2014 (10) TMI 407 - AT - Central Excise

SSI exemption - brand name of others - market leader s name is symbolically impressed on the cover and wrapper of the drug - Held that - The product of the appellant appears to have no marketability with association of the name of market leader being printed on the wrapper and cover (container) of the medicine cleared by the appellant. Therefore, brand name of the market leader brings out distinction to deny SSI exemption to the appellant. - On perusal of the wrapper of capsule, it is noticed that first three letters of drug resembles with the first three letters of market leader appealing to commons sense that the drug has inherent intimacy with the marketer demonstrating object thereof between the two. The container of the product exhibited to us carries symbol and name of market leader M/s. Infra Drugs and Chemicals which is a Division of a marketer of M/s. Oyster Lab Ltd. - Following decision of Nivaram Pharma Pvt. Ltd. 2004 (10) TMI 18 - HIGH COURT OF JUDICATURE (MADRAS) - Decided against assessee.

Summary

Issues:
1. Interpretation of the significance of a market leader's name printed on a product.
2. Compliance with SSI exemption Notification.
3. Use of a different brand name associated with the product.
4. Tax exemption considerations in public interest.

Analysis:
1. The judgment deliberated on the importance of a market leader's name being symbolically impressed on the cover and wrapper of a drug manufactured by the appellant. It was noted that such symbolic representation creates an impression that the product is associated with the market leader, impacting the perceived quality and marketability of the product. The connection between the product and the market leader's name was deemed significant in determining consumer perception and brand association.

2. The discussion revolved around the compliance with the Small Scale Industries (SSI) exemption Notification, focusing on the printing of the name of a marketing concern on the cover/wrapper of the capsule. Reference was made to the judgment of the Hon'ble Madras High Court in a similar case, emphasizing that the benefit of the Notification would not apply if the manufacturer affixes the brand name of another person on the specified goods. The judgment highlighted the importance of adherence to the Notification's conditions for claiming tax exemptions.

3. The judgment analyzed the use of a different brand name associated with the product, particularly emphasizing the significance of the market leader's name printed on the label and wrapper of the medicine. It was observed that the presence of the market leader's symbol and name contributed to the product's distinction, leading to the denial of SSI exemption to the appellant. The court stressed that tax exemptions are not granted casually, emphasizing the public interest aspect and the need for compliance with the spirit and conditions of the Notification.

4. In considering the tax exemption issue, the judgment examined the wrapper of the capsule, noting the resemblance between the first three letters of the drug and the market leader's name. This observation suggested an inherent connection and intimacy between the product and the marketer, further reinforcing the significance of the brand association in determining the product's marketability. The court highlighted the public interest aspect of tax exemptions, emphasizing that claimants must contribute to the spirit of the Notification to justify benefiting from such exemptions.