TaxTMI 
TaxTMI 
2018 (2) TMI 825
X X X X Extracts X X X X
X X X X Extracts X X X X
....Mr. Sanyat Lodha, Adv., Mr. Vivek B., Adv., Ms. Aakriti Dawar, Adv., Mr. Sushal Tewari, Adv. And Mr. T. R. B. Sivakumar, AOR For the Respondent(s) : Mr. K. Radhakrishnan, Sr. Adv., Mr. Rupesh Kumar, Adv., Ms. Nisha Bagchi, Adv., Ms. Sunita Rani Singh, Adv., Ms. Pooja Sharma, Adv. And Mr. B. Krishna Prasad, AOR JUDGMENT R.F. NARIMAN, J. 1. The present appeals arise out of a judgment dated 30.6.2015, passed by the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), in which the CESTAT has denied exemption under excise notifications, referred to hereinafter, in respect of jute bags manufactured by the appellants and supplied to the Food Corporation of India (FCI), various State Governments and Governmental agencies for use in packing of food grains sold through the Public Distribution System (PDS). The said exemption has been denied for a period of two years by holding that affixing the name, logo and particulars of buyers like the FCI and State Governments amounts to affixing on the jute bags a "brand name". 2. In exercise of powers conferred by Section 3(1) of the Jute Packaging Materials (Compulsory Use in Packing Commodities) Act, 1987 (hereinafter referred....
X X X X Extracts X X X X
X X X X Extracts X X X X
....turer and an emblem of the manufacturer resulted in the use of a brand name, but that the CESTAT, realizing that this could not be so, founded its judgment on the basis of using the name of the buyer/procurer of food grains and that this would be beyond the show cause notices and also, therefore, the CESTAT decision should be set aside. They also argued, relying upon several judgments, that, in the present case, there is no "brand name", as defined, at all, and that, therefore, the show cause notice, the Commissioner's order as well as the CESTAT's order are all incorrect. They further relied upon a letter dated 18.3.2011 and a Ministry of Finance circular dated 21.6.2011 to buttress their submissions. According to them, the Commissioner has not referred to these documents at all and the CESTAT merely brushes away the aforesaid documents, which go to the root of these cases. They also cited decisions on how such circulars are binding on the department. According to them, the CESTAT grossly erred in relying heavily upon the judgment in Kohinoor Elastics (P) Ltd. v. CCE, (2005) 7 SCC 528, as that judgment dealt with a specific exemption notification and held that as a brand name was ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....f, with which we are concerned, is 6305, and in particular, 63051030 and 63051040, where the rate of duty is 10%. Thus, upto 1.3.2011, it is clear that all the goods mentioned in Central Excise Tariff Entry 63 were exempt from payment of excise duty. However, by notification 12/2011 dated 1.3.2011, Item 16 was substituted, in which what was exempted was "all goods, other than those bearing a brand name or sold under a brand name". 7. Brand name, for the purpose of Chapter 63, is defined as follows: "(iv). In relation to products of this Chapter, "brand name" means a brand name, whether registered or not, that is to say, a name or a mark, such as a symbol, monogram, label, signature or invented words or any writing which is used in relation to a product, for the purpose of indicating, or so as to indicate, a connection in the course of trade between the product and some person using such name or mark with or without any indication of the identity of that person." 8. The aforesaid situation carried on for two years till 1.3.2013, when notification No.11/2013 reinstated the previous entry, without excepting goods bearing or sold under a brand name and, thus, reverted to....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... only when it is marked BIS with licence number. 5. Thus jute bags printed with above items by jute mills are part of specifications and so where bearing any brand name of the mill company, may not be treated as branded bags in the context of levies of duties. By printing the items on bags, jute mills are not getting any kind of extra mileage in promoting their products. 6. In view of the above, it is requested that the Notice dated 08.03.2011 served by the Office of the Superintendents of Central Excise under the Division of Kol-IV to various jute mills for payment of 10% Adv. Duty may be withdrawn." 11.This was followed by a circular dated 21.6.2011 issued by the Ministry of Finance which stated: "Subject: Clarification on issues pertaining to the levy of excise duty on branded readymade garments and made-up articles of textiles-Regarding. Board has received representations from trade and industry seeking clarification on certain issues pertaining to the levy of excise duty on readymade garments/made-ups that either bear or are sold under a brand name. These issues are:- (i) Applicability of the mandatory levy of excise duty on scho....