Supreme Court of India
NIRLEX SPARES PVT. LTD.versusCOMMISSIONER OF CENTRAL EXCISE
- Citation
- 2008 INSC 4
- Decided
- 4 January 2008
- Disposal
- Case Allowed
- Bench
- TARUN CHATTERJEE
Holding
The hexagonal design was not a brand name or trade name of the marketing company, so the appellant is entitled to the exemption under Notification No. 175/1986‑CE.
Summary
Nirlex Spares Pvt. Ltd., a small‑scale manufacturer of steel heads, printed a hexagonal artistic design on its corrugated boxes alongside its own brand names. The tax authorities held that the design was a monogram belonging to its marketing agent, L.M.S. Marketing Co., and therefore denied the exemption under Notification No. 175/1986‑CE. The Tribunal and the Commissioner upheld the demand, but the Supreme Court examined the evidence, including admissions that the marketing company did not own or claim any proprietary right over the design. The Court found that the design was not a brand or trade name of the marketing company and did not indicate a connection between the goods and that company. Consequently, the exemption under the notification was available to Nirlex Spares. The Court set aside the orders of the CEGAT and the Commissioner and allowed the appeal.
Issues considered
- The hexagonal design printed on the packaging is a brand name or trade name of the marketing company within the meaning of Notification No. 175/1986‑CE.
- Whether the use of such a design disqualifies the appellant from the small‑scale industrial unit exemption under the notification.
Legislation cited
Subjects
central excisesmall scale industrial unit exemptionbrand nametrade namemonogramNotification 175/1986‑CEfinding of factCEGATrelated personmarketing company
Judgment
[2008] 1 S.C.R.117
NIRLEX SPARES PVT. LTD. A
II.
COMMISSIONER OF CENTRAL EXCISE
(C.A. No. 5204 of 2001)
JANUARY 4, 2008
B
(TARUN CHATTERJEE & DALVEER BHANDARI, JJ.)
Central Excise Act, 1944:
Notification No. 17511986-C. E dated 1. 3.1986 -
Paragraph 7, Explanation VIII - Exemption to Small Scale C
Industrial Units from payment of excise duty - Denied to
assesse-manufacturer of Steel Healds, opining that it was
making use of monogram of a related person - Held:
•. Hexagonical artistic design printed by assessee on its
corrugated boxes was not at all a brand name/trade name of D
the Marketing Company - There is nothing to suggest that
the design belonged to or was owned by Marketing Company
or that it reflected any nexus between goods of assessee and
the Marketing Company - Therefore, benefit under the
Notification would be available to assessee. E
Appeal:
Finding of fact by Commissioner of Central Excise and
CEGAT - Interference with - Held: Both the authorities failed
to consider admissions and material evidence on record and F
..._ thereby came to a finding which on the face of it was not tenable
- Therefore, it is open ·to interfere with such a finding of fact.
The appellant-assessee was engaged in
manufacture and sale of Steel Heads under the brand
names/trade names 'lntatex' and 'lntaco', and was availing G
exemption benefit as a Small Scale Industrial Unit under
Notification No. 175/1986-CE .dated 1.3.1986. From
1.4.1990, the assessee started printing a hexagonal artistic
design, alongwith its brand names/trade names on its
117 H
118 SUPREME COURT REPORTS [2008] 1 S.C.R.
A corrugated boxes. The investigating officer held that the
said hexagonal design was the brand name and ""'
monogram of a Marketing Company and the said
Marketing Company was a related person; and since the
assessee was making use of the Monogram of the related
B person, it was not entitled to exemption in view of
paragraph 7 read with Explanation XIII of the Notification
for the period from 1.4.1988 to 30.9.1992. The investigating
officer also held that assessable value of the goods sold
by the assessee to the said related person would be the
.,.
price at which the goods were sold by the said related
c person and not the price at which the goods were sold to
it by the assessee. Accordingly, a show cause notice was
issued to the assessee raising the demand for excise duty
as also the value difference. The Commissioner of Central
Excise confirmed the demand. The Customs Excise and :
D Gold (Control) Appellate Tribunal upheld only the demand
for excise duty from the period 1.4.1990 as it accepted
the stand of the assessee that the monogram was used
only from that date. Aggrieved, the assessee filed the .....
instant appeal.
