AI Drafter - (New and Powerful) 
Generate professional replies, appeals, opinions to Show Cause Notices, assessment orders, audit objections, and other legal communications using TaxTMI's AI Drafter. 
TaxTMI 
TaxTMI 
2002 (10) TMI 114
X X X X Extracts X X X X
X X X X Extracts X X X X
....gaged in the manufacture and clearance of Diesel Engine parts (CET sub-heading 8409.00). During 1994-95 to 1997-98 (up to 17-10-1997), they manufactured and cleared without payment of duty Diesel Engine parts namely Rocker Box, Rocker Box with Lever and Fuel Pump Bracket under the brand name 'BHALLA FINE' as also Lubricating Pumps under the brand name 'BHALLA'. The brand name 'BHALLA' belonged to M/s. United Foundry and Engineering Works who had got the brand name registered in their favour under the Trade and Merchandise Marks Act, 1958 (hereinafter referred to as the Trade Marks Act) in respect of Lubricating Pumps long before the above period. The Department by show-cause notice dated 31-3-1999 proposed to recover duty of excise on the above clearances by invoking the extended period of limitation, alleging that M/s. Fine Industries were not eligible for the SSI exemption under Notification Nos. 1/93-C.E. (as amended) and 16/97-C.E. on account of the bar contained in Paragraph 4 of Notification No. 1/93 and the corresponding provision of Notification No. 16/97. The show cause notice was contested by the party. The Adjudicating Authority ruled out the applicability of Para 4 ibid....
X X X X Extracts X X X X
X X X X Extracts X X X X
....red in respect of MCB in favour of any other person. The lower Appellate authority also took note of the fact that the assessee had applied for registration of the said brand name in their favour in respect of MCB on 28-4-1994. The appeal of the Revenue is against this decision of the Commissioner (Appeals). 4.M/s. Swadesh Enterprises, M/s. V.K. Enterprises, M/s. Sumir Engineers and M/s. Swadesh Auto Industries (respondents in Appeal Nos. 1292, 1293, 1295 and 1296 respectively) manufactured Auto parts and cleared the same under the brand name 'SI' belonging to M/s. Swadesh Industries, without payment of duty, during the period 1996-97. The Department by show cause notices demanded duty on the said clearances and, inter alia proposed to impose penalties under Rule 209A on M/s. Randev Brothers, Shri Varinder Randev, Shri Narinder Randev and Shri Sunil Kumar Randev (respondents in Appeal Nos. 1290, 1291, 1294 and 1297 respectively). The original authority held that the assessees' goods attracted the mischief of para 4 of Notification No. 1/93-C.E. and hence they were not eligible for the SSI exemption under the Notification. The appeals preferred by the aggrieved parties against th....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... decide whether the benefit of SSI exemption was available to a manufacturer in respect of specified excisable goods affixed with a brand name not belonging to him but similar to certain brand name belonging to another person. This is a question of law involving interpretation of para 4 of Notification No. 1/93-C.E., which has to arise from settled facts. The brand name used by the assessee is 'BHALLA FINE' and the one owned by another person is 'BHALLA'. It is a question of fact as to whether the former is similar to the latter. We note that the referring Bench has not recorded any finding on this question of fact to pave the way for the above question of law. We observe that the above question of law would have arisen only if it had been found that the two brand names were similar. The regular Bench can first settle the aforesaid question of fact and then proceed to decide the eligibility of M/s. Fine Industries for exemption in respect of their "BHALLA FINE" branded goods, in the light of what we are going to hold on the second issue. 7.The second issue referred to us is whether the mischief of para 4 of the SSI exemption notification would be applicable to a manufacturer man....
X X X X Extracts X X X X
X X X X Extracts X X X X
....chief of para 4 of the notification hit the impugned goods cleared under the brand name by M/s. Fine Industries. Similarly, she submitted, the auto parts on which 'SI' brand name was used by the brand name owners viz. M/s. Swadesh Industries were in the same class as that of the different items of auto parts cleared under the brand name by M/s. Swadesh Enterprises and others. The DR in this connection referred to the Fourth Schedule to the Trade Marks Act read with Section 18(2) of the Act and Rule 26(1) of the Trade Marks Rules. The learned SDR argued that the reasoning of the learned Commissioner (Appeals) - that the branded goods of the assessee were different from the goods of the brand name owner - for allowing SSI exemption to the goods of the assessee (M/s. Fine Industries) was not correct as it did not satisfy the requirement of Explanation IX to Notification No. 1/93-C.E. She also did not accept the view taken by the Tribunal in Swadesh Industries v. CCE [2001 (129) E.L.T. 730] which was followed by the Commissioner (Appeals) in the case of M/s. Swadesh Enterprises & Others (respondents in A. No. E/1292/2001 etc). The learned SDR argued that where the branded goods of smal....
