TMI Blog1994 (12) TMI 79X X X X Extracts X X X X X X X X Extracts X X X X ..... drinks, fruit juices falling under Chapter 22 of the Central Excise (Tariff) Act, 1983 since 1-4-1977 in the name and style of M/s. Kali Aerated Works at Virudhunagar Trading and Marketing the products manufactured in and around the entire district of Kamarajar District, part of Madurai District and part of Ramanathapuram District. 3. The petitioner states that originally the business was founded by the petitioner's paternal grandfather late P.V.S.K. Palaniappa Nadar in the year 1916, under the trade name M/s. Kali Aerated Water Works with Headquarters at Virudhunagar and branches at various places like Madras, Trichy Tirunelveli, Madurai, Karaikudi, Salem, Kumbakonam and Erode. The business was said to have been started as Joint-Family business consisting of P.V.S.K. Palaniappa Nadar, his three sons, K.P. Rajendran, K. P. Dharmarajan, father of the petitioner in this Writ Petition, K. P. Ganesan and Mrs. Damayanthi Ammal, the only daughter. It is also stated that the said business was run as Joint Family Partnership Firm and the Partnership firm was strictly restricted to only the family members of the Founder. With passage of time, it is claimed the sons of the first two sons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ers of the joint family have been using the said trade marks in their respective and specified marketing areas without rivalry or competition among themselves. It is further stated that to avoid future confusion the members of the erstwhile joint family entered into a mutual agreement, dated 12-3-1993 under which the right to use the Trade name and Trade marks (once belonged to joint family) had been properly redefined and redeclared among themselves for removal of doubts and ambiguities and had them registered on 12-3-1993 (document No. 301/94 on the file of the District Registrar, Madras.) 5. The petitioner states that having regard to its position as a registered small scale industry they have been availing of the exemption to a limit of Rs. 30 lakhs upto which they need not pay excise duty in view of Notification No. 175/86 C.E., which came to be amended periodically by Notification No. 223/87, dated 22-9-1987 and 1/93 dated 1-3-1993. Then came the amendment in Notification No. 59/94 C.E., dated 1-3-1994 with effect from 1-4-1994 incorporating amendments which included the addition of paragraph 4, stipulating that if a person manufacture excisable goods bearing brand names of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t permitted an interrelated scheme of General SSI exemption under Notification No. 1/93-C.E., dated 28-2-1993, providing for duty concessions to the small scale industries, that such concession among other things accorded complete exemption from excise duty for the value of clearance upto Rs. 30 lakhs by the unit and for the value of clearances from Rs. 30 lakhs to 75 lakhs concessional rate of duty. It is also stated that paragraph 4 of the Notification No. 1/93 was amended under Notification No. 59/94 with effect from 1-4-1994 and the said paragraph No. 4 prior to 1-4-1994 and thereafter in so far as it is relevant for the purpose read as hereunder : Para 4 (prior to 1-4-1994) The exemption contained in this notification shall not apply to the specified goods where a manufacturer affixes the specified goods under a brand name or trade name (registered or not) of another person who is not eligible for the grant of exemption under this notification : Para 4 (after 1-4-1994) 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 : Relying upon the above and the Explanatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... paragraph 4 of the notification in question must be so construed as to apply to only exclude from the benefit of the exemption, if at all, a manufacturer who affixes the specified goods with the brand name or trade name (registered or not) of another person and not a manufacturer, who uses such brand name or trade name not exclusively belonging to another person or which jointly belongs to himself and another or other persons who similarly use the same. While the right to a trade mark or trade name or ownership in this regard accrues out of actual use and not necessarily on account of mere registration and the registration merely afford certain protection envisaged under the Trade and Merchandise Marks Act, 1958 and to certain extent in the ordinary common law of the country, the Authorities of the Central Excise Department can neither claim nor be conferred with the powers of adjudicating upon disputes relating to the right to ownership or otherwise, in respect of a brand name or trade name and the authorities under the Act have no other go but to accept the claim of ownership made by a manufacturer and proceed accordingly for all purposes of the Act, including the notification un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd being an exemption, the notification has to be construed strictly against the subject. It is also stated that the registered document virtually admits the ownership of Mr. K.P.R. Sakthivel and indicates permission given by him to the others to use them in different and respective areas to prevent unhealthy competitions and transgressing to the other areas and therefore the claims made on behalf of the petitioners to the contrary are not tenable. The permitted, concurrent and honest user though may be an effective answer or good defence to an accusation of violation or infringement of the rights of the owner has no relevance or concern with the aspects relating to levy of excise duty and exemption which have got to be decided strictly in accordance with the notification under question. The claim based upon common law, it has been stated, has no application to the case and no merit whatsoever. The claim on behalf of the petitioners that the exemption was meant to benefit small scale industries of all kinds has been denied and it was stated that amendments introduced by Notification No. 1/93 C.E., and subsequently thereafter brought about a change in the very concept and scheme und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2 SCC 448, the Apex Court was concerned