E The questions for consideration before the Court
were: whether the monogram was qualified to be the
brand name/trade name of the Marketing Company? and
whether the assessee was entitled to avail the exemption
Ir--
under Notification No. 175/1986-CE dated 1.3.1986?
F
Allowing the appeal, the Court
HELD: 1.1 The hexagonal shape/design affixed on
•
the corrugated boxes of the assesee was not at all a brand
nam2/trade name of the Marketing Company. It can also
G not be said that the hexagonal ·design aff.ixed on the
corrugated boxes of the assessee reflected the nexus
between the goods of the assessee and the Marketing
Company. [para 10, 13) [125-C, 127-D]
1.2 According to the Marketing Company itself, the
H said hexagonal shape/design did not belong to it nor did
NIRLEX SPARES PVT. LTD. v. COMMISSIONER OF 119
CENTRAL EXCISE
it have any proprietary or other right over the same. A
Besides, there is nothing on record to show that the said
shape/design belonged to or was owned by the Marketing
Company or it had permitted the assessee to use the
same on its corrugated boxes. In fact, this position was
specifically admitted during the cross-examination of the B
Assistant Collector of Central Excise. In any view of the
matter, the printing of the said design on the visiting cards
· of executives of the Marketing Company and some of the
"t drawings of the same company cannot confer any right
or ownership of the Marketing Company over the said c
hexagonal shape/design nor can the same by itself mean
that the design had any association with the Marketing
Company. [para 12] [126-D-G; 127-A]
1.3 Besides, it is an admitted position that the said
"'-· hexagonal shape/design was only printed on the visiting D
cards of the two executives of the Marketing Company
and the same was not even printed on its commercial
documents like letterheads and sales invoices. It also
appears from the record that the design printed on the
letterheads and sales invoices of the Marketing Company E
was totally different. Accordingly, the hexagonal design
printed on the corrugated boxes cannot be said to be
descriptive enough to serve as an indicator of nexus
between the goods of the assessee and the Marketing
Company. It cannot, therefore, be said that the assessee
F
was using the brand name of the Marketing Company.
[para 13 and 14] [127-B, C, D, G]
Commissioner of Central Excise Vs. Grasim Industries
Ltd. (2005) 4 SCC 194; Tarai Foods Ltd. Vs. Commissioner
of Central Excise [2006 (198) ELT 323; Commissioner of G
Central Excise Vs. Superex Industries 2004 (174) ELT 4 and
Commissioner of Central Excise Vs. Bhalla Enterprises (2005)
~ 8 sec 308 - referred to.
2.1. The benefit of exemption under the notification
No. 175/86-CE dated 1.3.1986 would be available to the H
120 SUPREME COURT REPORTS [2008] 1 S.C.R.
A appellant and the assessee shall be permitted to get
exemption under the notification No. 175/86-CE dated 1st
of March, 1986. [para 18-19] [135-A, B]
2.2. It is an admitted position that the goods in
question were manufactured by the appellant and the
8 Marketing Company was its marketing agent. There is also
no dispute that on the packings of the goods, the brand
names of the appellant 'lntatex' and 'lntaco' were clearly
and prominently printed. In between these two brand
names, the hexagonal shape/design was also printed.
c Therefore, if the said hexagonal shape/design was also
printed as the design of appellant's marketing agent, it
could not be taken as a ground to deny the exemption to
the appellant under the notification. [para 15] [130-H, 131-
A, B]
D
P&B Pharmaceuticals Pvt. Ltd. Vs. Commissioner of
Central Excise (2003) 3 SCC 599 - relied on.
2.3 From a bare reading of the opinion of the Law
Ministry contained in paragraph 3 of the Circular No. 52/
E 52/94-CX dated 1.9.1994, it is, clear that if a brand name
was not owned by any particular person, the use thereof
shall not deprive a unit of the benefit of the 'small scale
industrial unit' exemption scheme. [para 15] [132-E, F]
CommissionerofC.Ex., Calcutta Vs. Emkay Investments
F (P) Ltd. 2004(174) E.L.T. 298 (S.C.) - held inapplicable.
Commissioner of Central Excise, Trichy Vs. Grasim
Industries Ltd. 2005 (183) E.L.T. 123 (S.C.); Commissioner
of Central Excise, Chandigarh-I Vs. Mahaan Dairies
2004(166) E.L.T. 23 (S.C.) - distinguished.
