has placed before us various Sections of the Jute Act and Section 5A of the Central Excise Act. It is his submission that the J .....

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of different colours, thereby indicating that not only was the manufacturer s name disclosed, but that the colour strip would be a mark , leading to the fact that there is a brand name in these cases. According to him, a literal interpretation of the definition of brand name would show that the CESTAT is correct. Also, according to learned counsel, the CESTAT correctly relied upon the judgment in Kohinoor Elastics (supra) to arrive at a conclusion, based on the same definition of brand name, th .....

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mpts all goods falling within Central Excise Tariff Entry 63, except goods falling within 6307.10. The Central Excise Tariff, with which we are concerned, is 6305, and in particular, 63051030 and 63051040, where the rate of duty is 10%. Thus, upto 1.3.2011, it is clear that all the goods mentioned in Central Excise Tariff Entry 63 were exempt from payment of excise duty. However, by notification 12/2011 dated 1.3.2011, Item 16 was substituted, in which what was exempted was all goods, other than .....

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person using such name or mark with or without any indication of the identity of that person. 8. The aforesaid situation carried on for two years till 1.3.2013, when notification No.11/2013 reinstated the previous entry, without excepting goods bearing or sold under a brand name and, thus, reverted to the position that existed between 2004 and 2011, which is that jute bags, with or without brand names, were completely exempt from excise duty. 9. The facts of Civil Appeal No.8534 of 2015 will no .....

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gs as per the requirements of the buyers and directions of the Jute Commissioner. The items printed on jute bags and the reasons for such printing are stated below: S.No. Items Printed Remarks 1. Mill s Name As per Notification No. S.O.698(E) dated 04.07.2002 2. Manufactured in India -Do- 3. Buyer s Name As per buyer s requirement 4. Logo -Do- 5. Year of manufacture -Do- 6. BIS mark with licence No. As per BIS rule 3. The jute mills have to print the items on the bags as per the requirements of .....

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in commodities or class or commodities required to be packed in jute packaging material manufactured in India from raw jute produced in India. A copy of the latest order dated 27.08.2010 and JPM Act, 1987 are enclosed. Item No.3 to 6. These are printed on bags so that buyers can identify their products and the year when food grains or other material is packed. If a buyer prefers jute products as per BIS standard, jute mill has to manufacture bags conforming to BIS standard and it is proved BIS s .....

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f Central Excise under the Division of Kol-IV to various jute mills for payment of 10% Adv. Duty may be withdrawn. 11.This was followed by a circular dated 21.6.2011 issued by the Ministry of Finance which stated: Subject: Clarification on issues pertaining to the levy of excise duty on branded readymade garments and made-up articles of textiles-Regarding. Board has received representations from trade and industry seeking clarification on certain issues pertaining to the levy of excise duty on r .....

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Defence or its organizations. 2. The matter has been examined. On the issue of applicability of excise duty on uniforms or made-up articles like quilt, blankets, towels, linen etc. bearing the name or logo of a school, security agency, company, hotel or airline etc, it is clarified that such products would not merit treatment as branded products merely because the name of the school, institution or company or their logo is either printed, embroidered or etched on them. This is equally true of m .....

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es, apart from the name or logo of such organizations, the name of the tailor or manufacturer is affixed on such garments. However, mere affixing of name of the tailor or manufacturer would not constitute a brand name. Another related issue is the applicability of the mandatory excise duty to blankets which are supplied to the defence establishment, armed forces, police forces etc. against tenders that stipulate that the name of the manufacturer should be clearly indicated or marked on the produ .....

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would not constitute a brand name. Given the aforesaid two documents, the Superintendent (Central Excise) did not go ahead with the notice dated 7.3.2011. 13.A typical requisition order issued by the Directorate of Supplies and Disposals required the emblem of the purchaser and excise duty payable by the purchaser to be printed on the jute bags manufactured by the appellants. Also, what was required by the aforesaid requisition order was the following: Branding: Every bag shall be screen printe .....

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s the BIS certification for purposes of identification of the jute bags to be used in the PDS. 14.Long after the exemption notification of 1.3.2013, by which all jute bags were exempt whether branded or not, a show cause notice was issued on 17.12.2013 for the period from 1.3.2011 to 31.7.2013 demanding a sum of ₹ 30,49,72,784/- by way of excise duty. 15.The learned Commissioner, by its order dated 7.3.2014, confirmed the show cause notice, even for the period beyond 1.3.2013, as follows: .....

