TMI Blog2018 (8) TMI 1072X X X X Extracts X X X X X X X X Extracts X X X X ..... he values and promises that a consumer may perceive and buy into - Branding is a set of marketing and communication methods that help to distinguish a company or products from competitors, aiming to create a lasting impression in the minds of customers. The key components that form a brand’s toolbox include a brand’s identity, brand communication (such as by logos and trademarks), brand awareness, brand loyalty, and various branding (brand management) strategies. Many companies believe that there is often little to differentiate between several types of products in the 21st century, and therefore branding is one of a few remaining forms of product differentiation. There is no bar on the name of the manufacturer to be a brand name as long as it is used in relation to such specified goods for the purpose of indicating a connection in the course of trade between such specified goods and the person using such name. So, the real test here is the connection between the specified goods on which such a name is being used and the person using such name in the course of trade. In the instant case, the goods in question are being sold under the brand ‘More’ in exclusive ‘More Stores’ an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ore’ and the manufacturer Aditya Birla Retail Ltd., thus the use of name of manufacturer on packages can be considered as brand name. Merely by removing their registered brand name logos viz. ‘MORE’ and ‘Aditya Birla Retail’ from the packaging of some of their products and keeping the surrounding environment intact to take advantage of the said brands not render such goods unbranded and the benefits of exemption notification from GST would not be available to such goods - Also, the use of words like ‘ CHOICE’, ‘VALUE’ or ‘SUPERIOR’ on the proposed packing, which are already in use with the brand ‘More’ on the present packing, would amount to branding of goods as the goods can be identified with the brand ‘More’ by the use of these words. Ruling:- The use or words ‘VALUE’, ‘CHOICE’ or ‘ SUPERIOR’ on the proposed packing, without altering the surrounding environment to take advantage of brand ‘MORE’, would be construed as ‘brand name’ for the purpose of Exemption Notification. - MAH/AAAR/SS-RJ/05/2018-19 - - - Dated:- 7-8-2018 - SMT. SUNGITA SHARMA AND SHRI RAJIV JALOTA, MEMBER PROCEEDING (Under Section 101 of the Central Goods and Service Tax Act, 2017 and the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The modus operandi followed by the Appellant in respect of the said transaction streams, and, the nature of details disclosed on the packaging of the subject goods under such streams is as follows: (i) Stream 1- Subject goods processed and packed in-house by the Appellant: The Appellant procures unprocessed food products from various vendors and undertakes processing and packing in its own units. Such processing would generally involve sorting, quality assessment, grading etc. The subject goods would thereafter be sold by the Appellant from its More Stores. The package of subject goods sold by the Appellant under Stream 1 inter alia bears the name of the Appellant as being the manufacturer and the registered trademarks viz. More trademarks and the Aditya Birla logo. The package also bears a telephone number and an email address, for being contacted in case of consumer complaints. (ii) Stream 2- Subject Roods are procured by the Appellant in processed and packed form from third party vendors: Unprocessed food products are procured by third party vendors and subsequently processed and packed, in terms of the quality standards fixed by the Appellant. The su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... containers and inter alia bearing a registered brand name , attract GST at the rate of 5%. The Appellant, in respect of supply of the subject goods under either streams, is presently discharging GST at the rate of 5%. F. It is relevant to note that the requirements to (a) have specific declaration on the package of the subject goods, as regards its manufacturer, and, (b) to provide contact details in relation to consumer complaints (customer care related details), are statutory requirement in terms of the Legal Metrology Act, 2009 read with the Legal Metrology (Packaged Commodity) Rules, 2011, and, the Food Safety and Standards Act, 2006 read with Food Safety and Standards (Packaging and Labelling) Regulations, 2011, the relevant extracts of which legislations [collectively referred to as Subject Statutory Provisions ] are provided below- Legal Metrology Act, 2009 'Section 18. Declarations on pre-packaged commodities.-(1) No person shall manufacture, pack, sell, import, distribute, deliver, offer, expose or possess for sale any pre-packaged commodity unless such package is in such standard quantities or number and bears thereon such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted details as mandated under the Subject Statutory Provisions. - Subject goods sold under Stream 2:- The packaging would bear details of the manufacturer, and, the customer care related details, as mandated under the Subject Statutory Provisions, and would have a declaration- Marketed by Aditya Birla Retail Limited . Under both the streams, for some of the subject goods, the package would also bear a certain declaration for the sole purpose indicating the quality variant of the product so as to enable the customers to identify and buy products based on their requirements, budget and preferences. In this regard, the Appellant intends to make the following indicative declarations on the product package by using common/generic words- - The term Value with a corresponding statement that the said term is merely a quality indicator and that it indicates that the