G
3. The Tribunal as also the Commissioner, failed to
consider the admissions and the material evidence on
'r
record and thereby came to a finding which, on the face
of it, was not tenable on facts. Under these circumstances,
H it is open to this court to interfere with such a finding of
NIRLEX SPARES PVT. LTD. v. COMMISSIONER OF 121
CENTRAL EXCISE [TARUN CHATTERJEE, J.]
fact. The order of the CEGAT and that of the Commissioner A
are set aside. [para 17 and 19] [134-F, G; 135-B]
CIVIL APPELLATE JURISDICTION: Civil Appeal No 5204
of 2001.
From the final Judgment and Order No.249/2001-B dated B
23.3.2001 of the Customs, Excise & Gold (Control) Appellate
Tribunal, New Delhi in E/Appeal No. 4487/94-8.
S.K. Bagaria, Poli Kataki and Subhrajyoti Gupta (for
" Meenakshi Arora) for the Appellant.
K .. Radhakrishnan, Arijit Prasad and B.K. Prasad for the
c
Respondent.
The Judgment of the Court was delivered by
TARUN CHATTERJEE, J. 1. The pivotal question that
D
needs to be adjudicated upon in this appeal is whether the
appellant company is entitled to exemption from payment of
central excise duty under Notification No. 175/1986-CE dated
;.·. 1st of March, 1986 (in short "the notification").
2. Before deciding this question, it would indeed be E
worthwhile to briefly highlight the facts of the present appeal.
3. The appellant i.e. Nirlex Spares Pvt. Ltd. was and/or is
engaged in the business of manufacture and sale of Riderless
Steel Healds and Flat Steel Healds. It is important to note that
..
(
these goods were manufactured and sold by the company under F
its own brand names/trade names viz. 'lntatex' and 'lntaco' which
were affixed/ printed on its corrugated boxes. However, since it
is a company registered as a Small Scale Industrial Unit,-it was
availing the benefit of exemption from payment of central excise
duty under the notification, which grants such exemption to Small G
Scale Industrial Units.
4. The appellant, however, from 1st of April, 1990 started
printing a hexagonal artistic design (alleged monogram) along
with its brand names/trade names 'lntatex' and ' lntaco' on its
corrugated boxes. On 30th of September, 1992, an investigation H
122 SUPREME COURT REPORTS [2008] 1 S.C.R.
A was carried out in the factory of the appellant. The investigating
officers came to the conclusion that the appellant was making
use of a monogram of a related person, namely, L.M.S.
Marketing Company (in short 'the Marketing Company') as a
brand name for the goods manufactured and cleared by it and
B therefore, the appellant was not entitled to exemption in view of
paragraph 7 read with Explanation VIII of the notification forthe
period from 1st of April, 1988 and 30th of September, 1992. The
investigating officers had also found that the Marketing
Company to which the appellant sold its goods was a related
c person and therefore, the correct assessable value was the price
at which the goods were sold by the Marketing Company and
not the price at which the goods were sold to the Marketing
Company by the appellant. Accordingly, a show cause notice
dated 25th of March, 1993 was issued to the appellant under
which the following demands were raised:
0
i. Central excise duty amounting to Rs. 13, 43,
2641- on Riderless Steel Healds manufactured
during the period 1.4.1988 to 30.9.1992.
ii. Value difference of Rs. 10, 8351- between the
E value of the appellant and the Marketing
Company.
5. The appellant filed its reply dated 22nd of November,
1993 denying and disputing the allegations made in the show
F cause notice. The Commissioner of Central Excise, however,
by his order dated 5th of April, 1994 confirmed the entire demand
for duty and the value difference to be paid, as was arrived at
by the investigating officers. Thereafter, the appellant preferred
an appeal under S.35 of the Central Excise Tariff Act, 1985 to
G Customs, Excise and Gold (Control) Appellate Tribunal (in short
•
"the CEGAT"). The CEGAT also confirmed the decision of the
Commissioner of Central Excise by the impugned order except
that it had dropped the demand for excise duty for the period
before 1st of April, 1990 since it accepted the contention of t:ie
appellant that the monogram was used by it only from 1st of
H
: NIRLEX SPARES PVT. LTD. v. COMMISSIONER OF 123
CENTRAL EXCISE [TARUN CHATTERJEE, J.)
