Company wins appeal for tax exemption on customer-branded goods

The Tribunal allowed the appeal filed by M/s. Kohinoor Elastic (P) Ltd., granting them the benefit of exemption under Notification No. 1/93-C.E. for goods bearing the brand name of their customers and supplied exclusively to them without being traded in the market. The Tribunal relied on the precedent set by the Larger Bench decision in Prakash Industries, clarifying that affixing brand names on goods supplied solely to customers does not constitute using the brand name in the course of trade, thus entitling the company to the exemption.

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Issues:
1. Whether the benefit of exemption under Notification No. 1/93-C.E. is available to goods manufactured by a company bearing the brand name of another person.

Analysis:
The appeal involved the issue of whether a company, M/s. Kohinoor Elastic (P) Ltd., is eligible for the benefit of exemption under Notification No. 1/93-C.E. for goods manufactured by them bearing the brand name of another person. The company argued that they manufacture Narrow Woven Fabrics (Tapes) supplied solely to garment manufacturers who use them as input in garment production. They emphasized that the tapes are not sold to anyone else and bear the brand name of the respective garment manufacturers. The company cited a decision by the Larger Bench of the Tribunal in a similar case, Prakash Industries v C.C.E., Bhubneswar, where it was held that affixing the brand name of customers on specified goods supplied exclusively to them does not constitute using the brand name in the course of trade. The company also referred to Circular No. 71/71/94-CX, which clarified that goods bearing the brand name of customers and not traded in the market are not considered as using the brand name for the purpose of denying exemption.

The Respondent, represented by Ms. Ananya Ray, argued that the matter had already been decided against the Appellants by the Tribunal in a previous case, and the Commissioner (Appeals) upheld the decision based on the earlier ruling. However, the Tribunal noted that the issue in the present appeal was subsequently considered by the Larger Bench in the case of Prakash Industries, where it was clarified that the affixation of brand names on goods supplied only to customers and not traded in the market does not fall under the provisions related to brand names. The Tribunal highlighted that for the brand name provisions to apply, there must be a connection in the course of trade between the goods and the person using the brand name, which is not present when goods are supplied exclusively to the brand name owner for their own use and not for trade in the market.

Based on the precedent set by the Larger Bench decision, the Tribunal set aside the impugned order and allowed the appeal filed by M/s. Kohinoor Elastic (P) Ltd., granting them the benefit of exemption under Notification No. 1/93-C.E. for goods bearing the brand name of their customers and supplied exclusively to them without being traded in the market.

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