TMI Blog2023 (7) TMI 822X X X X Extracts X X X X X X X X Extracts X X X X ..... e above its clear that expensive, premium and branded jewellery are manufactured, marketed and sold by the appellants which are liable for tax at the rate of 2%. From the facts of the present cases as discussed in the impugned order there is no doubt that the name of the manufacturer CKJ and ABJ is written on each article of jewellery as is the requirement of the notification. Whether this name or initials draw any connection between the manufacturer and the product can be clearly established through the various advertisements, hoardings and their elegant and most vibrant expensive showrooms. The statements recorded from the customers it clearly shows that the jewellery is identified with the manufacturer. In the case of KAIL LTD. (FORMERLY KITCHEN APPLIANCES INDIA LTD.) VERSUS STATE OF KERALA REPRESENTED THRGH. JT. COMMR. (LAW) [ 2016 (10) TMI 938 - SUPREME COURT ] the issue was with regard to the tax under Section 5(2) of the KGST Act on sales turnover of home appliances for Rs. 27,27,20,230/- on the ground that the appellant-Company had sold the home appliances under the brand name Sansui . The Assessing Authority - the respondent-State, while scrutinizing the second sal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y. In fact, these appellants had also registered their trademarks with the authorities concerned. In the present case Rule12AA was a specific provision introduced to bring every person who gets the articles of jewellery manufactured on job work basis shall obtain registration, maintain accounts, pay duty leviable on such goods and comply with all the relevant provisions of these rules, as if he is an assessee. The question of Rule 12AA overriding section 2(f) or Section 3 of the central excise act does not arise. Time Limitation - HELD THAT:- In case of PUSHPAM PHARMACEUTICALS COMPANY VERSUS COLLECTOR OF C. EX., BOMBAY [ 1995 (3) TMI 100 - SUPREME COURT ] the apex court has held that the extended period of five years under the proviso to section 11A(1) is not applicable just for any omission on the part of the assessee, unless it is a deliberate attempt to escape from payment of duty. Where facts are known to both the parties, the omission by one to do what he might have done and not that he must have done does not constitute suppression of fact. The appellants therefore cannot be said to suppressed the facts as they were under the impression that they were not liable t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 00,000/- E/547/2008 C. Krishnaiah Chetty Sons Pvt. Ltd. 1-3-2005 to 30-11-2005 Rs.1,37,00,571/- Equal penalty under Section 11AC OIO No. 10/07, dated 31-3-2008 E/548/2008 Vinod Hayagriv -do- - Rs. 13,70,000/ - -do- E/549/2008 Abharan Jewellers -do- Rs. 31,40,607/- Equal penalty under Section 11AC OIO No. 11/07, dated 31-3-2008 E/550/2008 Pratap Kamath, CEO -do- - Rs. 3,10,000/- OIO No. 10/07, dated 31-3-2008 E/3088/2012 Abharan Jewellers 01.3.2005 to 15.12.2005 Rs. 18,05,060/- Equal penalty under Section 11AC OIA No. 351/2012, dated 3-8-2012 3. The appellants in all these cases are engaged in manufac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dition thereto, marks AEI and AE were also embossed to indicate the person who manufactured the jewellery. 4.1 The Larger bench referring to the decision of the Tribunal in MMTC vs. Commissioner of Central Excise, Delhi-I [2018 (362) E.L.T. 647 (Tri. - Del.)], held that: 23. Thus, what has to be seen in each case is whether the brand name or trade name, which could be a mark used in relation to the product, indicates 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 identify of that person. 24. Though Learned Counsel for the appellant and the Learned Authorized Representative of the Department have also made submissions on merit, it would not be necessary for this Larger Bench to decide them as it is the Division Bench which would have to decide the issues on merits. 25. The papers may, therefore, be placed before the Division Bench concerned with the aforesaid opinion of the Larger Bench for deciding the appeals on merit. 5. Based on the above observations of the Larger Bench, these appeals are before us to decide whether the brand name indicates a connection in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... marking purposes under the dispensation of BIS guidelines under the Bureau of Indian Standards Act, 1986 which was re-enacted in 2016 by Parliament. (b) The evidence on record in the proceedings in the form of depositions of witnesses and record of cross-examination and mahazar proceedings demonstrate the usage of the alphabets CKC or ABJ for compliance with the BIS guidelines. The Appellants are BIS registered. (c) Apart from hallmarking purposes, these are used as house-mark of the respective jewellery dealers for various purposes such as identifying the dealer from whom it was