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ame under Chapter Note 5 of Chapter 63, brand name may not be necessarily a name, as wrongly contended by them, but any writing, mark, invented words may constitute brand name under the said definition. Here, the printings/writings on the jute bags satisfy the definition of brand name under Chapter Note 5 of Chapter 63, as rightly alleged in the impugned Show Cause Notice. 4.8 On perusal of copy of notification no. nil dated 04.07.02 issued by the Jute Commissioner and further clarification give .....

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o by the settled principles of law that nothing can be imported in the wordings of the statutory provisions, and for that matter, Chapter Notes require to be read in its stricter terms. Since the ingredients of the definition of brand name are present in the impugned jute bags, I am inclined to hold that such goods bear brand name to consider them as branded goods, for the purpose of levy of Central Excise duty for the rest period i.e. March, 2011 to February, 2013 is also sustainable. 16. The C .....

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aside the same stating: Further, we find that the circular bearing no. 947/8/2011-CX dated 21.06.2011 referred to by the Appellant in the context of levy of excise duty on garments and also it is not binding on the interpretations advanced by the courts as has been held by the Hon ble Supreme Court in the case of CCE, Bolpur vs. Ratan Melting and Wire Industries, 2008 (231) ELT 22 (SC). 17. The very definition of brand name , which has been referred to hereinabove, has come up for consideration .....

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it has to be established that such a mark, symbol, design or name, etc. has acquired the reputation of the nature that one is able to associate the said mark, etc. with the manufacturer. We are supported in this view by series of judgments of this Court in Tarai Food Ltd. v. CCE [Tarai Food Ltd. v. CCE, (2007) 12 SCC 721] the expression brand name was explained in the following terms: (SCC p. 723, paras 7 & 9) 7. The words brand name connotes such a mark, symbol, design or name which is uni .....

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appended to the product and which established the link. xxx xxx xxx 16. We would also like to reproduce the following observation from CCE v. Bhalla Enterprises [CCE v. Bhalla Enterprises, (2005) 8 SCC 308] : (SCC p. 311, para 6) 6. The apprehension of the assessees that they may be denied the exemption merely because some other traders even in a remote area of the country had used the trade mark earlier is unfounded. The notification clearly indicates that the assessee will be debarred only if .....

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on, it would be entitled to the benefit of exemption. An assessee would also be entitled to the benefit of the exemption if the brand name belongs to the assessee himself although someone else may be equally entitled to such name. 17. These observations bring out two significant aspects, namely: (1) As per the notification, the assessee would be debarred only if it uses on the goods in respect of which exemption is sought, the same/similar brand name with the intention of indicating a connection .....

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titled to such name. (at pages 766, 767-768) To similar effect is the judgment of this Court in CCE v. Sanghi Threads, (2015) 14 SCC 701 at 702, wherein it was held that: 3. Challenging the order of CESTAT, the present appeal is preferred. We find from the narration of the aforesaid facts that it is held that the monogram used by the respondent is nothing but its own house-mark and is used for identification of the Group and not a brand name for the identification of the product. What is emphasi .....

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ate Government of Punjab and so on, the crop year, the name of the jute mill concerned, its BIS certification number and the statement that the food grains are manufactured in India. It is clear that all the aforesaid markings have, on the pain of penalty, to be done by the manufacturers of the jute bags, given the Jute Control Order and the requisition orders made thereunder. Obviously, such markings are made by compulsion of law, which are meant for identification, monitoring and control by Go .....

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not for the purpose of indicating a connection in the course of trade between the jute bag and some person using such name or mark. The markings are by compulsion of law only in order that Governmental authorities involved in the PDS may identify and segregate the aforesaid jute bags. This being the case, it is obvious that there is no brand name involved in the facts of the present cases. 19. Equally, it is clear that circulars that are issued by the Ministry of Finance are binding on the depar .....

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that case, was a notification dated 28.2.1993. The relevant portion of the notification, with which the Court was concerned, is set out in paragraph 4 as follows: 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: 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 fro .....

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dicating, 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. (at page 530) 21. The judgment of this Court turned on the fact that the exemption contained in the notification shall not apply to specific goods which bear a brand name of another person. It may first be noticed that there was no argument that the particular brand name concerned, on the facts of th .....

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