TaxTMI 
TaxTMI 
2023 (7) TMI 822
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....to 31.3.2006 Rs. 68,38,660/- Equal penalty under Section 11AC and Rs. 10,000 under Rule 25 OIO No. 18/2006, dated 2212-2006 E/200/2007 Subhas M. Kamath - Rs. 1,00,000/- E/547/2008 C. Krishnaiah Chetty & Sons Pvt. Ltd. 1-3-2005 to 30-11-2005 Rs.1,37,00,571/- Equal penalty under Section 11AC OIO No. 10/07, dated 31-3-2008 E/548/2008 Vinod Hayagriv -do- - Rs. 13,70,000/ - -do- E/549/2008 Abharan Jewellers -do- Rs. 31,40,607/- Equal penalty under Section 11AC OIO No. 11/07, dated 31-3-2008 E/550/2008 Pratap Kamath, CEO -do- - Rs. 3,10,000/- OIO No. 10/07, dated 31-3-2008 E/3088/2012 Abharan Jewellers 01.3.2005 to 15.12.2005 Rs. 18,05,060/- Equal penalty under Section 11AC OIA No. 351/2012, dated 3-8-2012 3. The appellants in all these cases are engaged in manufacturing of articles of jewellery. With effect from 1-3-2005, excise duty was imposed, as a budgetary measure, on branded jewellery. The Notification No. 4/2005, dated 1-3-2005 prescribed duty at the rate of 2% on such branded jewellery. When these appeals were heard earlier, this Tribunal vide its Interim Order No. 36 - 42/2018 dated 16.2.2018 at para 8.1 and 9 held that: "8.1 D....
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....on to the product, indicates 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 identify of that person. 24. Though Learned Counsel for the appellant and the Learned Authorized Representative of the Department have also made submissions on merit, it would not be necessary for this Larger Bench to decide them as it is the Division Bench which would have to decide the issues on merits. 25. The papers may, therefore, be placed before the Division Bench concerned with the aforesaid opinion of the Larger Bench for deciding the appeals on merit." 5. Based on the above observations of the Larger Bench, these appeals are before us to decide whether the brand name indicates 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. 6. On behalf of the appellants, the case was mainly argued by Learned Sr. Counsel Shri K. S. Ravi Shankar, and Shri N. Anand, Counsel. The Learned Counsel, in the case of C. Krishnaiah Chetty & Sons Pvt Ltd. has produced the flow chart to prove their point that they are not the....
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....lmarking purposes, these are used as house-mark of the respective jewellery dealers for various purposes such as identifying the dealer from whom it was brought in the event of customers returning the jewellery either for repair or remaking or otherwise. (d) The registered trade mark of the Appellant is entirely different and is their full registered/ incorporated name of C. Krishnaiah Chetty and Sons P. Ltd., name along with "diamond and chain" as evident from the certificate. (e) The advertisements on hoardings relied on by the department are only advertisements of stores of the Appellant(s) and are not evidence of affixation of brand name or trade name. (f) The Appellant(s) relied on the decision of the apex court in Astra Pharmaceuticals v. CCE, 1995 (75) ELT 214 (SC), in which the Court held that an emblem, word or both, is a device called House Mark, intended as an identification of the maker. But a brand name is different and is for identification of a product. (g) The Appellant(s) also relied on the following decisions: * In Tarai Foods Ltd v. CCE: 2006 (198) ELT 323 (SC) it was held that a brand name connoted a mark, symbol or design unique to particular manufact....
