2004 (97) ECC 35 (Tri)

CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL

New Delhi -- Bench-NB(B)

Shri S.S. Kang, Member (J) and Shri V.K. Agrawal, Member (T)

Kamfin Paints (India) Ltd.

Versus

CCE, Faridabad

Appeal No. E-2894/2003-NB(B)

[Arising out of Order-in-Appeal No. 207/C.E./APPL/DLH/IV/2003 dated 24.7.2003 passed by the Commissioner of Central Excise, Faridabad (Appeals)]

Final Order No. 608/2004-B, dt. 31.5.2004, Certified on 12.8.2004

SSI Exemption

Notification No. 1/93 -- Paints, varnishes, thinners -- Bearing Brand name of another person -- The benefit of Small Scale Exemption will not be available to excisable goods bearing the brand name of another person.

Duty demand (C. Excise)

Paints, Varnishes, Thinners -- Notification No. 1/93 not apply -- As they are clearing the impugned goods bearing the brand name of another person. But, the sale price has to be treated as cum duty price. Accordingly, the demand of duty is to be re-computed by the Adjudicating Authority by taking the sale price as cum duty price and allowing deduction of excise duty and duty so determined will be payable by the appellants -- Section 11A of CEA.

PRESENT :

Shri K.L. Handa, Consultant for the appellant.

Shri Vikas Kumar, SDR for the respondent.

Cases Cited :

1. CCE v. Fine Industries, 2002 (146) ELT 53 (T-LB)............................................ [Para 2]

2. CCE v. Rukmani Pakkwell Traders, 2004 (93) ECC 540 (SC)............................ [Para 3]

3. CCE, Chandigarh v. Mahaan Dairies, 2004 (93) ECC 657 (SC)........................... [Para 3]

4. Kemfin Chemicals Pvt. Ltd. v. CCE, 2003 (88) ECC 701 (Tri)............................. [Para 3]

5. Maruti Udyog Ltd., 2002 (80) ECC 249 (SC)...................................................... [Para 4]

6. Srichakra Tyres Ltd., 1999 (32) RLT 1 (CEGAT-LB).......................................... [Para 4]

Per : V.K. Agrawal

The issue involved in this appeal, filed by M/s. Kamfin Paints (India) Ltd., is whether they were clearing the excisable goods bearing the brand name of another person making them ineligible for the benefit of SSI Exemption Notification.

2. Shri K.L. Handa, learned Consultant, submitted that the appellants manufacture paints, varnishes, primers and thinners; that the benefit of SSI Exemption Notification has been disallowed to them on the ground that they were clearing thinners manufactured by them bearing the brand name and logo owned by M/s. Kamfin Industries. The learned Advocate, further, submitted that in respect of their other manufactured goods, the benefit of SSI exemption Notification has been granted in view of the Larger Bench decision of the Tribunal in the case of CCE v. Fine Industries, 2002 (146) ELT 53 (T-LB) whereas in respect of thinners, the benefit of exemption has been denied on the ground that the same is being manufactured by both the factories; that this finding is not correct inasmuch as thinners manufactured by them and those manufactured by M/s. Kamfin Industries are different; that, further, there is no evidence to show that the logo "Kemfin" was registered in the name of M/s. Kamfin Industries; that, in fact, it is not registered trade mark of any one and, therefore, it could be used by anybody; that logo "Kemfin" is only a house mark and not a brand name as the same only highlights the image of the manufacturers; that the thinners are not known in the market as "Kemfin Thinners" but on the contrary these are sold as "synthetic thinners", "epoxy thinner", etc.; that the word "Kemfin" on the packet does not establish any relationship between the Kemfin and the thinner. He also relied upon the Board's Circular No. 88/88-CX VI dated 30.12.1988, wherein it has been clarified that it is quite possible and permissible to have the same trade mark/brand name for different classes of goods owned by different persons. He, therefore, contended that the benefit of SSI Exemption Notification will be available to them. Finally, he submitted that the demand is hit by time limit specified in Section 11A (1) of the Central Excise Act as the show cause notice has been issued on 20.9.2000 for demanding duty for the period from 1.10.96 to 31.3.2000; that they had filed classification declaration; that, moreover, they were under the bonafide belief that the logo "Kemfin" was not their brand name as it was their company's name only.

