2016 (2) TMI 535 - AT - Central Excise

Demand of duty on Branded jewellery - It was alleged in the show-cause notices that the appellant have affixed the mark Q and I on the jewellery and cleared without payment of duty. - it was alleged that the appellants were paying excise duty on the branded jewellery under the brandname Tanishq and paid duty @ 2% advelorem for the clearances made upto June 2006. Thereafter, appellant stopped using the brand name Tanishq and started using the mark Q and I and the jewellery were cleared and sold in the market, therefore the mark Q and I represents brand name or trade name. Held that - These gold jewelleries are sold in exclusive Tanishq show rooms and the invoices/bills and the certificate of authenticity etc. bear the appellant s brand name Tanishq and the appellant s decision to sell the jewellery without using logo of Tanishq or Goldplus but affixed with the markings of Q & I and sold through their exclusive outlets/showrooms clearly falls within the definition of Brand name/Trade name of Chapter Note 12 and the Explanation to the Notification No.4/2005 dt.1.3.2005. Therefore by respectfully following the ratio of apex Court decision in the case of Grasim Industries and Australian Foods India Pvt. Ltd. 2013 (1) TMI 330 - SUPREME COURT we have no hesitation to hold that jewellery manufactured and cleared by the appellants during the relevant period are branded jewelllery and chargeable to duty. Demand confirmed with reduced penalty - Decided against the assessee.

Issues Involved:
1. Whether the letters "Q" and "I" embossed on the jewellery constitute a brand name or trade name.
2. Whether the demand for excise duty is barred by limitation.
3. Whether the penalty imposed on the appellant is justified.

Issue-wise Detailed Analysis:

1. Whether the letters "Q" and "I" embossed on the jewellery constitute a brand name or trade name:

The appellant argued that the letters "Q" and "I" embossed on the jewellery were merely identification marks and not brand names. They cited Board's Circulars dated 4.3.2005 and 2.3.2012, which clarified that identification marks used by jewellers for internal purposes do not attract excise duty. The appellant also relied on various judicial decisions to support their claim that the letters did not indicate a brand name or trade name.

The Tribunal, however, found that the letters "Q" and "I" were used to replace the brand names "Tanishq" and "GoldPlus" respectively. The Tribunal noted that the definition of "brand name" or "trade name" under Chapter Note 12 of Chapter 71 and the relevant notifications was broad and included any mark or symbol used to indicate a connection between the product and the manufacturer. The Tribunal concluded that the letters "Q" and "I" were indeed brand names as they were used in place of the previously registered brand names and indicated a connection with the appellant.

The Tribunal also referred to the Supreme Court's decision in CCE Trichy Vs. Grasim Industries Ltd., which held that even a single letter could constitute a brand name if it indicated a connection between the product and the manufacturer. The Tribunal found that the letters "Q" and "I" embossed on the jewellery met this criterion and thus, the jewellery was branded and subject to excise duty.

2. Whether the demand for excise duty is barred by limitation:

The appellant contended that the first show-cause notice dated 3.3.2009 was barred by limitation as they had duly informed the Department about their decision to stop using the brand name "Tanishq" and had provided all necessary clarifications. They argued that there was no suppression of facts or mis-declaration on their part.

The Tribunal, however, found that the appellant had replaced the brand names "Tanishq" and "GoldPlus" with the letters "Q" and "I" without informing the Department. The Tribunal noted that the demand was within the normal period and there was no question of limitation in this case. The Tribunal upheld the demand for excise duty for the period from September 2005 to December 2008 and from January 2009 to 6.7.2009.

3. Whether the penalty imposed on the appellant is justified:

The adjudicating authority had imposed penalties under Rule 25 of the Central Excise Rules. The appellant argued that there was no suppression of facts or intention to evade duty and hence, no penalty should be imposed.

The Tribunal found that the appellant had indeed replaced the brand names with the letters "Q" and "I" to avoid paying excise duty on branded jewellery. However, considering the overall circumstances, the Tribunal found the penalties imposed to be on the higher side and reduced the penalties from Rs. 4,98,33,980/- to Rs. 2,00,00,000/- and from Rs. 1,40,77,360/- to Rs. 50,00,000/- respectively.

Conclusion:

The Tribunal held that the letters "Q" and "I" embossed on the jewellery constituted a brand name or trade name and the jewellery was subject to excise duty. The demand for excise duty was upheld, and the penalties were reduced. The appeal was partly allowed in terms of the reduction in penalties.

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