2005 (98) ECC 234 (Tri)

CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL

West Zonal Bench -- Mumbai

Shri S.S. Sekhon, Member (T) and Shri T. Anjaneyulu, Member (J)

Commissioner of Central Excise, Goa

Versus

Costa & Co. Pvt. Ltd.

With Cross Appeal

Appeals No. E/3317/2001 Mum, E/2669/2002 Mum and E/2668/02 Mum

[Arising out of Order-in-Appeal KKS (3)3/Goa/2001 dated 19.9.2001 passed by the Commissioner of Central Excise (Appeals), Mumbai IV, VI & Goa. & Order-in-Original No. 1/Commr/Goa/Cx/202 dated 31.1.2002 passed by the Commissioner of Central Excise, Goa.]

Order No. A/340-342/WZB/2004-C-II, dt. 28.5.2004, Certified on 15.6.2004

Classification (C. Excise)

COSTA -- CETA -- Sub Heading 201.00, 1601.10, 1601.90 -- Assessee used COSTA'S mark on the product, indicating the product manufactured by Costa & Co. Pvt. Ltd. -- The said word & the star sign cannot be connoted as a "Brand name" within the realm of the chapter note 2 to Chapter 16 of CETA'85. Held "The fact herein of COSTA mark being used on all products of the assessee whether exigible under Chapter 2, 16 or elsewhere under Static Excise Laws, and even on non-exigible products and the fact that name and address of the manufacture is additionally printed on the pouch would therefore be constructed to serve as an emblem of a manufacturer, not as a mark specifically made to indicate excusive rely a relationship in trade of the disputed preparations. Projection of an image by such an emblem would not cause relationship in trade of the specific goods established and lead it to be and classified by involving Chapter 2 of Chapter 16. The orders of CCE (Appeals) are therefore required to be confirmed as regards the applicability of the mark COSTA.

Words & Phrases

"Product" and "House Mark" -- Difference -- Manufacturing company name printed on the product is a ward, is not product specific and is not being used in relation to a "Product" so as to identify that product but it is only used as a "House Mark" -- As such they cannot be termed "goods bearing a brand name" for the purpose of classification under Chapter 2 to 16 of CETA'85.

PRESENT :

Shri Vimlesh Kumar, SDR for the Revenue.

Shri V. Sridharan, Avocate for the Assessee.

Cases Cited :

1. Astra Pharmaceuticals (P) Ltd., 1995 (49) ECC 24 (SC)

2. D.C. of Sales Tax v. Shiphy International, (1988) 69 STC 325............................ [Para 2]

3. Indian Hotel Co. Ltd. v. Income tax Officer, (2000) 7 SCC 39......................... [Para 2(d)]

4. Sea Laminated Packaging, 1990 (30) ECC 36 (SC).......................................... [Para 2]

5. Sterling Foods, (1986) 63 STC 239.................................................................. [Para 2]

Per : S.S. Sekhon

1. (a) These three appeals are being disposed of by this common order as the issue involved revolves around the classification of the same products & thereafter the duty demands.

(b) Appeal E/2668/02 by the assessee arises consequent to a Show Cause Notice No. 59/MAR GAO/2001 dated 12.7.2001 which proposed classification of the products under dispute under Heading 1601.10 and recovery of duty of Rs. 22,13,636 under the provisions to Section 11A (1) Commissioner vide Order No. 21/Commr/Goa/CX/2002 dt. 31.1.2002 confirmed the same and imposed a penalty of Rs. 22,13,636 for contravening the provision of Rule 173B, 173F, 173G(1) read with Rule 9 (1) & 173 G (4) and Rule 53 of the Central Excise Rules. A confiscation of goods valued at Rs. 98,128 seized on 10.1.2001 was arrived and ordered to be redeemed on a fine of Rs. 25,000.