product is of a standard quality; - The term Choice with a corresponding statement that the said term is merely a quality indicator and that it indicates that the product is of a premium quality. - The term Superior with a corresponding statement that the said term is merely a quality indicator ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ative. As regards Question 3, the ARA has not specifically dealt with the same on the premise that the question cannot be raised in isolation . J. Aggrieved by the Impugned Order, the Appellant has filed the present Appeal. Whereas, the ARA has in terms of common findings set out in the Impugned Order, answered the GROUNDS OF APPEAL 1. The Impugned Order is bad in law and deserves to be set aside to the extent set out in the grounds of appeal hereunder in detail, including for the following reasons: (a) That the Impugned Order fails to take into consideration the settled law as declared by the Hon ble Supreme Court in the case of Tarai Foods Limited v. CCEx. Meerut-ll 2006 (198) E.L.T. 323 (S.C.), that the declaration of name of a company as per the statutory requirements would not amount to bearing a brand name . This case is squarely applicable to the facts of the present case. This legal position has also been subsequently followed by the Courts/Tribunals including in the case of Commissioner of Central Excise v. Synotex Industries, [2012 (278) ELT 90 (Tri-Kolkata)]. (b) The reliance placed on the decision of the Hon ble Supreme Court in the case of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... out in the Annexure to the CGST Notification]. The relevant part of the CGST Notification No .2/2017-Cenfro/Tax (Rate) dated 28th June, 2017 is extracted below: G.S.R. (E).- In exercise of the powers conferred by sub-section (1) of section 11 of the Central Goods and Services Tax Act, 2017 (12 of 2017), the Central Government, being satisfied that it is necessary in the public interest so to do, on the recommendations of the Council, hereby exempts intra-State supplies of goods, the description of which is specified in column (3) of the Schedule appended to this notification, falling under the tariff item, sub-heading, heading or Chapter, as the case may be, as specified in the corresponding entry in column of the said Schedule, from the whole of the central tax leviable thereon under section 9 of the Central Good and Services Tax Act, 2017 (12 of 2017). Schedule S.No. Chapter/ Heading/Sub-heading/Tariff item Description of Goods 69. 1005 Maize (corn) [other than those put up in unit container and,- (a) bearing a registered brand name; or (b) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he course of trade between such specified goods and the person using the name or mark, with or without any indication of the identity of that person. 5. In this regard, it is submitted that for any name to qualify as a brand name, it must be used in relation to specified goods indicating a connection in the course of trade between the said goods and the person, with or without indicating the identity of such person. In other words, the use of the name should be to associate specified goods with the person, in a manner that the customer would identify the specified goods with that person. Mere mention of the name of the manufacturer would not constitute a brand name as the customer would obviously not identify the goods with the name of the manufacturer. Reliance in this regard is placed on the following decisions: i. Astra Pharmaceuticals (P) Ltd. v. Collector of C. Ex, Chandigarh [1995 (75) E.L.T. 214 (S.C.)]- The AP or Astra on the container or packing was used to project the image of manufacturer generally. It did not establish any relationship between the mark and the medicine. For instance, if the appellant instead of using Dextrose injections would have desc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... However, from the More stores, several similar products, manufactured by different companies, are also sold, which products may or may not be bearing a brand name. The Appellant has over the course of period made concentrated efforts and incurred costs, which inter alia include significant efforts by way of advertising and marketing, to publicize and establish the More brand. It is consequent to such efforts that the customers of the subject goods recognize the brand and identity and ask for the products of the said brand. Customers of the subject goods who enter the More stores to purchase the subject goods, associate the subject goods with the More brand name, and, do not necessarily associate/connect the subject goods with the name of the Appellant. Accordingly, it is the More trademarks which establishes a connection in the course of trade between the subject goods and the Appellant. The definition itself indicates that brand name is one which establishes the said connection with or without indicating identity of such person. Therefore, in the present case, where the product packaging, though having the Appellant s name, will not have the brand name of the Appellant ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... name of the manufacturer on the package of a product, in terms of statutory requirements, would constitute a brand name , was not before the Hon ble Supreme Court in the case of Grasim (supra). In Grasim (supra), the Hon ble Court was concerned with whether use of the words A Subsidiary of Grasim Industries Ltd , by the manufacturer, can be construed to be a brand name . To this extent, the said decision operates in a different domain and does not deal with the question as to whether the name of the manufacturer which is declared as per the statutory requirement can be construed to be a brand name. It is a settled principle of law that a judicial decision is an authority for what it actually decides and not for what can be read into it by implication or by assigning an assumed intention to the judges- Bhanagar University v. Palitana Sugar Mill (P) Ltd., (2003) 2 SCC 111 - A decision, as is well-known, is an authority for which it is decided and not what can logically be deduced thereform. It is also well settled that a little difference in facts or additional facts may make a lot of difference in the precedential value of a decision. [ See Ram Rakhi v. Union of In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is no such intention or that the user of the brand name was entirely fortuitous and could not on a fair appraisal of the marks indicate any such connection, it would be entitled to the benefit of exemption . 