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of <h1>Supreme Court clarifies exemption criteria for jute bags under excise law</h1> <h3>M/s. RDB Textiles Ltd. Versus Commissioner of Central Excise And Service Tax, Kolkata-IV Commissionerate</h3> M/s. RDB Textiles Ltd. Versus Commissioner of Central Excise And Service Tax, Kolkata-IV Commissionerate - 2018 (359) E.L.T. 433 (SC), 2018 (14) SCC 42 Issues Involved:1. Denial of exemption under excise notifications for jute bags.2. Interpretation of 'brand name' under excise law.3. Applicability of exemption notifications and circulars.4. Relevance of compulsory markings on jute bags.Detailed Analysis:1. Denial of exemption under excise notifications for jute bags:The appeals arose from a CESTAT judgment denying exemption under excise notifications for jute bags manufactured by the appellants and supplied to FCI, various State Governments, and governmental agencies for use in the Public Distribution System (PDS). The exemption was denied for a period of two years by holding that affixing the name, logo, and particulars of buyers like FCI and State Governments amounts to affixing a 'brand name.'2. Interpretation of 'brand name' under excise law:The appellants argued that using the name of the buyer/procurer of food grains is not a 'brand name' as it does not indicate a connection in the course of trade between the jute bag and the buyer. They cited letters and circulars, including a letter dated 18.3.2011 and a Ministry of Finance circular dated 21.6.2011, which stated that such markings do not constitute a brand name. The respondents argued that the markings on the jute bags, including the name of the manufacturer and color strips, constituted a 'brand name' under the literal interpretation of the definition.3. Applicability of exemption notifications and circulars:The exemption provided under Notification 30/2004 dated 9.7.2004, which exempted all goods falling within Central Excise Tariff Entry 63, was amended by Notification 12/2011 dated 1.3.2011 to exclude goods bearing a brand name. This situation continued until 1.3.2013, when Notification No.11/2013 reinstated the previous entry, exempting all jute bags, branded or not. The appellants argued that the circulars issued by the Ministry of Finance are binding on the department of Central Excise, and there was no Supreme Court judgment contrary to such circulars.4. Relevance of compulsory markings on jute bags:The markings on the jute bags, including the name of the procurer agency, crop year, name of the jute mill, BIS certification number, and 'Manufactured in India' statement, were required by law for identification, monitoring, and control by governmental agencies involved in the PDS. These markings were not intended to enhance the value of the jute bags or indicate a connection in the course of trade between the product and any person. The Supreme Court held that such compulsory markings do not constitute a 'brand name' under the definition provided in the excise law.Conclusion:The appeals were allowed, and the judgment of the CESTAT was set aside. The Supreme Court concluded that the markings on the jute bags were by compulsion of law for governmental identification purposes and did not constitute a 'brand name' that would attract excise duty. The circulars issued by the Ministry of Finance were binding on the department of Central Excise, and there was no contrary Supreme Court judgment. The case of Kohinoor Elastics (P) Ltd. v. CCE was distinguished based on the facts, as the markings on the jute bags were not intended to indicate a connection in the course of trade.
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