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TaxTMI 
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2025 (10) TMI 549
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..../71001/2016 CCE vs. ORPL OIO No.28/2016 dt. 28.06.2016 2003-04 to 05-06 2. We are taking the facts of the appeals from Excise Appeal No.71001 of 2016. 3. The Respondents are manufacturer of Ophthalmic and Liquid Orals falling under Chapter heading 300310. They are registered with Central Excise Department and availing SSI Exemption under Notification No.8/2003-CE dated 01.03.2003. They are having their manufacturing unit at MNIT Industrial Estate Allahabad and also branch office as well as godown at Mumfordganj Allahabad. 4. The Respondents were also getting their goods manufactured on Principal-to-Principal basis from other manufacturers such as M/s Dolphin Laboratories Ltd., M/s Alchon Parentals (India) Ltd., situated at different places. They were also getting their goods manufactured on Loan License Basis from the units such as M/s Core Healthcare Ltd. situated at Ahmedabad and providing all the raw materials as well as packing material to them. The Respondents are also having a branch office/depot at Ahmedabad. Total quantity of the goods manufactured on Loan License Basis is taken to their depot at Ahmedabad and then transferred to Allahabad branch office. T....
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....the Respondents are not entitled for Small Scale Benefit. 9. The Respondents M/s Optho Remedies Pvt. Ltd. submitted that the turnover of the Respondents is not to be clubbed as the Respondents and the other companies are independent and clearing their products after payment of Central Excise duty, they are doing trading of the products manufactured on Principal-to-Principal basis and on Loan License Basis. It was submitted that the revenue has relied upon Stay Order No.159165/2013 dated 11.09.2013 and interim Order No.339/2013 dated 13.05.2013 passed in Excise Appeal No.1061/20125 - Ex. (DB) [2014 (312) E.L.T. 127 (Tri.-Del.)] in their own case, which was not a final order. 10. The Respondents relied upon the judgement of Hon'ble Supreme Court in the case of CCE vs. Cosme Farma Laboratories Ltd. [2015 (318) E.L.T. 545 (SC)] which is on identical issue and dismissed the appeal filed by the revenue. In this case the Hon'ble Supreme Court observed as under:- "21. The learned Counsel appearing for the respondent had also drawn our attention to a copy of one of the agreements entered into between the respondent and the job workers. Upon going through the said agreement, w....
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....spondents and the goods manufactured has to be sent back to the Respondents who only has the rights to sell such goods. 13. We do not agree with the grounds taken by the revenue. In the case of CCE Goa vs. Cosme Farma Laboratories Ltd.(supra), the Hon'ble Supreme Court dealt with identical issue and dismissed the appeal filed by the Department. It is held that the job workers were manufacturers and the Respondents - the Loan Licensee was not the manufacturer. 14. We agree with the finding of the Adjudicating Authority and submissions made by the Respondents and dismiss the Excise Appeal No.71001/2016. We allow Excise Appeal No.1061/2012 and Excise Appeal No.1394/2012 filed by the assessee and set aside the Order passed by Commissioner (Appeals). (Order pronounced in open court on.............) -SEPARATE ORDER- PER : SANJIV SRIVASTAVA MEMBER (TECHNICAL): I have gone through the order prepared by Learned Member (Judicial). However, even after long hours of persuasion, I am not in position to agree with the findings recorded. 2.0 The issue involve in the present case is vis-à-vis the determination of value of clearances by the manufacturing unit f....
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.... (iii) which, in relation to the goods specified in the Third Schedule, involves packing or repacking of such goods in a unit container or labelling or re relabelling of containers including the declaration or alteration of retail sale price on it or adoption of any other treatment on the goods to render the product marketable to the consumer] and the word "manufacturer" shall be construed accordingly and shall include not only a person who employs hired labour in the production or manufacture of excisable goods, but also any person who engages in their production or manufacture on his own account;" 5.0 In the present case the goods are those goods which are got manufactured by the appellants on job work basis or on loan license basis and actually products marked to the consumers only after undertaking whatsoever treatment to the customer from the premises of the appellants, that being so for the purpose of Rule 2f the process undertaken would have been the premises of manufacturer and the value of clearances should have been determined after taking into account the value of these goods also. 6.0 Notification No.8/2003-CE dated 01.03.2003 provides as under:-....