11. Applying the said principle to the Appellant s case, it cannot be said that the disclosure of Appellant s name on the proposed packaging, in terms of a statutory prescription, tantamount to an intention of indicating a connection between the subject goods and the Appellant. Such a conclusion is further flawed when viewed in the context that reflection of its name equally coincides with withdrawal of the corresponding brand names i.e. More trademarks , with which the subject goods have been historically identified. In terms of the decision of the Hon ble Supreme Court in the case of Stangen (supra), in order to qualify as brand name or trade name 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 . In the present facts, it is the More trademarks which best answer this description, having been used over a period of time to ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the company as per the statutory requirements would not amount to bearing a brand name 14. The ARA has failed to appreciate that the issue involved in the present case was squarely covered by the decision of Hon ble Supreme Court in Tarai Foods Limited v. CCEx. Meerut-II 2006 (198) E.L.T. 323 (S.C). Although the Appellant had relied upon the said decision of the Hon ble Supreme Court and also the decision of Hon ble Tribunal in the case of Synotex Industries (supra) on this issue, the ARA has not even dealt with the said decisions. The issue as to whether mentioning of the name of the manufacturer on the package of a product, in terms of statutory requirements, would constitute a brand name , is answered by the following decisions/circulars, which though relied upon by the Appellant before the ARA, were not considered, thereby rendering the Impugned findings unsustainable : (i) In case of Tarai Foods Limited Vs CCEx. Meerut-II 2006 (198) E.LT. 323 (S.C), the Hon ble Supreme Court has inter alia examined whether the definition of brand name , would include the name of the manufacturer printed on the package in terms of a legal requirement. The relevant entry ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re can be considered to be a brand name held as follows: Under the Standard Weights and Measures (Packets Commodities) Act, 1977 every packet is required to bear thereon or on a label squarely affixed thereto a definite, plain and conspicuous declaration as to, inter alia, the name and address of the manufacturer (see Rule 6 10). In other words, unit containers would have to bear the name of the manufacturer. If the name of the manufacturer were to be a brand name then this would mean, that there would be no unbranded unit container at all in law and the distinctiveness of T.H. 2001.10 would be meaningless. 15. Furthermore the definition of the words brand name shows that it has to be a name or a mark or a monogram etc. which is used in relation to a particular product and which establishes a connection between the product and the person. This name or mark etc. cannot, therefore, be the identity of a person itself. It has to be something else which is appended to the product and which establishes the link. 16. There is a value attached to the brand name, a value which has been recognized in the tariff entry by providing for levy of excise duty on goods bearin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ovisions, without actually printing the brand on the product packaging, would not render the product as bearing a brand name . 18. Reliance is further placed on the decision of the Hon ble Madras High Court in the case of CCE v. CESTAT Chennai, [2015 (318) ELT 238 (Mad)], wherein the issue pertained to denial of SSI exemption on account of the assessee clearing manufactured goods using the superscription manufactured and packed by SVS Sons , which was contended to be an affixation of brand name , by the Department. The Hon ble Madras High Court while taking note of the definition of brand name (which is similar to the meaning provided to the phrase under the Exemption Notifications) held that the superscription manufactured and packed by SVS Sons cannot be considered as a brand name or a trade name. 19. In addition to the above, reference is made to the following circulars: (a) Circular No. 1031/19/2016-CX, dated 14th June 2016 , which was issued as regards the levy of Excise duty on readymade garments and made up articles of textiles bearing brand name or sold under a brand name having retail sale price of ₹ 1,000 or more. The Board vide the said c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns, 2011 ( FSS Regulations ) in turn mandates provision of details of the manufacturer of the product on the corresponding package. Therefore, in case it is construed that name of the manufacturer is a brand name in itself, then every food product which is sold in packed form would be considered as branded. To this extent, the requirement that the product should bear a brand name would be rendered redundant, considering that a product sold in a unit container (and therefore being governed by FSSA and FSSA Regulations) would necessarily