April, 1990 onwards. Aggrieved by the impugned order passed A
by the CEGAT. the appellant has approached this court by filing
this appeal, which was heard in presence of the learned counsel
for the parties.
6. The CEGAT in its order observed that the hexagonal
B
. design, i.e. the monogram/logo must be held within the ambit
·of Explanation VIII of Paragraph 7 of the notification as it
belonged to the Marketing Company and was used by the
\ appellant on the goods manufactured by it. While coming to
this conclusion, the CEGAT rejected the contention of the
appellant that the conclusion that the alleged monogram was a c
: brand name of the Marketing Company could not be arrived at
· by placing sole reliance on the visiting cards of the executives
of the Marketing Company and some of the drawings of the
same company. It further held that the said monogram cannot
be printed on these documents merely for the sake of printing D
. and had the same not been a brand, there was no reason to
print it on the visiting cards of the executives of the Marketing
? Company. Accordingly, the CEGAT, in essence, held that the
hexagonal design was a brand name of the Marketing Company
on a finding that although the said design was printed on the E
corrugated boxes and not on the goods in question, but since
these goods were sold in the very same corrugated boxes, it
could not be said that the goods did not bear the design merely
because it did not appear on the goods. The CEGAT, however,
as noted herein earlier, held that the excise duty would have to F
~ be paid from 1st of April, 1990 onwards from which date the
appellant had started using the monogram on the goods
manufactured by it. This was so observed by placing reliance
on the fact that the revenue had not brought on record any
evidence to show that the monogram was used even before 1st G
of April, 1990 and therefore, the amount of duty was reduced to
f.
Rs. 6,59, 724/- along with the value difference of Rs. 10, 835/
-. The CEGAT also approved the reasoning of the
Commissioner in holding that the appellant and the Marketing
Company were related persons. H
124 SUPREME COURT REPORTS [2008] 1 S.C.R.
A 7. We have heard the learned senior counsel for the parties
and examined the impugned order as well the order of the •
Commissioner and the other materials on record. The question,
as noted herein earlier, which needs to be answered by us is
whether the appellant is entitled to avail the exemption under
B the notification and whether the monogram was qualified to be
the brand name/trade name of the Marketing Company. But
before we take up this question, it would be appropriate at this
stage to reproduce paragraph 7 and Explanation VIII of .,,
.
paragraph 7 of the notification which run as under: -
c "The exemption contained in this notification shall not
apply to the specified goods where a manufacturer affixes
the specified goods with a brand name or trade name
(registered or not) of another person who is not eligible
for the grant of exemption under this notification.
D
Explanation VIII. - "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, such as symbol,
monogram, label, signature or invented word or writing
which is used in relation to such specified goods for the
E
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."
F 8. Before we deal with Paragraph 7 read with Explanation
VIII of the notification, we may reiterate that in the show cause ,,,.
notice issued by the Commissioner of Central Excise, it was
alleged that the hexagonal shape/design printed on the
packings of the goods of the appellant was a brand name/trade
G name of the Marketing Company by placing reliance on the
following: -
a. Visiting Card of Shri Nilesh Doshi and Shri Paresh ~
Shukla of the Marketing Company
H b. One drawing prepared by LMS Industrial Group.
NIRLEX SPARES PVT. LTD. v. COMMISSIONER OF 125
CENTRAL EXCISE [TARUN CHATTERJEE, J.]
~ 9. We now turn to paragraph 7 of the notification. From a A
bare reading of the same, we cannot doubt that the exemption
notification shall not apply if a manufacturer affixes the specified
goods with a brand name or trade name of another person who
is not eligible for grant of exemption under the said notification.
Such being the position, the first requirement for non-availability B
of the benefit of exemption under this notification is that the brand
....
name or the trade name must be of another person .
10. We find that the said hexagonal shape/design was not
at all a brand name/trade name of the Marketing Company. After
examining the Hexagonal shape/design affixed on the c
corrugated boxes of the appellant, we are unable to agree with
the findings of the Tribunal that the said design was the brand
name or trade name of the Marketing Company, which would
be clear from the following admitted facts :
D
a. The said hexagonal shape/design was not at all owned
,..... by or belonged to the Marketing Company. The
Marketing Company had no proprietary or other right
over the said shape/design.
b. The Director of the Marketing Company was examined E
by the authorities with regard to the shape and design
and in his statement, the Director of the Marketing
Company has categorically stated as under :
... a. "In reply, I have to state that M/s.L.M.S. Marketing Pvt.