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....appellants fall within the category of branded jewellery which is liable to excise duty. (iii) Referring to the Circular dated 4-3-2005, she emphasised that the marketing of the products through various hoardings and various advertisements clearly showed a connection between the product and the manufacturer. In commercial parlance, the name of CKC/Abharan jewellers as understood by the common man is seen from the statement of jewellers, customers and advertising agencies which form part of the investigation. (iv) She also referred to Para 15(e) of the OIO NO 10/2007 dated 31.03.2008 to submit that Shri C.M. Krishna Kumar of Bangalore, a customer, in his statement dated 2-052006 stated that he had purchased a finger ring from M/s. Krishnaiah Chetty & Sons Pvt Ltd., because of their assurance of quality and genuine product; that the abbreviation "CKC" embossed on the jewellery he had purchased and that he is of the opinion that "CKC" stands for the brand C. Krishniah Chetty & Sons and that he understands by the advertisement that M/s C. Krishniah Chetty & Sons is a name in jewellery business." (v) Referring to various advertisements the AR submitted that advertising the product....
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....uty was introduced on branded jewellery. As per the terms of this Rule, excise duty is to be paid by the person who gets the articles of jewellery produced or manufactured on his behalf on job work basis. She also submitted that the various decisions relied upon by the counsel were of no relevance as Rule 12AA was specifically introduced in the year 2005 to bring these jewellery manufactures under the excise net. Finally, She submitted that the impugned orders may be upheld and appeals dismissed. 12. Heard both the counsels on behalf of the appellants and the Authorized representative on behalf of the revenue. The fact that all the articles of jewellery are got manufactured through various job workers is not disputed. It's also a fact that on each of these articles of jewellery name of the manufacturer is embossed, CKC in the case M/s. C. Krishnaiah Chetty & Sons Pvt. Ltd. and ABJ by M/s. Abharan Jewellers and they were sold through their Showrooms or their retail shops at various places. The trade name was also registered with the respective authorities concerned. All these manufacturers advertised their products through various channels like print media, TV ads and on various ot....
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....ndication of the identity of that person. 14. Board's Circular dated 4-3-2005 is reproduced as under: Government of India Ministry of Finance (Department of Revenue) Tax Research Unit Subject: Excise duty levy on branded articles of jewellery. In this year's budget 2005-06, an excise duty of 2% has been imposed on branded articles of jewellery of heading 7113 of the Central Excise Tariff. The duty is leviable only if the brand name or the trade name, as defined, is indelibly affixed or embossed on the article of jewellery itself. In this context, relevant extracts of Finance Minister's budget speech is reproduced below: "... expensive and premium jewellery is now manufactured and sold under alluring brand names. On such branded jewellery, I propose to levy an excise duty of 2 per cent. I may clarify that there is no levy on unbranded jewellery, including unbranded gold jewellery." It is thus clear that for attracting this levy, the article of jewellery must be marketed and sold under a brand name. Despite this, there have been some misgivings among a section of the trade about the scope of this levy, To allay the apprehensions of the trade, some illustrations ar....
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....g. I am directed to refer to D.O.F. No. B-1/3/2011-TRU, dated 25-3-2011 at the post-budget stage 2011-12 containing the following clarification about the scope of Central Excise levy applicable to precious metal jewellery of CETH 7113 manufactured or sold under a brand name : "ABC jewellers" advertises and sells its products under the brand "Star" or puts a logo like ABC i.e. in a stylized manner. It also puts the same brand name or an abbreviation thereof or a mark which has a connection with such brand name either on the jewellery or article itself or on the packing such as the jewellery box or pouch or even on the warranty card or certificate of quality. Such goods will clearly be treated as branded and will be liable to duty." 2. It is learnt that based on the said clarification some enquiries have been initiated by the departmental agencies seeking to demand duty on such articles of jewellery which are packed in boxes, pouches etc. bearing a trade name or brand name or mark. References have since been received from the Trade requesting for providing clarity on levy of excise duty on jewellery sold under a Brand name. The industry has drawn attention to condition no. 8 of....