(c) Appeal No. E/2669/02 by the assessee, emanates from a Show Cause Notice No. 50/MAGAO/2001 dt. 18.5.2001, on deny same goods consequent to the which Commissioner confirmed a demand of duty of Rs. 12,62,443 under the proviso to Section 11A (1) and imposed a penalty of equivalent amount under Section 11AC read with Rule 173 Q.

(d) Appeal No. E/3317/01 filed by Revenue, emanates from a Show Cause Notice No. CE/MAR/1/SCND/COSTA/2000-2001 dt. 17.5.2000 proposing to classify the very same products under dispute in Heading 1601.10 and proposing penalty for misdeclaration. In this case, Commissioner (Appeals) vide Order-in-Appeal, impugned now, decided that those every same disputed products, would be classified under 1601.90 since they were 'prepared unbranded items put up in unit containers" leviable to 'nil' rate of duty as the mark' COSTA with a star' was the House Mark and not a Brand Name.

2. (a) Since the issues revolve around classification of the products appeal 3317/01 filed by Revenue the very same Commissioner who adjudicated the items in the other two appeals, the facts of this appeal and decision thereon would settle all the matters being taken up for disposal by this common order. This appeal is therefore take up first.

(b) after hearing both sides and considering the issues, it is found:

(a) the entities claimed to be classifiable under S.H. 0201.00 are (1) Cocktail sausages (2) Frankfurters (3) Luncheon Meat (4) Corned Beef (5) Croquettes (6) Pastrami (7) Salami (8) Mortadella (9) Sandwich fillers (10) Ham (11) Ham cubes (12) Bacon (13) Tongue (14) Goa Beef Sausages (15) Goa Pork Sausages (16) Pork Cocktail Sausages (17) Pork Frankfurters (18) Pork Salami (19) Pork Luncheon Meat (20) Chicken Frankfurters plain (21) Chicken slices (22) Chicken frankfurters masala & (23) Beef cubes.

The disputed chapter headings are 201.00 & 1601.10 and 1601.90. The assessee have with effect from 7.6.2000 deleted the marks "COSTA with a five pointed star" (hereinafter referred to as "COSTA") on the products. The packs also contain a yellow coloured sticker showing date of manufacture price of the product and also the mark `COSTA'.

(b) The admitted process employed, in short, is following steps

(i) Meat in carcase form of the slaughtered animal is procured and thereafter processes of cleaning, chopping, cutting, mincing and converting the same into small desired pieces are effected.

(ii) The items are then frozen after scalding or and boiling and treating them with salt/nitrates and marketed in frozen condition in poly pouches.

(iii) In certain other items, additional ingredients like spices, oil etc. are added & thereafter they are encased in animal gut or otherwise or and given shapes in mould, sliced of required oil being added or batter of egg and flour treatment being resorted and thereafter marketed in frozen condition in poly pouches.

(iv) all items are at all times kept frozen and marketed in cold storage in poly pouches. They are to be heated/cooked before eating.

(c) A perusal of the Chapter Note to Chapters 2 & 16 and Head Notes of HSN, reveals that Chapter 2 would cover meat and meat offals in the following states only--

(i) Fish including packed with salt as a temporary preservative.

(ii) Meat chilled/frozen, salted in brine, dried or smoked, slightly sprinkled with sugar or with aqnenis (sic) solution of sugar treated for tenderizing, chopped, minced, ground and when mixed with meat from different animals.

(iii) Packed, branded or not, Even when put up in air tight packing only if subjected to permissible treatment of Chapter 2 i.e. as per Note 2 to Chapter 2 which reads as --

"2. This chapter covers products, which are chilled, frozen and salted, in brine, dried or smoked but not otherwise prepared."

If any further treatment of cooking, pre cooking or shape e.g. of sausage is given to the meat/offal e.g. boiled, steamed, grilled, fried or roaster (sic) or otherwise prepared e.g. pickled and or spiced to preserve including those covered fully or partially with batter or bread crumbs, truffled, seasoned (with pepper, salt etc.) and made into pates would get the entities transferred to headings under Chapter 16.