Ltd. does not have any brand name or symbol of its F
own."
b. "As stated earlier, M/s.L.M.S. Marketing Pvt. Ltd. does
not have any brand name/symbol. The symbol referred
is only a geometrical design and, therefore, question of
G
our allowing use of this does not arise."
c. "We do not get any royalty and as stated earlier, we do
not claim any proprietary rights on the design referred
above." (Emphasis supplied)
H
126 SUPREME COURT REPORTS [2008] 1 S.C.R.
A 11. Thus, according to the Marketing Company itself, the
said shape/design did not belong to it nor it had any proprietary
"'
or other right over the same. The executive of the appellant Shri
Nileshbhai R.Doshi also deposed and he stated in his statement
as under:
B "On being asked about the monogram and brand name
used by Nirlex Spares Private Limted, I have to state
that so far as monogram is concerned, I have to state ,,
that this is not the monogram in sense of ourselves with
reference to our trade mark or anything else but this is
c simply a design which is selected out of 617 designs
given by designers. In connection with brand names
'INTATEX' and 'INTACO', I have to state that these are
our own brand names."
12. From a bare reading of the aforesaid statement of Shri
D
Nileshbhai R.Doshi, which we do not find any ground to
disbelieve, it appears that there is nothing on record to show .....
that the said hexagonal shape/design belonged to or was owned
by the Marketing Company and thus they had permitted the
appellant to use the same on their corrugated boxes. That apart,
E there was no agreement or letters showing that the said
hexagonal shape/design belonged to or was owned by the
Marketing Company or that it had permitted the appellant to
use the same. In fact this position was specifically admitted
during the cross-examination of the Assistant Collector of Central
F Excise. In any view of the matter, the printing of the said design •
on the visiting cards of the executives of the Marketing Company.
and a drawing of the same company cannot, in our view, confer
any right or ownership of the Marketing Company over the said
hexagonal shape/design. Therefore, it is difficult for us to agree
G with the findings of the Tribunal to the extent that the hexagonal
design affixed on the corrugated boxes of the appellant had in
fact reflected the nexus between the concerned goods namely,
Riderless Steel Healds and the Marketing Company. At the
same time, the fact that the said hexagonal design appears on
H the visiting cards of the Executives of the Marketing Company
NIRLEX SPARES PVT. LTD. v. COMMISSIONER OF 127
CENTRAL EXCISE [TARUN CHATTERJEE, J.)
~
and some of the drawings of the same Marketing Company A
cannot by itself mean that the design had any association with
the Marketing Company.
13. There is another aspect of this matter. It is an admitted
position that the said hexagonal shape/design was only printed
on the visiting cards of the two executives of the Marketing B
Company and the same was not even printed on the commercial
1
documents like letterheads and sales invoices of the Marketing
Company. It also appears from the record that the design printed
on the letterheads and sales invoices of the Marketing Company
was totally different. In any view of the matter, in view of the c
admitted position that the Marketing Company never came
forward to say that the hexagonal design in fact belonged to
them and they had permitted the appellant to use the same on
their corrugated boxes, we are unable to agree with the findings
arrived at by the Tribunal on the aforesaid question. Accordingly, D
we hold that the hexagonal design cannot be said to be
descriptive enough to serve as an indicator of nexus between
the goods of the appellant and the Marketing Company.
Therefore, we hold that the alleged monogram cannot be said
to be the brand name or trade name of the Marketing Company E
and such being the position and in view of the discussions made
herein above, we hold that the benefit of exemption provided by
the notification is available to the appellant.