brought in the event of customers returning the jewellery either for repair or remaking or otherwise. (d) The registered trade mark of the Appellant is entirely different and is their full registered/ incorporated name of C. Krishnaiah Chetty and Sons P. Ltd., name along with diamond and chain as evident from the certificate. (e) The advertisements on hoardings relied on by the department are only advertisements of stores of the Appellant(s) and are not evidence of affixation of brand name or trade name. (f) The Appellant(s) relied on the decision of the apex court in Astra Ph ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion in the notification, she submitted that any mark or symbol or monogram, etc., which is used in relation to the product and which indicates a connection in the course of trade between the product and some person using such name or mark is to be considered as Brand Name . She further submitted that the abbreviations such as CKC or ABJ clearly indicate a connection between such symbols and jewelers selling such jewellery. Hence, the goods articles of jewellery sold by the appellants fall within the category of branded jewellery which is liable to excise duty. (iii) Referring to the Circular dated 4-3-2005, she emphasised that the marketing of the products through various hoardings and various advertisements clearly showed a connection between the product and the manufacturer. In commercial parlance, the name of CKC/Abharan jewellers as understood by the common man is seen from the statement of jewellers, customers and advertising agencies which form part of the investigation. (iv) She also referred to Para 15(e) of the OIO NO 10/2007 dated 31.03.2008 to submit that Shri C.M. Krishna Kumar of Bangalore, a customer, in his statement dated 2-052006 stated that he had p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been held as Brand Name for the purposes of the above Notification and the Tribunal has held that excise duty is payable. (viii) She also rebutted the submission of the Learned Counsel on behalf of the appellant that the excise duty if at all payable has to be paid by the goldsmiths who had actually made the articles of jewellery. She referred to Rule 12AA of the Central Excise Rules, 2002 which was introduced into the statute with effect from 1-3-2005, the date on which the levy of excise duty was introduced on branded jewellery. As per the terms of this Rule, excise duty is to be paid by the person who gets the articles of jewellery produced or manufactured on his behalf on job work basis. She also submitted that the various decisions relied upon by the counsel were of no relevance as Rule 12AA was specifically introduced in the year 2005 to bring these jewellery manufactures under the excise net. Finally, She submitted that the impugned orders may be upheld and appeals dismissed. 12. Heard both the counsels on behalf of the appellants and the Authorized representative on behalf of the revenue. The fact that all the articles of jewellery are got manufactured through va ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (1) (2) (3) (4) (5) 14. 7113 Article of jewellery on which brand name or trade name is indelibly affixed or embossed on the articles of jewellery itself. 2% - Explanation . - For the purposes of this notification, brand name or trade name means 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 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. 14. Board s Circular dated 4-3-2005 is reproduced as under: Government of India Ministry of Finance (Department of Revenue) Tax Research Unit Subject: Excise duty levy on branded articles of jewellery. In this year s budget 2005-06, an excise duty of 2% has been imposed on branded articles of je ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f fact, and can be ascertained as how the name is understood in commercial parlance. In the jewellery trade, there are certain well known brand names like Tanishq , Sangini , etc. and the scope of the levy is only with respect to jewellery marketed and sold under such brand names as clearly, understood in the trade. It is requested that the gold dealers/manufacturers associations may be suitably briefed about the scope of the excise duty levied on branded articles of Jewellery so that there is no inconvenience to the trade. Branded precious metal jewellery Levy of Excise duty Clarifications Instruction F. No. 354/38/2011-TRU, dated 2-3-2012 Government of India Ministry of Finance (Department of Revenue) Central Board of Excise Customs, New Delhi Subject : Clarification regarding levy of Excise duty on branded precious metal jewellery - Regarding. I am directed to refer to D.O.F. No. B-1/3/2011-TRU, dated 25-3-2011 at the post-budget stage 2011-12 containing the following clarification about the scope of Central Excise levy applicable to precious metal jewellery of CETH 7113 manufactured or sold under a brand name : ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is indelibly marked or embossed. If such brand name is not affixed or embossed on the jewellery or article itself but appears on the packing such as the jewellery box or pouch or even on the warranty card or certificate of quality, such goods will not be treated as branded jewellery and thus will not be liable to excise duty. The clarification issued in this regard vide D.O.F. No. B-1/3/2011-TRU, dated 25 th March, 2011 stands modified to this extent. 