2025 (11) TMI 1860 - AT - Central Excise

Marking Metal Liners With GIPL Not a Brand, SSI Exemption Under Notification 9/2003-CE Restored for Supplier

M/s. Jekay International Track Pvt. Ltd. Versus Commissioner of Howrah CGST & CX Commissionerate, Kolkata

CESTAT Kolkata held that metal liners supplied exclusively to Railways bearing the initials 'GIPL' did not constitute a brand or trade name and therefore ... SSI Exemption - use of brnad name of others - metal liners bore the initials “GIPL” and thus carried a brand/trade name, disqualifying the appellant from exemption under N/N. 9/2003-CE - HELD THAT:- The Appellant has categorically replied on 30.03.2005, explaining that the markings were not brand names but only identification initials required by Railways for traceability, and the goods were not elsewhere marketable or intended for trade other than Indian Railways. In this regard, there are merit in the submission of the Appellant. It is a fact on record that the goods were never intended for commercial sale in the open market and were directly consumed by the Railways. The marking “GIPL” was not for branding but purely for traceability and rejection tracking, as clarified by Railways, which has been acknowledged by the Deputy Commissioner in his de novo order. The Railway authorities have categorically mentioned that they have not approved any initial/trade mark with the suppliers of materials. Further, as a measure of caution, they have advised him to seek clarification from RDSO - there are no merit in the submission of the Ld. A.R. that the Deputy Commissioner should have sought further clarification from RDSO section of the Railways. It is also observed that the goods were never intended for commercial sale in the open market and were directly consumed by the Railways. The marking “GIPL” was not for branding but purely for traceability and rejection tracking, as clarified by Railways. Thus, we hold that the initials “GIPL” embossed on the metal Liners were not a brand/trade name. Accordingly, disqualifying the appellant from availing the exemption under Notification no. 9/2003-CE, is legally not sustainable. The demand of duty confirmed against the Appellant by denying the benefit of exemption as provided under the Notification no. 9/2003-CE., is legally not sustainable - Appeal allowed. 1. ISSUES PRESENTED AND CONSIDERED 1.1 Whether the embossing of the initials 'GIPL' on metal liners constituted use of a 'brand name' or 'trade name' so as to disentitle the manufacturer from exemption under Notification No. 9/2003-CE. 1.2 Whether the de novo adjudication order complied with the Tribunal's earlier remand directions to seek clarification from Railways, and if non-compliance, whether this justified setting aside the de novo order. 1.3 Whether the proceedings denying exemption under Notification No. 9/2003-CE were vitiated for failure to implead the alleged brand owner ('GIPL') as a co-noticee. 2. ISSUE-WISE DETAILED ANALYSIS Issue 1 - Nature of the marking 'GIPL' and eligibility to SSI exemption under Notification No. 9/2003-CE Legal framework (as discussed) 2.1 The Tribunal proceeded on the definition and understanding of 'brand name'/'trade name' as adopted in small-scale industry exemption notifications, namely that the mark must indicate a connection in the course of trade between the goods and the person using or owning the mark. The Tribunal relied on judicial precedents holding that marks used only for identification, traceability, or regulatory/customer requirements, and not to indicate such trade connection, are not 'brand names'. Interpretation and reasoning 2.2 The goods in question were metal liners manufactured strictly to the specifications of a purchaser for onward supply to Indian Railways. The Tribunal recorded as a fact that the goods were never intended for commercial sale in the open market and were directly consumed by Railways. 2.3 The initials 'GIPL' were embossed on the metal liners as advised by the purchaser and, as established from the clarification of Railway authorities and noted in the de novo order, such marking was intended purely for traceability and rejection tracking and not as a brand indicator. 2.4 The Tribunal emphasized that the department had not shown that 'GIPL' functioned as a brand/trade name in the course of trade, or that it belonged to another person whose brand reputation was being used in the market. There was no evidence that the marking established any trade connection of the goods with the supposed brand owner in the general market. 2.5 Relying on the decision in C.C.E., Chandigarh v. Champion Industries, the Tribunal reiterated that, unless the department proves that a mark belongs to another person and is used to indicate a trade connection, SSI exemption cannot be denied merely because a mark appears on the goods. 2.6 Referring to Astra Pharmaceutical Pvt. Ltd. v. C.C.E., the Tribunal applied the distinction between house marks/identification marks and brand names, and endorsed the principle that markings used only for identification, particularly as required by a customer or regulation, do not constitute 'brand names' for the purpose of SSI notifications. Conclusions 2.7 The embossing of 'GIPL' on the metal liners was held to be an identification/traceability marking and not a 'brand name' or 'trade name' in the sense required to deny SSI exemption. 2.8 Disqualification of the manufacturer from availing exemption under Notification No. 9/2003-CE on the basis of such marking was held to be legally unsustainable, and the duty demand raised on that ground was set aside. Issue 2 - Compliance with remand directions regarding clarification from Railways Interpretation and reasoning 2.9 The earlier remand order required the adjudicating authority to seek clarification from Railways regarding the purpose and nature of the marking 'GIPL'. The Deputy Commissioner, in de novo proceedings, obtained a written clarification from Railway authorities. 2.10 The letter from Railways, reproduced by the Tribunal, categorically stated that the Railways did not approve any initial/trade mark of any approved suppliers supplying materials as per RDSO drawings and advised that further clarification could be sought from the RDSO. 2.11 The Tribunal noted that the Deputy Commissioner, having obtained this clarification and finding it sufficient to show that no trade/brand approval existed, proceeded to decide that 'GIPL' did not constitute a brand name. The Tribunal held that this satisfied the substance of the remand direction. 2.12 The argument of the departmental representative that the Deputy Commissioner was bound to further approach RDSO and that failure to do so vitiated the de novo order was rejected. The Tribunal held that the Deputy Commissioner had complied with the Tribunal's direction by seeking and considering Railways' clarification and that he was entitled to take a view on the basis of the reply received. Conclusions 2.13 The de novo order was found to be in compliance with the remand directions. The setting aside of the de novo order by the Commissioner (Appeals) on the ground of alleged non-compliance with the earlier Tribunal directions was held to be unjustified. Issue 3 - Effect of non-impleadment of alleged brand owner 'GIPL' as co-noticee Interpretation and reasoning 2.14 The Tribunal noted that the alleged brand/initials 'GIPL' belonged to the purchaser who had placed the order and on whose instructions the marking was embossed. Only that entity could clarify whether the embossing was intended as use of a brand name or merely as an identification mark. 2.15 It was observed that the department did not make the alleged brand owner a co-noticee in the show cause notice, despite the entire case turning on whether 'GIPL' was a brand name belonging to another person and used in the course of trade. 2.16 The Tribunal reasoned that, when the manufacturer merely acts on the instructions of a purchaser and the alleged brand belongs to such purchaser, non-impleadment of the alleged brand owner undermines the legal basis of the proceedings to deny SSI exemption based on the use of another's brand name. Conclusions 2.17 The proceedings initiated solely against the manufacturer, without involving the owner of the initials 'GIPL' as a co-noticee, were held to be legally unsustainable. 2.18 On this ground also, denial of exemption and confirmation of demand were found infirm. Overall Disposition 2.19 The Tribunal held that the initials 'GIPL' did not constitute a brand/trade name for purposes of Notification No. 9/2003-CE, that the de novo adjudication had complied with the remand directions, and that non-impleadment of the alleged brand owner vitiated the proceedings. The impugned order was set aside, and the de novo order dropping the demands was restored, with consequential relief as per law.