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....w one can clearly state the category of jewellery manufacturers that are to be taxed. "2.... expensive and premium jewellery is now manufactured and sold under alluring brand names. On such branded jewellery, I propose to levy an excise duty of 2 per cent. I may clarify that there is no levy on unbranded jewellery, including unbranded gold jewellery. It is thus clear that for attracting this levy, the article of jewellery must be marketed and sold under a brand name. Emphasis supplied. 3..... 4. Whether a particular name or mark or symbol etc. is a brand name or not is a matter of fact, and can be ascertained as how the name is understood in commercial parlance. In the jewellery trade, there are certain well-known brand names like 'Tanishq', 'Sangini', etc. and the scope of the levy is only with respect to jewellery marketed and sold under such brand names as clearly, understood in the trade. It is requested that the gold dealers/manufacturers associations may be suitably briefed about the scope of the excise duty levied on branded articles of Jewellery so that there is no inconvenience to the trade. Emphasis supplied." 16. The Hon'ble Supreme court in the case of Commission....
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....some policy to curb some public evil or to effectuate some public benefit. The legislation is primarily directed to the problems before the Legislature based on information derived from past and present experience. It may also be designed by use of general words to cover similar problems arising in future. But, from the very nature of things, it is impossible to anticipate fully the varied situations arising in future in which the application of the legislation in hand may be called for, and, words chosen to communicate such indefinite referents are bound to be in many cases lacking in clarity and precision and thus giving rise to controversial questions of construction. The process of construction combines both literal and purposive approaches. In other words the legislative intention, i.e., the true or legal meaning of an enactment is derived by considering the meaning of the words used in the enactment in the light of any discernible purpose or object which comprehends the mischief and its remedy to which the enactment is directed..." 17. From the Budget speech of the Hon'ble Finance Minister the intention of the legislature is to tax those jewellery manufacturers who sell expe....
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....gns". 19. Similarly in the case of Abharan Jewellers, in their advertisements state that: "We offer an extensive range of stunning pieces that will leave you spellbound. Our collections are crafted with love and care, making sure each piece is unique, elegant, and classic. Our mission is to provide you with the highest quality and certified jewellery that will elevate your style and make you feel special. Abharan Jewellery brand is a well-known, trustworthy and respected brand in India. Abharan Jewellers is known for its exquisite designs and high-quality BIS Hallmarked jewellery, including gold, diamond, platinum, and silver pieces. The company offers a wide range of jewellery collections, including traditional, contemporary, and fusion designs to suit different tastes and occasions. The brand is known for its excellent customer service and has won several awards for its quality and innovative designs. Our collection features exquisite pieces crafted from 18k and 22k (916) BIS Hallmarked gold. our jewellery is designed to elevate any outfit. Our exquisite collection of diamond jewellery is sure to leave you spellbound. From classic solitaire rings to delicate diamond necklace....
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....for the purpose of indicating a connection between the product and that Company. The use of the words "A quality product from ITL group" clearly showed an intention to show a connection between the product and the ITL group. These words indicated that the quality of the product was the same as that of a product of ITL group. If use of such words did not disentitle a party from the benefit of the Notification, we fail to understand what sort of words would disentitle a party. The decision of the Tribunal in this case is clearly erroneous and will stand overruled". 24. In the case of Kail Ltd. Versus State of Kerala: 2018 (12) GSTL 226 (SC), the issue was with regard to the tax under Section 5(2) of the KGST Act on sales turnover of home appliances for Rs. 27,27,20,230/- on the ground that the appellant-Company had sold the home appliances under the brand name "Sansui". The Assessing Authority - the respondent-State, while scrutinizing the second sale exemption as claimed by the appellant-Company Kail Ltd., found that it is the brand name holder of "Sansui" and hence the turnover of the items sold under "Sansui" brand name was treated as first sale under Section 5(2) of the KGST Act....
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....hat respondents were using 'brand name'. The Tribunal further held that the name on the goods manufactured and cleared by the respondent in the market could at best be termed as "House mark" and not brand name/trade name. The Apex court on the above issues observed as follows: "31. In our considered opinion, the aforesaid findings are also totally wrong and recorded in violation of the law of Trade Marks. 32. We may also refer to another decision of this Court in Astra Pharmaceutical Pvt. Ltd v. Collector of Central Excise, Chandigarh, reported in 1995 (75) E.L.T. 214 (S.C.). That was a case of Pharmaceutical product. In the said decision also the manner and scope of "Brand name" and distinction between 'House mark' and "Product mark/Brand name" has been brought out. It was stated therein by this Court that "House mark" which is usually a device in the form of an emblem, word or both is an identification of the manufacturer which is compulsory under the Drug Rules. On the other hand, product mark or brand name is invariably a word or a combination of a word and letter or numeral by which the product is identified and asked for. In paragraph 6 of the said Judgment, Narayanan's B....