(d) On examining of the list, of meat products in this case, it is found, some of them would get classified under Chapter 2 while others would go under Chapter 16 of the Tariff depending upon the treatment meted during the operation conducted on carcass procured and brought to the appellant assesses premises. The operations, if conducted and ingredients as added in certain cases would result in emergence of a new exigible commodity from Chapter 2 product to a commodity of Chapter 16 as found in the sub-para (c) above. The plea of the Ld. Advocate that by precooking and cooking of the meats 'no manufacture' under Excise Law would take place and his reliance on the case of Indian Hotel Co. Ltd. v. Income tax Officer (2000) 7 Supreme Court Cases 39 wherein the Apex Court had held 'mere processing activity like preparation or selling of food packages or preparation of food stuff for serving in hotels would not amount to manufacture, will not help the assessee herein. It is the case of the assessee that what they undertake is not `cooking of food' nor the entity being marketed as food in the sense of "Ready to Eat Food." They have relied upon material and affidavits to stress that what is marketed, needs to be and in fact is cooked, before it is consumed. The entity is claimed to be 'raw uncooked edibles' and even the Commissioner finds that they need to be cooked [see para 34 (ii) of Order-in-Original in Appeal No. E/2668 & para 8 (iii) of order impugned in Appeal No. 3317/01 and para 38 (iii) of impugned order in E/2669/01]. The material placed and relied only leads to conclude that meats are processed to render them as preparations, which can be preserved, marketed and be edible. The Indian Hotel's case relied upon does not specifically deal with the definition of 'manufacture' under Central Excise Act, 1944 especially the scope of clause (ii) in the definition under the Central Excise Act, 1944 and when Chapter Note 1 of Chapter 16 is applicable. The other cases relied upon by the Ld. Advocate viz. D.C. of Sales Tax v. Shiphy International [(1988) 69 STC 325] & Sterling Foods, [(1986) 63 STC 239] of the Supreme Court, also based on finding that frozen shrimps, prawns, lobsters are regarded commercially as the same commodity and therefore there is no manufacture will not help the assessee since sausage or say frank further are not regarded as 'pork meat' from which they are made and emerge Commercially "pork meat" is differently understood than sausage etc. When commercially known new entity emerges which is marketable, manufacture does take place, even if classification remains the same, is well settled concept of manufacture under Central Excise Law [See Laminated Packaging, 1990 (30) ECC 36 (SC) : 1990 (49) ELT 326 (SC)]. The plea of no manufacture taking place has to be therefore rejected.

(e) The products in this case are therefore to be classified under heading of Chapter 2 or 16. After determining the chapter, based on the extent of treatment as per Chapter Note 2 to Chapter 2 and the finding as since para 'c' above the question of applying further six digit classification would arise. Under Chapter 2, no further sub-classification is called for. Therefore, the presence or absence of the Mark Costa on the unit or the packings or labels etc. will not be relevant for classification of those entities that would remain covered under Chapter 2. As regards Chapter 16, the further classification has to be arrived by just finding out whether the entity being cleared and under classification is 'put up in unit container'. A unit container by definition under Section IV of the Tariff would mean a container whether large or small (for example tin, can, box, jar, bottle, bag or carton, drum, barrel, or canister) designed to hold a predetermined quantity or number. Though there is no finding arrived how the 'unit container' definition would be applicable nor is there a contest to the same by the appellant and on perusal of the copies of the declarations and samples of 'pouches' it is observed that predetermined weight quantities are mentioned on the pouches. The pouches are to be held as 'Unit containers' Once it is established that the entities are placed in unit containers' classification under 1601.10 is to be examined which reads as :

"1601.10 -- Put up in unit containers and bearing a and (sic) name"

The heading 1601 reads as "Preparations of meat, xxx"