15. Its pertinent to note that for the first time 2% tax was levied on branded jewellery form 1st March 2005. From the Hon ble Finance Minister statement made in her budget speech it could be inferred at to what is branded jewellery and who are to be taxed, clearly spelling out the intention of the legislature. The TRU letter dated 4th March 2005, which is extracted above once again reiterated the intention of the legislature. At para 2 and para 4 as extracted below one can clearly state the category of jewellery manufacturers that are to be taxed. 2.... expensive and premium jewellery is now manufactured and sold under alluring brand names. On such branded jewellery, I propose to levy an excise duty of 2 per cent. I m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that make it and the duty of the Court is to act upon the true intention of the Legislature. If a statutory provision is open to more than one interpretation the Court has to choose that interpretation which represents the true intention of the Legislature. This task very often raises the difficulties because of various reasons, in as much as the words used may not be scientific symbols having any precise or definite meaning and the language may be an imperfect medium to convey one s thought or that the assembly of Legislatures consisting of persons of various shades of opinion purport to convey a meaning which may be obscure. It is impossible even for the most imaginative Legislature to forestall exhaustively situations and circumstances that may emerge after enacting a statute where its application may be called for. Nonetheless, the function of the Courts is only to expound and not to legislate. Legislation in a modern State is actuated with some policy to curb some public evil or to effectuate some public benefit. The legislation is primarily directed to the problems before the Legislature based on information derived from past and present experience. It may also be designed by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted edition or one-of-a-kind pieces to enhance the exclusivity and uniqueness of the jewellery line. This has added value and intrigue for collectors and individuals seeking distinctive jewellery. The Alluring Charm of Bracelets. There are many different types of bracelets to choose from, and the best one for you will depend on your style, budget, and the occasion for which you plan to wear it. Our goldsmiths have upgraded themselves, beginning by brainstorming ideas and conceptualizing the designs by combining traditional jewellery-making techniques with innovative approaches to produce unique textures, shapes, or effects, experimenting with laser cutting and 3D casting to create intricate and detailed components that would be difficult to achieve through traditional methods. Today with six luxurious boutiques and showrooms across Bangalore C. Krishnaiah Chetty group is referred to as trendsetter in quality in craftsmanship, and premium luxurious designs . 19. Similarly in the case of Abharan Jewellers, in their advertisements state that: We offer an extensive range of stunning pieces that will leave you spellbound. Our collections are crafted with love and care, making s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct can be clearly established through the various advertisements, hoardings and their elegant and most vibrant expensive showrooms. The statements recorded from the customers it clearly shows that the jewellery is identified with the manufacturer. 22. In the case of Commissioner of Central Excise, Trichy Versus Grasim Industries Ltd. 2005 (183) ELT-123 (SC), the Apex court was dealing with the case where the Respondents was a subsidiary of one M/s. Grasim Industries Ltd. On the bags of cement manufactured by them the Respondents had used the following words: Manufactured by Dharani Cements Ltd. A. Subsidiary of Grasim Industries Ltd. 23. Based on the facts of that case the Apex Court observed that In our view, the Tribunal was clearly erroneous. As indicated above, the Explanation makes it clear that it need not be a trade name or brand name as commonly understood. Any name or mark or writing, even the name of a company is sufficient so long as it is used for the purpose of indicating a connection between the product and that Company. The use of the words A quality product from ITL group clearly showed an intention to show a connection between the product a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... woo the customers. 