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2020 (2) TMI 1380 - AT - Central ExciseLevy of Excise Duty - affixation of Brand name or not - Commissioner, in the order impugned before the Tribunal observed that mere embossing of initials of the raw material supplier cannot be equated with affixing of a brand name and, therefore, concluded that no duty could be imposed as it could not be said that brand name had been indelibly fixed - HELD THAT - Heading 7113 contained in Chapter 71 of Central Excise Tariff deals with articles of jewellery and parts thereof, of precious metal or of metal clad with precious metal. Under the sub-headings of Heading 7113, the rate of duty prescribed is 14%. However, the notification dated 1 March, 2005 reduces the rate of duty under Heading 7113 to 2% for articles of jewellery on which brand name or trade name is indelibly affixed or embossed on the articles of jewellery itself. Brand name or trade name has been defined in the Explanation to mean, a name or a mark, such as a symbol, monogram, label, signature or invented words or any writing which is used in relation to a product, for the purpose of indicating a connection in the course of trade between the product and some person using such name or mark with or without any indication of the identity of that person. The Circular dated 4 March, 2005 issued by C.B.E. C., after referring to the speech of the Finance Minister that excise duty of 2% would be levied on branded jewellery only, clarified that for attracting excise duty, the article of jewellery must be marketed and sold under a brand name. Three illustrations have also been given in the said Circular dated 4 March, 2005. The first illustration is of a case where a jeweller ABC Jewellers gets his articles of jewellery from job workers who put a mark/sign/initials on the article of jewellery. This is only to identify that the article of jewellery was received from a particular goldsmith and, therefore, would not be a branded jewellery. The second illustration is of ABC Jewellers , while selling articles of jewellery to customers, puts a distinctive sign/mark/initials on the jewellery. This again was said to be for the purpose of identification so that when the jewellery is returned to ABC Jewellers, it can recognize the jewellery as its own. In such a case also, jewellery is not sold under a brand name and will not attract duty. The third illustration is when ABC Jewellers advertises and sells its products under a brand name Star . It, therefore, clearly transpires that excise duty of 2% can be levied only on articles of jewellery on which brand name or trade name is indelibly affixed or embossed on the articles of jewellery. Brand name or trade name has been clearly explained in the Notification dated 1 March, 2005 and the Circular dated 4 March, 2005 issued by the C.B.E. C. Each case would, therefore, have to be examined on its own facts to determine whether a particular name or mark or symbol that is affixed or embossed on the article of jewellery is a brand name or not. What has to be seen in each case is whether the brand name or trade name, which could be a mark used in relation to the product, indicates a connection in the course of trade between the product and some person using such name or mark with or without any indication of the identify of that person. The papers may, therefore, be placed before the Division Bench concerned with the aforesaid opinion of the Larger Bench for deciding the appeals on merit.
Issues Involved:
1. Whether the articles of jewellery are branded or not. 2. Whether the appellants are manufacturers of branded jewellery. 3. Interpretation of the term "brand name or trade name" under the Central Excise Tariff Act. 4. Applicability of the 2% excise duty on branded jewellery. 5. Conflicting decisions in previous cases regarding the definition of branded jewellery. Detailed Analysis: Issue 1: Whether the articles of jewellery are branded or not. The Tribunal examined the definition of "brand name or trade name" as per the Central Excise Tariff Act and various notifications. The term includes any name or mark used to indicate a connection in the course of trade between the product and the person using the name or mark. The Tribunal referred to the Circular dated 4 March 2005, which clarified that excise duty applies only if the jewellery is marketed and sold under a brand name. The Circular provided three illustrations to explain the scope of this levy: - A jeweller using marks for identification by job workers does not constitute branded jewellery. - A jeweller marking jewellery for identification upon sale does not constitute branded jewellery. - A jeweller selling jewellery under a brand name, including marks connected to the brand, constitutes branded jewellery. Issue 2: Whether the appellants are manufacturers of branded jewellery. The Commissioner held that the appellants, who engaged job workers to manufacture jewellery, were considered manufacturers of branded jewellery. The job workers embossed marks like "CKC" on the jewellery, which indicated a connection in the course of trade with the appellants. The Commissioner concluded that the appellants were responsible for taking Central Excise Registration and paying duty as per Rule 12AA of the Central Excise Rules, 2002. Issue 3: Interpretation of the term "brand name or trade name" under the Central Excise Tariff Act. The Tribunal analyzed the definition of "brand name or trade name" as provided in the Act and the relevant notifications. The term includes any name or mark used to indicate a connection in the course of trade between the product and the person using the name or mark. The Tribunal emphasized that each case must be examined on its facts to determine if a particular mark constitutes a brand name. Issue 4: Applicability of the 2% excise duty on branded jewellery. The Tribunal referred to the notification dated 1 March 2005, which reduced the duty rate to 2% for jewellery with an indelible brand name or trade name. The Circular dated 4 March 2005 clarified that the duty applies only to jewellery marketed and sold under a brand name. The Tribunal reiterated that hallmarks do not constitute branding for excise levy purposes. Issue 5: Conflicting decisions in previous cases regarding the definition of branded jewellery. The Tribunal examined the conflicting decisions in Titan Industries and Anopchand Trilokchand. In Anopchand Trilokchand, the Tribunal held that small letters "AT" on jewellery did not constitute a brand name. In Titan Industries, the Tribunal found that marks "Q" and "I" replaced previous brand names and indicated a connection with the manufacturer, thus constituting branded jewellery. The Tribunal concluded that there was no conflict between the decisions as they were based on different facts. Conclusion: The Tribunal concluded that the definition of "brand name or trade name" must be interpreted based on the facts of each case. The papers were referred back to the Division Bench for deciding the appeals on merits, with the opinion that the 2% excise duty applies only to jewellery marketed and sold under a brand name as defined in the relevant notifications and circulars.
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