Therefore, the bearing of a brand name has to be on the preparation and preparation would also include and be a "retail pack" as per Chapter Note 1 to Chapter 16. The unit retail pack for certain period bears the mark COSTA on the pack and thereafter for a later period such mark does not appear. During the later period this mark is only on the sticker showing the date of packing and the price. Price Sticker is not a part of packing material as it is well settled that placing/replacing of such price stickers and Placing of such price stickers with date of manufacture would not constitute manufacture under the Central Excise law. Packing and price stickers are required to be placed on the packages meet the needs of certain other laws and are not an activity to be recognized under Central Excise Act, 1944. The placing of such price stickers would not entitle and be covered under the mischief of labelling/relabelling under Excise is settled. Therefore, the COSTA mark on such stickers would not attract and bring the mischief of brand name application stipulation of Chapter Notes Chapter 16.

(f) For the period the mark COSTA was on the package, the finding of CCE (Appeals) is --

11. There is considerable force in the arguments advanced by the appellants and their reliance on the Hon'ble Supreme Court judgment in the case of M/s. Astra Pharmaceuticals (P) Ltd. It has been held in the said case that, "house mark" (usually a device in the form of an emblem in, word or both) is an identification of the manufacturer which is compulsory under the Drug Rules. Product mark or brand name (invariably a word or a combination of a word and letter or numeral) is the one by which the product is identified and asked for". In the instant case, the products are themselves identified as either, say, "Sandwich fillers", "Ham", "Salami" as the polythene bags indicate. The word "COSTA's" involving the usage of a punctuation mark "an apostrophe" and the letter "s" is only any indication that the product is manufactured by Costa & Co. Pvt. Ltd. The said word & the star sign cannot be connoted as a "brand name" within the realm of the Chapter Note 2 to Chapter 16 of CETA'85. `COSTA V which is a word, is not product specific and is not being used in relation to a "product so as to identify that product, but, it is only used as a "house mark" As aforesaid, the products are identified by the name of the product like Salami, Ham, etc. As such, they cannot be termed "goods bearing a brand name" and hence merit appropriate classification under the residual chapter sub-heading 1601.90 of CETA'85 and which attracts Nil rate of duty under tariff.

This finding cannot be upset on the basis of ground taken by Revenue in Appeal E/3317/01. Once it is found that the same mark COSTA as placed is registered as Trade Mark for spices, chutneys, confectionary, tea, coffee, and other goods in Chapter 30, non-alcoholic drugs, syrup etc. in Chapter 32 and alcoholic beverages. This Mark therefore is not product specific. The mark is definitely a House Mark as recognized by the Supreme Court in the case of M/s. Astra Pharmaceuticals (P) Ltd., 1995 (49) ECC 24 (SC) : 1995 (75) ELT 214 (SC). The definition under Chapter Note 2 to Chapter 16 and Chapter Note 2 (ii) under Chapter 30 of the Central Excise Tariff Act for Brand name being parimateria the finding of the Supreme Court in Astra Pharmaceutical's case (supra) and the fact herein of COSTA mark being used on all products of the assessee whether exigible under Chapter 2, 16 or elsewhere under Static Excise Laws, and even on non-exigible products and the fact that name and address of the manufacture is additionally printed on the pouch would therefore be constructed to serve as an emblem of a manufacture, not as a mark specifically made to indicate excusive rely a relationship in trade of the disputed preparations. Projection of an image by such an emblem would not cause relationship in trade of the specific goods established and lead it to be and classified by involving Chapter 2 (sic) of Chapter 16. The orders of CCE (Appeals) are therefore required to be confirmed as regards the applicability of the mark COSTA.

(g) Since the classification of the products under Chapter 2 or and Chapter 16 is required to be re-determined, in light of the findings herein, the matters are required to be remitted back to the original authority to re-determine the classification and thereafter work out the duty demands, if any. The issue of penalty kept open and be re-determined in view of the quantum of demands, if any, after hearing the assessee.

3. All appeals allowed as remand in above terms.

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