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....ory, the exemption shall apply to the aggregate value of clearances mentioned against each of the serial numbers in the said Table and not separately for each manufacturer; (vii) the aggregate value of clearances of all excisable goods for home consumption by a manufacturer from one or more factories, or from a factory by one or more manufacturers, does not exceed rupees three hundred lakhs in the preceding financial year. For the purposes of determining the 3. aggregate value of clearances for home consumption, the following clearances shall not be taken into account, namely : - clearances bearing the brand name or (a) trade name of another person, which are ineligible for the grant of this exemption in terms of paragraph 4; clearances of the specified goods which (b) are used as inputs for further manufacture of any specified goods within the factory of production of the specified goods; clearances of strips of plastics used (c) within the factory of production for weaving of fabrics or for manufacture of sacks or bags made of polymers of ethylene or propylene. The exemption contained in this 4. notification shall not apply to specified goods b....
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.... - (i) in respect of specified goods which have been notified under section 4A of the Central Excise Act, the value as determined in accordance with the provisions of that section, and (ii) in respect of specified goods other than those referred to in sub-clause (i), the value as determined in accordance with the provisions of section 4 of the Central Excise Act, or the tariff value fixed under section 3 of the said Act;" 7.0 The clauses as referred above are identical to clauses in Notification No.175/86 and 1/1993 specifically clause 4, which has been interpreted by Hon'ble Supreme Court in the case of KOHINOOR ELASTICS PVT. LTD. Vs COMMISSIONER OF CENTRAL EXCISE, INDORE 2005 (188) ELT 3 (SC), wherein following has been held:- "7.It is on just such a reasoning that the Full Bench of the Tribunal has held that the exemption is not lost. We are afraid that there is complete misreading and a misunderstanding of the Notification. As set out hereinabove, Clause 4 of the Notification is clear and unambiguous. It says that the exemption is lost if the "goods" bear the brand/trade name of another. There are no other qualifying words. The term "goods" admitte....
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....s case there is no dispute on facts. The "course of trade" of the Appellant is making elastics for specified customers. It is an admitted position that the Appellants are affixing the brand/trade name of their customers on the elastics. They are being so affixed because the Appellants and/or the customer wants to indicate that the "goods (elastic)" have a connection with that customer. This is clear from the fact that the elastics on which brand/trade name of "A" is affixed will not and cannot be used by any person other than the person using that brand/trade name. As set out hereinabove once a brand/trade name is used in the course of trade of the manufacturer, who is indicating a connection between the "goods" manufactured by him and the person using the brand/trade name, the exemption is lost. In any case it cannot be forgotten that the customer wants his brand/trade name affixed on the product not for his own knowledge or interest. The elastic supplied by the Appellants is becoming part and parcel of the undergarment. The customer is getting the brand/trade name affixed because he wants the ultimate customer to know that there is a connection between the product and him. Of cou....
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.... this aspect." (Emphasis supplied by us) 14. Therefore, in order to avail of the benefit of the exemption notification, the assessee must establish that his product is not associated with some other person. To put it differently, if it is shown that the assessee has affixed the brand name of another person on his goods with the intention of indicating a connection between the assessee‟s goods and the goods of another person, using such name or mark, then the assessee would not be entitled to the benefit of exemption notification. We may hasten to clarify that if the assessee is able to satisfy the Adjudicating Authority that there was no such intention, or that the user of the brand name was entirely fortuitous, it would be entitled to the benefit of the exemption." 9.0 Tribunal in the case of SANTEL COMMUNICATIONS PVT. LTD. Vs COMMR. OF C. EX., CHENNAI-IV 2016 (343) ELT 1026 has held as follows: "24. On perusal of records and findings, we find that the adjudicating authority dealt the issue in detail at Para 14 of the order and relied the Board's Circular dated 27-10-2014 and the Apex Court's decision in the case of Collector v. Vimal Printery [Civil ....