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....thereby proceeded to set aside the well-written Judgment passed by the Commissioner of Central Excise, Mumbai who has recorded his reasons giving cogent basis for his reasoning. 36. In the book of "Law of Trade Marks" by K.C. Kailasam and Ramu Vedaraman the distinction between 'Product mark' and 'House mark' has been beautifully delineated, which is as under : "It is possible that the proprietor may use several trade marks in respect of his goods (known as Product mark), besides using a common mark in all his products to indicate the origin of the goods from the enterprise (known as House mark). This practice is more predominant in the pharmaceutical trade. Though both are trade marks and are registrable as such, each has its own distinct function. While the House mark represents the image of the enterprise from which the goods emanate, the Product mark is the means by which goods are identified and purchased in the market place and it the focal point of presentation and advertisement." Emphasis supplied 37. In view of above discussion, it is clear that what was being used by the respondent under the expression "Kalvert" was a "Brand name" and not a "House mark" as sought to ....
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.... after completion of job work are intended to be cleared, before the goods are cleared from the premises of the job worker. (4) The job worker shall fill up the particulars of date and time of removal of goods before the clearance of goods and after such clearance the job worker shall intimate to the said person, the date and time of the clearance of goods for completion of the particulars by the said person in the triplicate copy of the invoice. (5) The said person may supply or cause to supply to a job-worker, the following goods, namely :- (a) inputs in respect of which he may or may not have availed CENVAT credit in terms of the CENVAT Credit Rules, 2004, without reversal of the credit thereon; or (b) goods manufactured in the factory of the said person without payment of duty; under a challan, consignment note or any other document (herein referred to as 'document") with such information as specified in sub-rule (2) of rule 11 of the Central Excise Rules, 2002, duly signed by him or his authorised agent. (6) The responsibility in respect of accountability of the goods, referred to in sub-rule (5) shall lie on the said person. (7) Notwithstanding any thing contained....
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....undertaken for the sole purposes of undertaking job work under these rules unless he has exercised his option in terms of the proviso to sub-rule (1). In view of the above Rule the argument of the appellants that they are not the manufacturers is not sustainable. The fact that these appellants supply gold and other required materials to the job worker and the job worker in turn returns the finished articles of jewellery after embossing the name to the manufacturer is not in dispute. Neither the job workers have come forward to register themselves. Therefore, to claim that they are not the manufactures of articles of jewellery is far-fetched. Section 37 of central excise act 1944 empowers the government to make Rules for assessment and collection of duties. These rules do not have an overriding effect as claimed by the appellants in as much as Rule 12AA has been introduced to specify as to who is the manufacturer liable to be registered in the world of jewellery business. All the decisions relied upon by the appellants have no relevance as these are the decisions rendered prior to the introduction of Rule 12AA. 32. In the case of Torrent Laboratories Pvt. Ltd. vs. U.O.I: 1991 (955)....
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....gainst the manufacturer, even de hors the applicability or otherwise of the principle of construction - Generalia specialibus non derogent, they do not operate on the same field or cover the same area, to be reconciled in order to avert any clash or inconsistency. That apart, even if it is to be assumed that they relate to one and the same nature of demand from the manufacturer of any amount due from him to the State, the provisions contained in Section 11A are general in nature and application and the Modvat Scheme being a specific and special beneficial scheme, with self-contained procedure, manner and method for its implementation, providing for its own remedies to undo any mischief committed by the manufacturer in abuses thereof, the provisions of the said special scheme alone will govern such a situation and there is no scope for reading the stipulations contained in a general provision like Section 11A into the provision of the rules in question which alone will govern in its entirety the enforcement of the Modvat Scheme. The question as to the relative nature of the provisions general or special has to be determined, with reference to the area and extent of their application....