~ 14. That apart, in our view, the nexus between the hexagonal
design and the Marketing Company cannot be found when the F
Marketing Company itself had categorically disowned the title
to the said design and admitted that the said design did not
belong to them. That being the position, it cannot be held that
the appellant was using the brand name of the Marketing
Company when the Marketing Company has itself disowned G
the brand name, more so, since it is unusual that the person
who is owning a brand name would come forward to disown the
same when such disowning would deprive the said person of a
valuable asset. In Commissioner of Central Excise Vs. Bhalla
Enterprises [(2005) 8 SCC 308], this Court, while considering H
128 SUPREME COURT REPORTS (2008] 1 S.C.R.
A similar provisions of a subsequent notification N0.1/93-CE, in
paragraph 6, observed as under: -
"The notification clearly indicates that the assessee will
be debarred only if it uses on the goods in respect of
which exemption is sought, the same/similar brand name
B with the intention of indi<;ating a connection with the
assesses' goods and such other person or uses the name
in such a manner that it would indicate such connection.
Therefore, if the assessee is able to satisfy the assessing
authorities that there was no such intention or that the
c user of the brand name was entirely fortuitous and could
not on a fair appraisal of the marks indicate any such
connection, it would be entitled to the benefit of
exemption. An assessee would also be entitled to the
benefit of the exemption if the brand name belongs to
D the assessee himself although someone else may be
equally entitled to such name."
As noted hereinabove, we have already indicated that the
brand name used on the corrugated boxes would not show any
E intention of indicating a connection between the goods
manufactured by the appellant and the Marketing Company.
Again, in Commissioner of Central Excise Vs. Grasim
Industries Ltd. [(2005) 4 sec 194], this court, while considering
similar provisions of the Notification No. 5/98-CE, observed in ·
paragraphs 15 and 16 as under: -
F
"In our view, the Tribuf:lal 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
G may have the meaning as suggested by the Tribunal, for
the purposes of such a notification the term "brand name
or trade name" gets 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
H
NIRLEX SPARES PVT. LTD. v. COMMISSIONER OF 129
CENTRAL EXCISE [TARUN CHATTERJEE, J.]
!~'
"symbol" or a "monogram" or a "label" or even a "signature p,
of invented word" is a brand name or trade name.·
However, the contention is that they must be used in
relation to the product and for the purposes of indicating
a connection with the other person. This is further made
clear by the words "any writing". These words are wide B
enough to include the name of a company. The
'I<· reasoning given by the Tribunal based on a dictionary
meaning of the words "write" and "writing" is clearly
erroneous. Even the name of some other company, if it
is used for the purposes of indicating a connection c
between the product and that company, .would be
sufficient. It is not necessary that the name or the writing
must always be a brand name or a trade name in the
sense that it is normally understood. The exemption is
only to such parties who do not associate their products
with some other person. Of course this being a notification D
~
under the Excise Act, the connection must be of such a
• nature that it reflects on the aspect of manufacture and
J deal with quality of the products. No hard-and-fast rule
can be laid down however it is possible that words which
merely indicate the party who is marketing the product E
may not be sufficient. As we are not dealing with such a
case we do not express any opinion on this aspect.
16. This court has, in the case of Royal Hatcheries (P)
... Ltd. V State of A.P already held that words to the effect
"that is to say" qualify the words which precede them. In
F
this case also the words "that is to say" qualify the words
"brand name or trade name" by indicating that these
terms must therefore be understood in the context of the
words which follow. The words which follow are of wide
amplitude and include any word, mark, symbol, G
monogram or label. Even a signature of an invented
word or any writing would be sufficient if it is used in
relation to the product for purpose of indicating a
connection between the product and the other person!
company." H
130 SUPREME COURT REPORTS [2008] 1 S.C.R.
~
1
A In Tarai Foods Ltd. Vs. Commissioner of Central Excise
[2006 (198) ELT 323], this court, while considering a similar
definition of the expression "brand name", in paragraphs 7 and
9, held as under: -
"7. The words brand name connotes such a mark, symbol,
B
design or name which is unique to the particular
manufacturer which when used on a particular product
would establish a connection between the product and
the manufacturer."
c '.'9. Furthermore the definition of the words 'brand name'
shows that it has to be a name or a mark or a monogram
etc. which is used in relation to a particular product and
which establishes a connection between the product and
the person. This name or mark etc. cannot, therefore, be
D the identity of a person itself. It has to be something else
which is appended to the product and which establishes
the link."
In Commissioner of Central Excise Vs. Superex
Industries [2004 (174) ELT 4], in the context of the Notification
E No. 175/86-CE, this court in paragraph 3 held as unper: -
".3. CEGAT has held that the benefit of the Notification
would be lost only if the manufacturer affixes the specified
goods with a brand name or trade name of the another
who is not eligible to the exemption under the notification.