disclose the name of the manufacturer in every case. 23. It is a settled law that the courts should always presume that the legislature inserted every part in a statute/notification for a purpose and the legislature s intention is that every part of a statute should have effect and that a construction which results in redundancy of some part of a statute, must not be accepted. Reliance in this regard is placed on the decision of the Hon ble Supreme Court in the case of Bansal Wire Industries Ltd v. State of U.P. [2011 (269) E.L.T. 145 (S.C.)] wherein the Hon ble Court laid down that it is a settled principle of law that the words used in the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... outlet from which a good is sold is often the most crucial and conclusive/actor to hold a good as branded . It has been further held that whether the brand name appears in entirety or in parts or does not appear at all cannot be the chief criterion; primary focus has to be on whether an indication of a connection is conveyed in the course of trade between such Specified goods and some person using the mark . On this basis, it was held that cookies sold loosely from the Cookie Man counter would be considered to be branded. c. On perusal of the SSI Exemption Notification it is evident that the same was applicable to all genres of goods and the benefit thereunder was restricted in respect of goods bearing a brand name or trade name . It is noteworthy that apart from having a universal applicability, the SSI Exemption Notification did not also prescribe the manner in which the goods may bear a brand name (i.e. on a unit container etc.). It is in this context that the Hon ble Supreme Court held that to determine whether a product bears a brand name, one needs to look into the environment i.e. packaging and wrapping of the goods, accessories it is served with, uniform of vend ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e. Also, to this extent, the finding in the Impugned Order, that the goods are being supplied through the More stores which is registered brand as on the 15th May 2017 , is in excess of the conditions stipulated in the Exemption Notifications, which is only concerned with the nature of disclosures made on the unit container alone. e. Further the decision of Hon ble Supreme Court in the Australian Foods case (supra) is clearly distinguishable on facts and therefore not applicable to the present case. It is an admitted fact that, in Appellant s case, the More Stores, constituted under hyper-market and super-market formats, offer wide range of products to its customers viz. fresh fruits and vegetables, groceries, personal care, home care, general merchandise etc., which primarily pertain to third party brands, wherever applicable. Further, even in respect of the subject goods, the Appellant offers similar products of other companies alongside its own products. This specifically stems from the overall objective to project and promote More Stores as multi-brand retail outlets which offer wide range and variety of products of several brands/manufacturers. In fact, during FY 2017-18, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rks or indications which may serve in trade to designate the kind, quality, quantity, intended purpose, values, geographical origin or the time of production of the goods or rendering of the service or other characteristics of the goods or service , shall not be registered. The definition of trademark as provided in Section 2(zb) of the Trade Marks Act is broadly similar to the definition of the term brand name under the Exemption Notifications to the extent it includes a mark or a name that indicates a connection in the course of trade between the goods or services, as the case may be, and some person having the right as proprietor to use the mark . In view of the same, a name, which merely indicates quality parameters of the goods, should also not be construed to be a brand name . c. Accordingly, the declarations inter alia using common/generic terms viz. Value , Choice and Superior , for reflecting the quality of the subject goods to be sold under Stream 1, cannot be construed to be brand name for the purpose of the Exemption Notifications. The supply of subject goods would therefore attract GST at Nil rate in terms of the relevant entries to the Exemption Not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re not free from doubt as they had earlier proposed for the goods being marketed by them (2nd question before AAR) and now withdrew the same as their claim of declaring the details on packages as per statutory requirements was not found valid by AAR. Written submissions were also tendered to fortify their say. Discussions 28. We have heard both the parties and gone through the written submissions made in the matter. Of the three points raised before the AAR, the Appellant is raising only points no. 1 and 3, thereby dropping the issue of products proposed to be sold under stream 2 i.e. where the goods of third parties were proposed to be marketed by the Appellant. Therefore, the issue before us to decide is : (i) Whether mention of name of the Appellant on the goods, as required by FSSAI regulations and Legal Metrology Rules, amounts to brand name or not. (ii) Whether use of general words like Choice , Value or Superior on the goods to be sold in More stores would render the said goods as branded or not. 29. The notification no. 02/2017-Central Tax (Rate) dt. 28 June 2017 (and corresponding notifications under SGST Acts and IGST Act) is the centra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g, and advertising. Name brands are sometimes distinguished from generic or store brands. Branding is a set of marketing and communication methods that help to distinguish a company or products from competitors, aiming to create a lasting impression in the minds of customers. The key components that form a brand s toolbox include a brand s identity, brand communication (such as by logos and trademarks), brand awareness, brand loyalty, and various branding (brand management) strategies. Many companies believe that there is often little to differentiate between several types of products in the 21st century, and therefore branding is one of a few remaining forms of product differentiation. 