26. In the present case the articles of jewellery itself were embossed with the name of the manufacturer and the products were widely advertised to attract the customers in buying their products for the quality and craftsmanship of their products. As held by the Apex court the intention was very clear and specific and the legislature intended to tax only those jewellery manufacturers who had established their brand in the market. 27. Now let s examine the fact that whether it is merely a house mark or trade mark (brand name). The appellant has relied on Astra pharmaceuticals to prove their point of view that it is only a house mark. 28. In the case of Commissioner of Central Excise, Mumbai vs. Kalvert Foods India Pvt. Ltd.: 2011 (270) E.L.T. 643 (S.C.), the issue was whether the Appellant had cleared the goods under question under any brand name. The Tribunal had 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 m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. 34. Therefore, 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. 35. Unfortunately, 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the First Schedule to the Tariff Act]. [(1) Notwithstanding anything contained in these rules, every person (not being an export-oriented unit or a unit located in special economic zone) who gets articles of precious metals falling under heading 7114 of the First Schedule to the Tariff Act, produced or manufactured on his behalf, on job work basis, (hereinafter referred to as the said person ) shall obtain registration, maintain accounts, pay duty leviable on such goods and comply with all the relevant provisions of these rules, as if he is an assessee.] (2) If the said person desires clearance of excisable goods for home consumption or for exports from the premises of the job worker, he shall pay duty on such excisable goods and prepare an invoice, in the manner referred to in rules 8 and 11 respectively except for mentioning the date and time of removal of goods on such invoice. (3) The original and the duplicate copy of the invoice so prepared shall be sent by him to the job worker from whose premises the excisable goods after completion of job work are intended to be cleared, before the goods are cleared from the premises of the job worker. (4) Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecious metals falling under heading 7114 of the First Schedule to the Tariff Act], and the term job work shall be construed accordingly . 31. The industry that manufactures and markets the articles of jewellery, it is a well-known fact that unlike other industries there is no manufacturing unit as such. Instead, all the jewellery manufacturers get these articles of jewellery made through large number of artisans and goldsmiths on job work basis. Seeing the nature of business, a new Rule 12AA was introduced which is reproduced above. The Rule very categorically stated that every person who gets articles of precious metals falling under heading 7114 of the First Schedule to the Central Excise Tariff Act, produced or manufactured on his behalf, on job work basis, shall obtain registration, maintain accounts, pay duty leviable on such goods and comply with all the relevant provisions of these rules, as if he is an assessee. It also clearly mentions that the job worker shall not be required to get himself registered or shall not be required to maintain any record evidencing the processes undertaken for the sole purposes of undertaking job work under these rules unless he has exe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Court. It was contended that no time-limit was provided in this specific provision, while for taking actions in other cases, Section 35 provided time-limit and therefore the provisions should be held to be ultra vires. The Supreme Court applied the maxim - GENERALIA SPECIALIBUS NON DEROSANT and negatived the contention. The Supreme Court held that the provision of S. 33(6) of the Bombay Sales Tax Act, 1959 was confined to a particular class of tax evaders while Section 35 of the Bombay Sales Tax Act, 1959, was a general provision dealing with escaped assessment or under assessment. Thus whenever the legislature makes general provision and in the same sphere makes a special provision which would be applicable to specific cases, the provision relating to specific cases would be applicable to specific cases and not the provision relating to general cases . . 