with the claim relating to infringement, registration of trade mark, copyright and designs. That was a case, where the family business of manufacturing a product under a brand name with family members involved in the business having shares and directorship in all companies of the family - son of the sole proprietrix of such a company became the Managing Director of another company, which started marketing of the family product, but subsequently commencing business of manufacturing the same product. While considering the claim therein from the angle of acquiescence, it was observed that acquiescence is one of the defences available under the 1958 Act. Acquiescence is sitting by, when another is invading the rights and spending money on it. Such conduct is inconsistent with the claim for exclusive rights in a trade mark, trade name etc., and if the acquiescence in the infringement amounts to consent, it will be a complete defence to the charge of infringement. In the very same decision, the Court also held that it is a settled principle of law relating to the trade mark and that there can be only one mark, one source and one proprietor and it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Constitution and other laws. It was also held therein that if the Rules do not tend in some degree to the accomplishment of the objects for which power has been delegated to the authority, Courts will declare them to be unreasonable and, therefore void. (g) In London Rubber Co., v. Durex Products Inc. - AIR 1963 SC 1882, it has been held that it is the duty of the Court to give full effect to the language used by the Legislature and that it has no power either to give that language a wider or narrower meaning than the literal one, unless the other provisions of the Act compel it to give such other meaning. It was also held therein that it was not obligatory upon a proprietor of a trade mark to apply for its registration so as to enable him to use it. (h) In Banner and Company v. Union of India - 1994 (70) E.L.T. 181, a learned single Judge of Calcutta High Court held that putting the brand name on a specified goods does not change the goods and that therefore it cannot amount to `manufacture' in terms of Section 2(f) of Central Excises and Salt Act, 1944. It was also held therein that SSI exemption -brand name Notification No. 175/86-C.E., dated 1-3-1986 and amending Notificat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iders as honest, fair and equitable. The object of every legislation is to advance public welfare. In other words, as observed by Crawford in his book on Statutory Constructions that the entire legislative process is influenced by considerations of justice and reason. Justice and reason constitute the great general legislative intent in every pieces of legislation. Consequently, where the suggested construction operates harshly ridiculously or in any other manner contrary to prevailing conceptions of justice and reason, in most instances, it would seem that the apparent or suggested meaning of the statute was not the one intended by the law makers. In the absence of some other indication that the harsh or ridiculous effect was actually intended by the Legislature, there is little reason to believe that it represents the legislative intent." (k) In Machine Well Engineers v. Union of India 1994 (73) E.L.T. 19, a Division Bench of the Allahabad High Court had an occasion to deal with a situation where one class of Small Scale Industry which manufactures goods and sells them in open market or to the purchaser, who affixes into the goods its brand name is exempted from excise duty upt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd since by those who have to construe, execute and apply such provisions. The Court also held therein as hereunder : " 12. How then should the Courts proceed? The expressions in the Schedule and in the notification for exemption should be understood by the language employed therein bearing in mind the context in which the expressions occur. The words used in the provision, imposing taxes or granting exemption should be understood in the same way in which these are understood in ordinary parlance in the area in which the law is in force or by the people who ordinarily deal with them. It is, however, necessary to bear in mind certain principles. The notification in this case was issued under Rule 8 of the Central Excise Rules and should be read alongwith the Act. The notification must be read as a whole in the context of the other relevant provisions. When a notification is issued in accordance with power conferred by the statute, it has statutory force and validity and, therefore, the exemption under the notification is, as if it were contained in the Act itself. See in this connection the observations of this Court in Orient Weaving Mills (P) Ltd. v. Union of India - 1978 (2) E. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e cases like the present from the purview of the exemption clause, then it must be held that the legislature has failed to use appropriate words to carry out the intention. We were told that for subsequent years, the relevant item in the Schedule has been suitably modified and the present question, is therefore, not likely to arise in future. " (o) In Union of India v. Pillaiyar Soda Factory - 1992 (57) E.L.T. 261, a Division Bench of this Court, to which I was a party while construing a similar exemption notification and laying down the principles underlying the interpretation of exemption notification held as follows : " P. 13 A bare reading of the explanation unmistakably shows that the expression "common trade mark aerated waters" implies aerated waters which are sold under the same trade mark or under the same brand name in more than one factory, whether belonging to one or more manufacturers. Thus, the sale must be with the `same' trade mark or brand name in order to attract the categorisation of `common trade mark aerated waters', for the purpose of the notification. Can the use of a `similar' or `deceptively similar' or `deceptively identical' trade mark used by a manuf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion. The authorities intended to deny the benefit of individual exemptions only where one or more manufacturers sell the product under the `same' trade mark or brand name. It is a fundamental rule for the construction of statutes, that where the language is plain and clear, the words must be held to have been used, according to the plain and ordinary meaning of the term to determine their connotation or meaning. Therefore, using the well settled rule of interpretation, the conclusion is irresistible that the Collector fell in error in construing `same' as `similar' or even `deceptively similar' to deny the benefit of individual exemption to the writ petitioners under the notification." 