31. Coming to how brand name is defined under the said GST notification, we find that the definition of brand name therein includes any name, which may be name of the manufacturer as well, which may be seen as under- The phrase brand name means brand name or trade name, 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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the manufacturer s name on packets is not sufficient to classify the same as branded. We would like to reproduce the para 11 of the said judgment to show that facts of the case before us are different from the facts and circumstances of the case before Hon ble Supreme Court: There is a value attached to the brand name, a value which has been recognized in the tariff entry by providing for levy of excise duty on goods bearing a brand name. It may be that the appellant had deliberately omitted the brand name in selling the French Fries to avail of the nil rate of tariff. This cannot detract from the consequences which would follow in law. If the assessee opts not to take advantage of the brand name in its trade, it could at least have the benefit of the rate of duty applicable to unbranded product. The exemption claimed in both the cases is similar but facts are different. Hon ble Apex Court has ruled that if the assessee opts not to take advantage of the brand name in its trade, it could at least have the benefit of the rate of duty applicable to unbranded product. 34. So the question that begs an answer is whether the Appellant is opting not to take advantage of bra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d goods. The Appellant has argued that if manufacturer s name on the package, declared as per statutory requirements under FSSAI and or Legal Metrology Rules, is accepted as brand name then every packaged commodity will be considered as branded. This is not true in every case. Instead, if every reputed manufacturer whose brand name is covered in their name can just remove their brand from the package and avail the exemption of the said notification, no one would be covered under GST. For example, M/s. Patanjali Ayurved Ltd. selling Cow Ghee under the registered brand name Patanjali were to remove the said brand from the package and sell the same under manufacturer s name, this will not render the said goods unbranded, because the customer will identify the said goods with the brand Patanjali due to the mention of name Patanjali Ayurved Ltd. declared on the package as manufacturer s name due to statutory requirement. Merely mention of manufacturer s name on the product as required under different statutes may not necessarily result in consideration of that product as branded. But if the name of manufacturer mentioned on the product, even as per statutory requirements, clearly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... brand name on goods is not a compulsory requirement. The scrutiny of surrounding circumstances, as done in above paras, clearly shows that the said goods, even though without affixing brand on them, will be considered as bearing the brand of More . The bearing a brand as mentioned in the said notification and vehemently argued by the Appellant, does not necessarily mean affixing on the unit container/goods. The notification does not provide specifically about the affixing the said brand on the goods itself and Hon ble Apex Court has ruled, in similar case, that physical manifestation of brand name is not compulsory on goods. A harmonious reading of the notification and Supreme Court judgment makes it clear that the said goods in the instant case are branded even if the registered brand name logos are removed from the same. (b) Astra Pharmaceuticals (P) Ltd. [1995 (75) ELT 214 (SC)], has been clarified and distinguished by three member bench of Hon ble Apex Court in the judgment of M/s Grasim Industries Ltd.,[2005 (183) ELT 123 (SC)], wherein the mention of a name of company on the packaging was considered as branding of those goods. This judgment has been relied by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he issue pertained to the distinction between House Mark and Trade Mark . (i) Commissioner of Central Excise, Pudducherry, [2015(318)ELT 238(Mad.)]- The issue does not state anything about the environment kept intact to take advantage of the earlier brand being used on the goods as is being done by the Appellant in the instant case. 39. The other judgments cited by the Appellant pertain to the interpretation of the Statue. Here, the issue of interpretation is the exemption notification and we are strictly following what is prescribed under the said notification regarding the brand name. We are not inclined to extend the benefit of the said exemption notification to the Appellant by liberal construction of the said notification. In this, we are fortified by following judgments of Hon ble Supreme Court- (a) Rajasthan Spg. and Wvg. Mills Ltd. v. Collector of C. Ex. Jaipur[1995(77) ELT 474(SC)] - Exemption notification construable strictly - Liberal construction which enlarges the term and scope of the notification not permissible nor extended meaning assignable to exempted item (b) B.P.L Ltd. v. COMMR. Of C. Ex. Cochin- II, [2015 (319) ELT 556(SC)]- ..... X X X X Extracts X X X X X X X X Extracts X X X X
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