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.... while clearing the said goods and the Revenue's plea that the overseas supplier embossed the name as per the direction of the appellants is not relevant and not acceptable. Therefore, the Hon'ble Supreme Court's decision in the case of Collector v. Vimal Printery [2000 (115) E.L.T. A222 (S.C.)] is squarely applicable to the present case and the adjudicating authority has rightly relied on the above judgment in his order." 10.0 In the case of VIR RUBBER PRODUCTS P. LTD. Vs COMMISSIONER OF C. EX., MUMBAI-III 2015 (318) ELT 578 (SC) Hon'ble Supreme Court has held as follows:- " 5.From the aforesaid definition of brand name, it becomes apparent that on the goods manufactured by the appellant for the aforesaid automobile companies, the appellant had been using brand name or trade name on those goods. In such cases, in respect of those goods which are manufactured for the other person, obviously no exemption is to be given as the aforesaid Notification does not apply to those specified goods. To put it pithily, what would be the position if the appellant was doing job work only for other companies and using their brand name on the goods manufactured? Was it permissible to se....
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....the SSI unit or that, the input material used by the SSI unit was already affixed with brand name." It becomes clear from the reading of the aforesaid paras that amendment in para 4 in the manner mentioned above was brought to deny the benefit of Notification to those SSI units which have been making use of branded good for another person irrespective of whether the brand name owner himself is SSI unit or not. It was also made abundantly clear here that the requirement of affixation or brand name by the SSI unit was immaterial. That was the purpose for substituting the word "affixing" by the word "bearing". Going by the aforesaid consideration this Court held in Australian Foods (India) (P) Ltd. case that after this amendment in para 4 it was not necessary that there has to be affixation of the name or mark on the goods. Applying the ratio of this case to the facts of the present case, the irresistible conclusion is to hold that the impugned order of the CEGAT is untenable and not in accordance with law. We may mention that while giving its decision the CEGAT has gone by the unamended para 4 without taking into consideration the amended para and the implication th....
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....goods" manufactured by him. This will be for the purpose of indicating a connection between the "goods" manufactured by him and his customer." 9.The other reason given by the CEGAT is that "HM" and "PAL" are not the brand names. Here again, it has fell into legal error. Similar contention was rejected by this Court in 'Commissioner of Central Excise, Trichy v. M/s. Grasim Industries Ltd.‟ (2005 (3) SCR 466 = 2005 (183) E.L.T. 123 (S.C.)] in the following words : - "In our view, the Tribunal has completely misdirected itself. The term "brand name or trade name" is qualified by the words "that is to say". Thus, even though under normal circumstances a brand name or a trade name may have the meaning as suggested by the Tribunal, for the purposes of such a Notification the terms "brand name or trade name" get qualified by the words which follow. The words which follow are "a name or a mark". Thus even an ordinary name or an ordinary mark is sufficient. It is then elaborated that the "name or mark" such as a "symbol" or a "monogram" or a "label" or even a "signature of invented word" is a brand name or trade name. However, the contention is that they must be used....
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....e of the excisable goods : Provided that the cost of transportation, if any, from the premises, wherefrom the goods are sold, to the place of delivery shall not be included in the value of excisable goods. Explanation.- For the purposes of this rule, job-worker means a person engaged in the manufacture or production of goods on behalf of a principal manufacturer, from any inputs or goods supplied by the said principal manufacturer or by any other person authorised by him." In view of the above amendment that has been incorporated in the Central Excise Act and the rules made there under, I am not in position to agree with the said decision of Hon'ble Supreme Court in the case of M/s Cosme Farma Laboratories Ltd. (supra), which is for the period when these provisions were not there. 12.0 In the present case the total value of clearances of the goods manufactured by the appellant-I, either in his own premises or on loan license basis or on job work basis should be taken into account for determining the correct value of clearances. This correct value of clearances would be the total of clearances made from the appellant's manufacturing depot/office premise....
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.... the import of Explanation VIII." 14.0 In view of the discussions as above, the appeals filed by the appellants need to be dismissed, whereas the appeal filed by the Revenue needs to be allowed. Order Dated 14-11-2024 POINTS OF DIFFERENCE In view of the above, taking note of the facts that Member (Judicial) has opined for setting aside the impugned order and Member (Technical) has held against upholding the impugned order, following questions have referred to Hon'ble President for referring the matter to Third Member for resolution in difference of opinion recorded:- Whether the appeals filed by the appellants should be- A. allowed as held by Member (Judicial) relying on the decision of Cosme Farma and the appeal filed by the revenue dismissed ; or B. dismissed as held by Member (Technical) as the decision of Cosme Farma is distinguishable for the reason of change in the provision of the statute, and on the basis of the provisions of statute and decisions relied upon by him and the appeal filed by the revenue be allowed. (Order pronounced in open court on- 14th November, 2024) &n....