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....C) where it was held that all the three ingredients of Section 11A (1) proviso should be present when suppression was invoked. They claimed that the impugned orders except for baldly stating that there was suppression does not bring about any positive evidence to establish that there was any omission or commission to warrant invocation of the extended period. 37. On perusal of the show cause notices and the impugned orders we find that the claim of the revenue is that there was wide publicity and all the jewellery manufacturers should have come forward and registered themselves. The revenue also claims that the fact of manufacturing of branded jewellery came to their notice only after search of the premises of the appellants and after detailed investigations conducted by them. 38. It is a fact that with effect from 1.3.2005 branded jewellery was chargeable to Central Excise Duty at the rate of 2% adv.; wide publicity was given and various circulars were issued to educate the trade and the revenue authorities. When these amendments were introduced, it was widely publicized that all the persons engaged in sale of branded articles of jewellery are to be registered and pay the requir....
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.... payment of duty. Where facts are known to both the parties, the omission by one to do what he might have done and not that he must have done does not constitute suppression of fact." Emphasis applied 17. In fact, the Act contemplates a positive action which betrays a negative intention of wilful default. The same was held by Easland Combines, Coimbatore v. The Collector of Central Excise, Coimbatore - (2003) 3 SCC 410 = 2003 (152) E.L.T. 39 (S.C.) wherein this Court held :- "31. It is settled law that for invoking the extended period of limitation duty should not have been paid, short levied or short paid or erroneously refunded because of either fraud, collusion, wilful misstatement, suppression of facts or contravention of any provision or rules. This Court has held that these ingredients postulate a positive act and, therefore, mere failure to pay duty and/or take out a licence which is not due to any fraud, collusion or willful misstatement or suppression of fact or contravention of any provision is not sufficient to attract the extended period of limitation." '6. ------ So far as misstatement or suppression of facts are concerned, they are clearly qualified by the wo....
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....mmitted to extend the period from six months to 5 years. Unless the assessee is put to notice, the assessee would have no opportunity to meet the case of the department. The defaults enumerated in the proviso to the said sub-section are more than one and if the Excise Department places reliance on the proviso it must be specifically stated in the show-cause notice which is the allegation against the assessee falling within the four corners of the said proviso...." 40. From the 4 show cause notices and the impugned orders the allegation against the appellants is that since there was wide publicity and the appellants knew they were manufacturers of branded jewellery, should have got themselves registered and paid the duties. There is no allegation of wilful suppression or any intent to evade payment of duty either in the show cause notice nor there is any finding to that effect in the impugned orders. Moreover, the Board's clarification dated 2.3.2012 specifically admits to the fact there is confusion among the officers to the leviablity of duty on branded jewellery and clarifies that only those articles of jewellery where the brand name is embossed alone will be liable for duty. Th....
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.... no further repetition of such incidents, and to avoid harassment of the jewellery industry, it has been decided that when a Commissioner is in doubt and is not in a position to decide whether a particular jewellery is branded jewellery or not, or when a jeweller contests that the jewellery sold by him is not branded jewellery, the matter should be referred to the Board. Such references should be sent through the Zonal Chief Commissioner giving full details and relevant documents indicating why the particular jewellery should be treated as branded jewellery. The Chief Commissioner should forward all such references to the Board by addressing it to Member (Central Excise) along with his comments in the matter. Till such time as the matter is decided by the Board, no precipitate action should be taken to charge excise duty on such jewellery Obviously, no reference needs to be made to the Board where the jewellers themselves agree that they are manufacturing branded jewellery as per the circular issued by the Board. Similarly, no reference needs to be made to the Board where the Commissioner holds that the jewellery in question is not branded jewellery. The contents of this letter may....