F It could not be denied that the name Kirloskar is not
affixed to the generating sets. CEGAT has held that
merely because, in the invoices, the set is passed off as
a Kirloskar generating set, the benefit of the Notification
would not be lost. We see no infirmity in this reasoning.
G We, therefore, see no reason to interfere."
15. It is an admitted position that the goods in question
were manufactured by the appellant and the Marketing
Company was its marketing agent. There is also no dispute
H that on the packings of the goods, the brand names of the
NIRLEX SPARES PVT. LTD. v. COMMISSIONER OF 131
CENTRAL EXCISE [TARUN CHATTERJEE, J.]
'
' >j appellant 'lntatex' and 'lntaco' were clearly and prominently A
J
(
printed. In between these two brand names, the hexagonal
shape/design was also printed. Therefore, if the said hexago!lal
shape/design was also printed as the design of the appellant's
marketing agent, it could not be taken as a ground to deny the
exemption to the appellant under the notification. In this B
connection, reliance can be placed on a judgment of this court
in the case of P&B Pharmaceuticals Pvt. Ltd. Vs.
"' Commissioner of Central Excise [(2003) 3 SCC 599] wherein
this court in paragraph 15 held as under:-
"From a perusal of para 7 of Notification No. 175186-CE, c
it is clear that the exemption granted by the notification
is not applicable to the specified goods where a
manufacturer affixes the specified goods with a brand
name or trade name (registered or not) of another person
who is not eligible for the grant qf exemption under the D
said notification .......... .It is only when a manufacturer of
,+- the specified goods affixes them with a logo-brand name
or trade name - of another person who is not eligible for
the exemption that he becomes ineligible to avail the
benefit under the notification. Use of the logo of the E
manufacturer by other person, whether an assignor or a
third party, has no relevance for purposes of para 7. That
is not the import of Explanation VIII."
At this stage, the relevant extracts of the opinion of the
~~
Law Ministry, Union of India contained in paragraph 3 of the F
Circular No. 52/52/94-CX, dated 1/9/1994 issued by the Ministry
of Finance (Department of Revenue) may also be reproduced
as under:
"Perusal of the said explanation (Explanation IX to the G
Notification N0.1193-C.E.) will show that to satisfy the
f requirement of brand name or trade name, itis necessary
that the trade name must indicate a connection in the
course of trade between such specified goods and some
person using such name or mark with or without any H
132 SUPREME COURT REPORTS [2008] 1 S.C.R.
)". l
A indication or identity of that person. Unless connection
between the trade name and the person with whom that
trade name is to be identified can be established, the
requirement of brand name or trade name as provided
for in the said notification will not be satisfied. It is an
B admitted case of the department that in respect of Jocks,
the units are making locks bearing the same name or
mark eve.n though there is no person who claims
ownership to that mark or name. The names being used "
in the manufacture of locks by these small scale units
c do not belong to any particular manufacturer and any
unit is free to use any name. Therefore, in our view, even
without the issue of Notification of 4th ;11th May, 1994
units which are using trade name or brand name, which
does not belong to any person, were eligible for exemption
under the said notification because of explanation IX in
D
the said notification. Admittedly, the notification, dated
4th I 11th May, 1994 is clarificatory in nature and the
purpose could have been achieved by issuing a
...,
clarification to the field formations."
E From a bare reading of this opinion of the Law Ministry
and in view of the discussions made hereinabove and relying
on the decisions of this court, as noted hereinabove, it is, clear
that if a brand name was not owned by any particular person,
the use thereof shall not deprive a unit of the benefit of the small
F scale exemption scheme. Such being the position, we are of -~
the view that the printing of the hexagonal design on the goods
of the appellant, where such hexagonal design is not owned by
the Marketing Company, would not disentitle the appellant from
the benefit of the exemption under the notification.
G 16. Before parting with this judgment, we may deal with
the submissions made on behalf of the learned senior counsel
for the respondent Mr. K. Radhakrishnan. The learned senior
counsel for the respondent Mr. K. Radhakrishnan contended
that the appellant was using the mark of the Marketing Company
H with the purpose of indicating a connection between the goods
NIRLEX SPARES PVT. LTD. v. COMMISSIONER OF 133
CENTRAL EXCISE [TARUN CHATTERJEE, J.]