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.... at MNIT Industrial Estate Allahabad and also branch office as well as godown at Mumfordganj Allahabad. The assessee are getting their goods manufactured on principal-to-principal basis from the other manufacturers situated at different places. They are also getting their goods manufactured on loan-license basis from the units situated at Ahmedabad and providing all the raw materials as well as packing materials to them. The assessee are also having a branch office/depot at Ahmedabad. Total quantity of the goods manufactured on loan-license basis is taken to their depot at Ahmedabad and then transferred to Allahabad branch office. The total goods manufactured on principal-to-principal basis are also transferred to Allahabad branch office. The goods manufactured by the assessee at their factory, are not brought to the branch office but cleared on payment of duty directly to the customers. 2.2 After scrutiny of ER-1 Returns and Profit & Loss Account for the period in dispute, the Revenue entertained the view that the assessee had made the goods cleared clandestinely and availed SSI Exemption under Notification No. 8/2003-CE dated 01.03.2003 wrongly. On these allegations, show caus....
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.... manufacturing the goods on loan-license basis; they are registered under Central Excise independently and are clearing their goods on payment of duty; they are clearing their goods by using brand name of the assessee-M/s Optho Remedies Pvt Ltd. Further, M/s Ahlcon Parenterals India Ltd and other companies were manufacturing the goods and clearing the same to the assessee on principal-to-principal basis; they are independently registered with the Central Excise and clearing their goods after payment of central excise duty; they are clearing their goods by using brand name of the assessee-M/s Optho Remedies Pvt Ltd. 4.3 The learned Counsel further submitted that the turnover of the manufacturers under loan-license and also manufacturers on principal-to-principal basis cannot be clubbed with the turnover of the assessee thereby denying the SSI benefit. 4.4 The learned Counsel further submitted that it is the case of the department that the assessee are not eligible for SSI Exemption under Notification No. 8/2003-CE being brand name of the assesssee is used by the other manufacturers; the said notification states that clearances bearing the brand name or trade name of another pe....
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....o be allowed as held by the learned Member (Technical). 7. I find that the in the present case, there is no dispute that the assessee are manufacturing their products and are availing the benefit under Notification No. 8/2003-CE dated 01.03.2003 and paying the duty after crossing full exemption limit. It is also not in dispute that the assessee are also getting the goods manufactured from the other manufacturers. As per the Revenue, the goods manufactured from the other manufacturers who are job workers on loan-license basis or principal-to-principal basis, should also be included in the turnover of the assessee for the purpose of SSI Exemption. Whereas, as per the Notification 8/2003-CE dated 01.03.2003, the exemption can only be denied if the assessee is manufacturing the goods by using brand name of other manufacturer; but in the present case, the assessee is manufacturing the goods by using its own brand name and those are the other manufacturers-job workers, who are manufacturing the goods by using the brand name of the assessee-M/s Optho Remedies Pvt Ltd. The department cannot deny the SSI Exemption to the assessee rather it should be denied to the manufacturers-job worker....
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....on, which is not permitted under law. 9. Further, I find that the turnover of the manufacturers under loan-license and also the turnover of the manufacturers on principal-to-principal basis, cannot be clubbed with the turnover of the assessee dying SSI benefit because the Notification No. 8/2003-CE states that clearances bearing the brand name/trade name of another person. 10. Further, I find that the decisions relied upon by the learned Member (Technical),are on the footing that SSI benefit will not be available if any manufacturer clears the goods bearing the brand name/trade name of another person. Therefore, those decisions are not applicable in the present case. 11. Further, I find that it is a settled law that the value of goods manufactured on behalf of loan-licensee, not to be added in computing aggregate value of clearances of goods manufactured by the assessee on their own account, for the purpose of exemption under notifications as held in the following decisions: ⮚ Omega Pharmaceuticals vs. CCE, Surat - 2006 (196) ELT 332 (Tri. Mumbai) ⮚ Tanmed Pharmaceuticals vs. CCE, Chennai-IV - 2005 (190) ELT 190 (Tri. Chennai) o....