12. I have very carefully considered the submissions made by learned counsel appearing on either side. The reliance placed on the decision of Allahabad High Court [Machine Well Enginers's case 1994 (73) E.L.T. 19] and of Calcutta High Court (Banner Co. case 1994 (70) E.L.T. 181) are inappropriate, in that though in those (two) cases a provision similar to the one under consideration now before me came up for consideration, the facts and circumstances as also the issues which arose for considerat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ave certain advantages in the market. Therefore it cannot be held that the classification is arbitrary and based on irrelevant considerations. Concession is granted obviously to SSI Units who has to struggle hard to earn a good market for their goods and to prevent brand name holders adopting the device of manufacturing those goods through SSI Units — Contention is accordingly rejected." Learned single Judge of Karnataka High Court was of the view that the `Explanation', which is similar to the one under consideration in this case, denied the exemption because the brand name belongs to someone else, who is not eligible for exemption and the real basis to deny such exemption is equation made by equating the manufacturer with the brand name holder. Learned single Judge of Karnataka High Court was also of the view that concession is granted obviously to SSI Units, who has to struggle hard to earn a good market for their goods and to prevent brand name holders adopting the device of manufacturing those goods through SSI Units in order to avoid the payment of excise duty. As noticed earlier, it was also held therein that concession from levy of tax is not a matter of right and though ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tered into between parties and the registered trade or brand name proprietor has permitted the others to use the same for their own business in their respective areas may be an effective answer or defence to any claim or charge of infringement of a trade or brand name, but in my opinion it cannot detract from the obvious and inescapable position that the other petitioners are really using the trade or brand name registered in the name of K.P.R. Sakthivel, who alone for all purposes is supposed to be the proprietor of the trade mark. This being the factual position, there can be no difficulty in coming to the conclusion that the petitioners manufacture the goods by affixing the goods so manufactured by them, with a brand or trade name of another person and that therefore they will not be eligible for the grant of exemption claimed by them. 14. The submissions made by learned counsel for the petitioners on the basis of the nature or extent of rights of an individual to a trade or brand name, registered or not, either under the common law or under the Trade and Merchandise Act, 1958 and the decisions relied upon for that purpose have no relevance whatsoever in adjudicating the liabi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ected. It is by now well settled that any exemption from the payment of any tax or public duty is merely a concession or a bounty, which cannot be claimed by any one as a matter of right. Equally, it is well settled that the legislature or the Government concerned is not bound to tax everything to tax something. The legislature or the Government has wide range of discretion and latitude in choosing or picking up persons or objects for taxation or for conferring any benefit of exemption or concession and so long as the differential treatment meted out is based on some relevant consideration, the provision cannot be challenged as being either arbitrary or unreasonable. The levy of excise duty or for that matter the denial of a concession or exemption cannot be said to constitute any violation of the fundamental rights to carry on any business, trade or profession, unless the levy of tax itself is shown to be unconstitutional or patently unwarranted in law. A challenge of arbitrariness or unreasonableness when made should be considered not in the sense of not being reasonable, but in the sense that it is manifestly arbitrary. Viewed either from the nature of the levy or the scheme und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... read with together. The provisions in para 4 in question curtails and restricts the operation of the exemption notification and does not itself impose any duty. That ex-hypothesis has been imposed by the Statute and the rules made thereunder. As a matter of fact, the question relating to the grant of an exemption or the withdrawal of the same or modification or restriction of the privilege of exemption earlier granted are also matters pertaining to Policy governed by the Will of the legislative wisdom and of the law making authorities and the same cannot ordinarily be interfered with by Courts. Further, the impugned para 4 does not have the effecting of varying or altering the character of the levy from Excise Duty into any other levy nor within the competence of the State, either pursuant to a legislation or subordinate legislation. Thus, on a careful consideration of the various submissions noticed supra, I am of the view that the petitioners have not made out any sufficient cause or substantiated any patent legal infirmity in the provision contained in paragraph 4 of the Notification in question so as to justify interference by this Court with the said provision. 16. For all ..... X X X X Extracts X X X X X X X X Extracts X X X X
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