X X X X Extracts X X X X
X X X X Extracts X X X X
....CE [1999 (107) E.L.T. 457] Rukmani Pakkwell Traders v. CCE [1999 (109) E.L.T. 204] Swadesh Industries v. CCE [2001 (129) E.L.T. 730] 11.The learned Advocate, Shri B.L. Narsimhan, for M/s. Fine Industries, referred to the provisions of the Trade Marks Act as also to the Fourth Schedule to the Act and pointed out that the same brand name could be registered under the Trade Marks Act in respect of goods falling under different classes under the Fourth Schedule to the Act. To illustrate the point, the learned Advocate brought on record extracts from the Trade Marks Journal which showed inter alia that the brand name 'SIROCCO' was registered in favour of a trader in respect of machine tools and parts thereof falling under class 7 while the same brand name was registered in favour of another party in respect of goods of class 11 and in favour of a third party in respect of goods of class 25. The Advocate was endeavouring to counter the learned SDR's plea that the mischief of para 4 of the notification was attracted even where the branded goods of the SSI unit belonged to the same class as....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... name/trade name on goods different from the specified goods of the SSI unit. In order to resolve this issue, we think, we have to read together Explanation IX and Explanation X to the notification. Explanation IX defines brand name/trade name as under :- "Brand name" or "trade name" shall mean a brand name or trade name, whether registered or not, that is to say a name or a mark (x x x) such as symbol, monogram, label, signature or invented word or writing which is used in relation to such specified goods for the purpose of indicating, or so as to indicate a connection in the course of trade between such specified goods and some person using such name or mark with or without any indication of the identity of that person." According to the above Explanation, either of the terms 'brand name' and 'trade name' used in para 4 of the notification should be one used in relation to the specified goods of the SSI unit for the purpose of indicating a connection in the course of trade between such specified goods and some person using such name or mark. It is not in dispute that the words "some person using such name or mark" stand for "another person" in para 4. Explanation IX, of cou....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d goods fell within the net of para 4 ibid which contained the exclusionary clause. The Revenue had to show that the said goods were bearing the brand name of another person, which burden was discharged by it. The Revenue had a further burden to discharge in terms of Explanation X which said that the mere fact that a small scale manufacturer's goods bore the brand name/trade name of another manufacturer/trader shall not be a reason for the Revenue (whose burden it was to bring such goods within the net of para 4 so as to deny the benefit of exemption to the small scale manufacturer) to deem that such other manufacturer/trader was also manufacturing the specified goods. The Revenue had to show that the brand name/trade name owner was also manufacturing the specified goods and clearing the same under his brand name/trade name. 14.The above position appears to be well supported by the Apex Court's decision in the case of Paliwal Electricals wherein their Lordships explained the object of para 7 of Notification No. 175/86 as under :- "Now what does para 7 provide and why? It provides that the benefit of Notification No. 175 shall not be available to a small manufacturer, who affi....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... be equally applicable to para 4 ibid. We have no doubt in our mind that, to attract the mischief of para 4, the specified goods manufactured by SSI unit should have been cleared under the brand name of another person who used the same brand name on identical goods. 15.We have also perused the CBEC's circular. The case examined by the Board was one in which the jurisdictional Assistant Collector had denied the benefit of exemption under Notification No. 175/86-C.E. to an SSI unit in respect of gas stoves cleared under the brand name 'HOTLINE', on the ground that the brand name was owned by another company not eligible for exemption under the notification. The view taken by the Assistant Collector was that the above branded product was hit by the bar in para 7 of the notification. The Board took note of the fact that both the SSI unit and the other company were registered owners of 'HOTLINE' brand name but in respect of different goods - the former in respect of gas stove and the latter in respect of television set. The Board, after referring to Section 8 of the Trade Marks Act, further noted that it was permissible to have the same trade mark/brand name registered in favour of d....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e notification, apart from stipulating the mere user of the brand or trade name of another person, does not carry any further limitation on the said user that it should be in respect of similar or identical goods also." The Division Bench, in the writ appeals, did not entertain the challenge as to the constitutional validity of para 4 ibid which had since been upheld by the Hon'ble Supreme Court. On the aforesaid (additional) issue, however, the Division Bench of the High Court vacated the findings of the learned Single Judge and remanded the issue to the adjudicating authority. Paragraphs (5) and (6) of the Division Bench judgment, extracted below, are relevant :- It"5. is the contention of the learned Counsel for the appellants that the clause (4) of the said Notification can be made applicable only if the users of the same brand name manufacture the identical goods and not otherwise. We are of the opinion that this is a matter to be decided only by the adjudicating authority. As stated already, since the adjudicating authority had not decided this issue, it is for him to take up the issue after giving an opportunity to the appellants herein. On this short ground, we are of....