33. In the case of Collector of Central Excise, Jaipur versus Raghuvar (India) Ltd.: 2000 (118) E.L.T. 311 (S.C.), the apex court held that 14. The above conclusion of ours is itself sufficient to answer the question in favour of the Revenue and against the manufacturer, even de hors the applicability or otherwise o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dures as branded jewellery were liable to central excise duty. The department contended that only after searching the premised of these appellants and conducting of various investigations, recording of statements they were aware of the fact that these appellants were manufacturers of articles of branded jewellery. Since they failed to register and the facts were known to the department only after investigation there is suppression and hence proviso to Section 11A is invoked and accordingly interest and penalties has been levied. 36. The Appellants on the other hand claimed that no allegation of suppression can be levied against them since the issue of excisability on branded jewellery was in a state of confusion. It is also submitted this confusion resulted in various Board circulars and with specific reference to the Board circular issued vide F.No. 354/203/2005-TRU dated 29.12.2005 where the board had directed the officers that no precipitate action to be taken to charge excise duty on jewellery. They relied on various decisions with specific reference to T. N. Dadha Pharmaceuticals vs. CCE: (2003) (152) ELT 251 (SC) where it was held that all the three ingredients of Sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sion or willful misstatement or suppression of facts, a smaller, specific and more serious niche, to the proviso. Therefore, something more must be shown to construe the acts of the appellant as fit for the applicability of the proviso. 24. In the case of Cosmic Dye Chemical v. Collector of Central Excise, Bombay (1995) 6 SCC 117 , this Court held that intention to evade duty must be proved for invoking the proviso to section 11A(1) for extended period of limitation. It has been further held that intent to evade duty is built into the expression fraud and collusion but mis-statement and suppression is qualified by the preceding word wilful . Therefore, it is not correct to say that there can be suppression or misstatement of fact, which is not wilful and yet constitutes a permissible ground for invoking the proviso to section 11A. 25. In case of Pushpam Pharmaceuticals Company v. C.C.E. [1995 (78) E.L.T. 401 (S.C.)], this Court has held that the extended period of five years under the proviso to section 11A(1) is not applicable just for any omission on the part of the assessee, unless it is a deliberate attempt to escape from payment of duty. Where facts are known t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... contravention of any of the provisions of the Act or of the Rules made thereunder with intent to evade payment of duties by such person or his agent. There is no such averment to be found in the show cause notice. There is no averment that the duty of excise had been intentionally evaded or that fraud or collusion had been practiced or that the assessee was guilty of wilful misstatement or suppression of fact. In the absence of any such averments in the show-cause notice it is difficult to understand how the Revenue could sustain the notice under the proviso to Section 11-A(1) of the Act. It was held that the show cause notice must put the assessee to notice which of the various omissions or commissions stated in the proviso is committed to extend the period from six months to five years. That unless the assessee is put to notice the assessee would have no opportunity to meet the case of the Department. It was held : ...There is considerable force in this contention. If the department proposes to invoke the proviso to Section 11-A(1), the show-cause notice must put the assessee to notice which of the various commissions or omissions stated in the proviso is committed to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... jewellery. I am directed to refer to Board's Circular No. B-1/1/2005-TRU, dated 4th March 2005 (2005 (181) 11.T. 17 on the above subject. The said circular clarifies the scope of levy of excise duty on branded jewellery. Board has clarified that the scope of the levy is only with respect to jewellery marketed and sold under such brand names as clearly understood in the trade Certain illustrative case were also indicated in the circular so as allay the apprehensions of the trade, and field formations were requested to suitably brief gold dealers/manufacturers etc., so that there is no inconvenience to the trade. 2. Despite the scope of duty liability on branded jewellery being clarified in detail in Board's Circular dated 4th March 2005, complaints have been received in the Board that this circular is not being given effect to, in certain Commissionerates, Certain instances have been brought to notice where some jewellers claiming to be covered by the Board's circular have been forced to pay excise duty, and jewellery has also reportedly been seized. 3. Board has taken a serious view of the matter It is surprising that Commissioners are not following instr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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