2013 (8) TMI 422 - AT - Central Excise

Tribunal Upholds Duty Decision on Brand Name Dispute

The tribunal determined that the letters 'KPM' on the goods constituted a brand name of another manufacturer, as evidenced by an agreement, leading to the ... SSI exemption - Use of trademark - Commissioner set aside penalty - Held that:- brand name or trade name can be any name, symbol, monogram or mark which indicates a connection between a person and the goods being manufactured or traded by him. Such brand name or trade name need not be registered with the trade mark authority. In fact the ‘brand name’ or ‘trade name’ symbolises the goodwill of a manufacturer or a trader or service provider which he has earned over the years so that any goods affixed with that mark are associated with that person. In this case, the mark ‘KPM’ is of M/s. K.P. Manufacturers and there is no dispute that the appellant had an agreement with M/s. K.P. Manufacturers for using the mark KPM on their goods for which a royalty was being paid - the mark ‘KPM’ of M/s. K.P. Manufacturers has to be treated as their unregistered trade mark which they were trying to popularise. Since, KPM is a brand name of M/s. K.P. Manufacturers, the use of this brand name by the appellant would disentitle them for the benefit of SSI exemption - Assessee has been paying the duty on the forgings affixed with the brand name KPM at normal rate and as such, there is no short payment of duty - Decided against Revenue. Issues:1. Whether the letters 'KPM' embossed on the goods can be considered a brand name or a house mark.2. Whether the duty demand on the goods bearing the letters 'KPM' was correctly imposed.3. Whether there was suppression of facts by the appellant to evade duty payment.4. Whether penalty under Section 11AC is applicable.Analysis:1. The dispute centered around whether the letters 'KPM' on the goods constituted a brand name or a house mark. The appellant argued that it represented a brand name of another manufacturer, M/s. K.P. Manufacturers, with whom they had an agreement for using the mark. The tribunal examined the definition of a brand name as per the SSI exemption notification, emphasizing that it signifies a connection between the goods and a person. The tribunal found that 'KPM' was indeed a brand name of M/s. K.P. Manufacturers, as evidenced by the agreement and correspondence, leading to the conclusion that the appellant correctly paid duty on goods bearing this brand name at the normal rate.2. The tribunal determined that since the appellant had a valid agreement with M/s. K.P. Manufacturers to use the brand name 'KPM' on the goods, they were not entitled to the benefit of SSI exemption. Therefore, the duty paid at the normal rate on the branded goods was deemed appropriate, and there was no short payment of duty. Consequently, the tribunal set aside the duty demand imposed on the appellant.3. The issue of suppression of facts by the appellant was raised, alleging an intent to evade duty payment. The tribunal noted that the appellant had disclosed the use of the brand name 'KPM' in their returns and had previously addressed this matter with the department. As a result, the tribunal found no suppression of facts by the appellant, leading to the dismissal of the penalty under Section 11AC.4. Regarding the applicability of penalty under Section 11AC, the tribunal upheld the decision that there was no suppression of facts by the appellant. Consequently, the penalty was deemed not maintainable, and the tribunal dismissed the Revenue's appeal challenging the Commissioner (Appeals)'s decision on the penalty issue. The tribunal allowed the appellant's appeal and set aside the duty demand, emphasizing the legitimacy of paying duty on goods bearing the brand name 'KPM' at the normal rate.