1y manufactured and cleared by the appellant and the Marketing A
Company. The learned senior counsel for the respondent Mr. K.
Radhakrishnan cited various cases in support of this contention.
Having heard the learned senior counsel for the respondent Mr.
K. Radhakrishnan and the learned senior counsel for the
appellant Mr. Bagaria, we are of the view that the authorities B
cited by Mr. K. Radhakrishnan would not help the respondent
as they do not apply to the facts of the present case. Let us first
take up the decision of this court in the case of Commissioner
of C.Ex., Calcutta Vs. Emkay Investments (P) Ltd. [2004(174)
E.L.T. 298 (S.C.)] on which Mr. K. Radhakrishnan has placed c
strong reliance. In our view, this case is of no help to the
respondent as the same is distinguishable on facts. In this case,
unlike our case: -
a) Merino was registered brand name of Merinoply &
Chemicals; D
b) Merinoply & Chemicals was a large scale manufacturer
.,-- of th~ same goods;
c) Merinoply & Chemicals never disputed that the br~nd
name "Merino" does not belong to them; E
d) The intention to indicate, if not connection, atleast the
fact that the quality was similar to a particular type of
plywood was there.
It is true th.at in so far as the first point of difference in clause F
..,. a) is concerned, registration of the brand name is not a pre-
requisite for the application of paragraph 7 read with
Explanation 8 of the notification. Nevertheless, the purpose
behind bringing the same to light is only to suggest that in that
case, the other company had a proprietary right over the brand
G
name by virtue of the registration whereas in the present case,
; the Marketing Company is totally denying any association with
"'1'
the brand name, much less any proprietary right by virtue of the
registration.
The learned senior counsel for the respondent Mr. H
134 SUPREME COURT REPORTS [2008] 1 S.C.R.
A Radhakrishnan has also placed reliance on the decision of this )'( I
court in ,Commissioner of Central Excise, Trichy Vs. Grasim
Industries Ltd. [2005 (183) E.L.T. 123 (S.C.)]. That case too is
distinguishable on facts in as much as the intention to indicate
a connection was present in that case, unlike the case in hand.
B Another decision relied upon by the learned senior counsel for
the rnspondent in Commissioner of Central Excise,
Chandigarh-I Vs. Mahaan Dairies (2004(166) E.L.T. 23 (S.C.)]
is also, in our view, distinguishable on facts. In that decision, it
was an admitted position that a name was being used, which
c was the registered trade mark of another company. This fact •
was not disputed. Thus the court held, with which we are in full ·
agreement, that the mere use of additional words in addition to
the name of another person would not by itself enable the party
to claim the benefit of the Notification. We have already stated
that in that decision, admittedly, a registered name of another
0
person was used on the product of the respondent of that case.
That decision, therefore, would not apply to the facts and
circumstances of the present case.
17. Before we close, we may also consider a short
E submission of the learned senior counsel for the respondent.
According to the learned senior counsel for the respondent Mr.
K. Radhakrishnan, the question as to whether the brand name
of the Marketing Company was used by the appellant on the
corrugated boxes in which the goods were kept and supplied is
F a question of fact and this court, therefore, is not entitled to
interfere with such a finding of fact. In our view, the Tribunal as ,,_
also the Commissioner, while coming to the conclusions as
arrived by them, failed to consider the admissions and the
material evidence on record and thereby came to a finding
G which, on the face of it, was not tenable on facts. Under these
circumstances, it is open to this court to interfere with such a
finding of fact and accordingly, this argument of the learned
senior counsel for the respondE'nt is not acceptable.
18. For the reasons aforesaid, we are not in agreement
H with the views expressed by the CEGATand the Commissioner
NIRLEX SPARES PVT. LTD. v. COMMISSIONER OF 135 .
CENTRAL EXCISE [TARUN CHATTERJEE, J.]
of Central Excise and accordingly, we answer the question A
posed by us, as noted herein earlier, by holding that the benefit
of exemption under the notification in question would be
available to the appellant.
19. Accordingly, the order of the CEGAT and that of the
Commissioner is set aside and we hold that the appellant shall 8
be permitted to get exemption under the notification No. 175/
86-CE dated 151 of March, 1986.
20. The appeal is thus allowed with no order as to costs.
R.P. Appeal allowed. C
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