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nd name. Given the aforesaid two documents, the Superintendent (Central Excise) did not go ahead with the notice dated 7.3.2011. 13.A typical requisition order issued by the Directorate of Supplies and Disposals required the emblem of the purchaser and excise duty payable by the purchaser to be printed on the jute bags manufactured by the appellants. Also, what was required by the aforesaid requisition order was the following: "Branding: Every bag shall be screen printed in dark navy blue colour (darkest possible) with the emblems as per clause 8 with the following: a) Identification of procurement agency (containing insignia and name or short name or both as advised by the procurement agency). b) Rabi 2013-14 c) Short name of mill in capitals and CM/L No. d) "MANUFACTURED IN INDIA" A typical supply order placed by the Jute Commissioner also required, as a matter of law, that the purchaser's name be put together with the name of the manufacturer's mill as well as the BIS certification for purposes of identification of the jute bags to be used in the PDS. 14.Long after the exemption notification of 1.3.2013, by which all jute bag....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ide the penalty that was imposed and stated that the longer period of limitation could not be availed in the facts of these cases. However, relying strongly upon this Court's judgment in Kohinoor Elastics (supra), it came to the conclusion that since the jute bags had a brand name, the exemption contained in the amended notification of 1.3.2011 would not apply to the appellants. In dealing with the Finance Ministry circular dated 21.6.2011, the CESTAT brushed aside the same stating: "Further, we find that the circular bearing no. 947/8/2011-CX dated 21.06.2011 referred to by the Appellant in the context of levy of excise duty on garments and also it is not binding on the interpretations advanced by the courts as has been held by the Hon'ble Supreme Court in the case of CCE, Bolpur vs. Ratan Melting and Wire Industries, 2008 (231) ELT 22 (SC)." 17. The very definition of "brand name", which has been referred to hereinabove, has come up for consideration in several judgments of this Court. In CCE v. Stangen Immuno Diagnostics, (2015) 11 SCC 761 at 763, this Court, in paragraph 3, set out the definition of brand name, which is the same as the definition in the present case....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d to the benefit of exemption. An assessee would also be entitled to the benefit of the exemption if the brand name belongs to the assessee himself although someone else may be equally entitled to such name." 17. These observations bring out two significant aspects, namely: (1) As per the notification, the assessee would be debarred only if it uses on the goods in respect of which exemption is sought, the same/similar brand name with the intention of indicating a connection with the assessees' goods and such other person or uses the name in such a manner that it would indicate such connection. If there is no such intention or that the user of the brand name was entirely fortuitous and could not on a fair appraisal of the marks indicate any such connection, it would be entitled to the benefit of exemption. (2) The assessee would also be entitled to the benefit of exemption if the brand name belongs to the assessee himself although someone else may be equally entitled to such name." (at pages 766, 767-768) To similar effect is the judgment of this Court in CCE v. Sanghi Threads, (2015) 14 SCC 701 at 702, wherein it was held that: "3....
X X X X Extracts X X X X
X X X X Extracts X X X X
....wn the law contrary to such circulars. This is a well settled proposition as laid down in paragraph 30 of CIT v. Trans Asian Shipping Services (P) Ltd., (2016) 8 SCC 604 at 621. 20. However, since heavy reliance was placed on the judgment of this Court in Kohinoor Elastics (supra) by the CESTAT, it has become necessary for us to deal with the aforesaid judgment. The exemption notification, which was involved on the facts of that case, was a notification dated 28.2.1993. The relevant portion of the notification, with which the Court was concerned, is set out in paragraph 4 as follows: "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: Provided that nothing contained in this paragraph shall be applicable to the specified goods which are component parts of any machinery or equipment or appliances and cleared from a factory for use as original equipment in the manufacture of the said machinery or equipment or appliances and the procedure set out in Chapter X of the said Rules is followed: Explanation IX.-'Brand name' or trade name' shall mean a bran....