3. Countering the arguments, Shri Vikas Kumar, learned SDR, submitted that Shri Rajiv Bhalla, who is one of the Directors in the appellant company, is the proprietor of M/s. Kemfin Industries, has deposed in his statement that the brand name and logo belonged to him and he was manufacturing the goods under this brand name; that, subsequently, the said brand name and logo was supplied to M/s. Kemfin Chemicals (P) Ltd.; that in the case of Kemfin Chemicals Pvt. Ltd. v. CCE, 2003 (88) ECC 701 (Tri), the Tribunal has held that the brand name "Kemfin" belongs to Kemfin Industries as the Sale Deed between the Kemfin Industries and Kemfin Chemicals Pvt. Ltd. clearly mentions that M/s. Kemfin Industries are the owner of brand name "Kemfin"; that in view of these facts, the appellants cannot claim that they were not aware of the brand name used by them with logo belonged to Kemfin Industries; that, recently, the Supreme Court in the case of CCE v. Rukmani Pakkwell Traders, 2004 (93) ECC 540 (SC) : 2004 (165) ELT 481 (SC) has held that neither in clause 4 of Notification No. 1/93-CE nor in Explanation IX, it is provided that the specified goods must be the same or similar to the goods for which the brand name is registered "It is to be seen that there may be an unregistered brand name or an unregistered trade name. These might not be in respect of any particular goods. Even if an unregistered brand name or trade name is used, the exemption is lost. This makes it very clear that the exemption would be lost so long as the brand name and trade name is used irrespective of whether the use is on the same goods as those for which the mark is registered". He also relied upon the decision in the case of CCE, Chandigarh v. Mahaan Dairies, 2004 (93) ECC 657 (SC) : 2004 (166) ELT 23 (SC) wherein the Supreme Court has considered the Board's Circular No. 88/88 dt. 13.12.88, relied upon by the learned Consultant in the present matter. The Supreme Court has held therein that "in order to claim the benefit of a Notification, party must strictly comply with the terms of the Notification. It on wordings of the Notification the benefit is not available then by stretching the words of the Notification or by adding words to the Notification benefit cannot be conferred." In reply the learned Consultant submitted that in terms of the decision of the Larger Bench of the Tribunal in the case of Srichakra Tyres Ltd., 1999 (32) RLT 1 (CEGAT-LB), their assessable value has to be redetermined treating the price charged by them as cum duty price; that the penalty imposed is on higher side.

4. We have considered the submissions of both the sides. Notification No. 1/93 and its successor Notification provides that the benefit of Small Scale Exemption will not be available to excisable goods bearing the brand name of another person. It is not in dispute that the impugned goods manufactured by the appellants are cleared bearing the brand name and logo "Kemfin >>>>" belonging to M/s. Kemfin Industries. Shri Rajiv Bhalla, proprietor of M/s. Kemfin Industries, has stated in his statement that the goods manufactured by his unit are cleared bearing the brand name "Kemfin" and logo >>>> since inception of his unit in 1983. It has been mentioned by the learned SDR that the said Rajiv Bhalla is the Director of the Appellant company. In view of this, it cannot be claimed by the appellants that they were under the bonafide belief that they were using the name of their company only while putting the brand "Kemfin" with logo >>>> on their products. On this count also the extended period of limitation will be invocable for demanding the duty as the fact of using the brand name and logo of another firm has not been disclosed by them to the Department. It is an admitted fact that both the units are making thinners, which may be of different types. Different types of thinners will not make any difference for the purpose of attracting the mischief of para 4 of Notification No. 1/93-CE. Further, the highest court of the land has now held in the case of Rukmani Pakkwell Traders (supra) that exemption would be lost so long as the brand name is used irrespective of whether the use is on the same goods as those for which the mark is registered. The Supreme Court in the case of Mahaan Dairies (supra), has observed that "if and when they get their mark registered, then they would become entitled to the benefit of the Notification in accordance with the Board's Circular No. 88/88 dated 13.12.88." Thus, the Circular No. 88/88 also does not advance the case of the appellants. We, therefore, hold that the appellants are not eligible for the benefit of-SSI Exemption-Notification as they are clearing the impugned goods bearing the brand name of another person. However, we agree with the learned Consultant that in view of the decision of the Larger Bench in the case of Srichakra Tyres Ltd. and also the decision of the Supreme Court in the case of Maruti Udyog Ltd., 2002 (80) ECC 249 (SC), the sale price has to be treated as cum duty price. Accordingly, the demand of duty is to be re-computed by the Adjudicating Authority by taking the sale price as cum duty price and allowing deduction of excise duty and duty so determined will be payable by the appellants. Taking into consideration all the facts and circumstances of the case, we are of the view that interest of justice will be met if the appellants are directed to pay a penalty of Rs. 30,000 only. We order accordingly. The appeal is disposed in these terms.

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