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2016 (10) TMI 136 - AT - Central ExciseSSI Exemption - Denial of - use of brand name or logo of another person - extended period of limitation - Cum-duty benefit - Held that - we find certain force in the submissions made on behalf of the appellants that they have not used the brand name or logo of anybody else and the brand name quality used by them on their products, in the manner and style, is their own brand name, which is different from the brand name/logo used by M/s. Pure Ice Cream Co. for their Ice Cream. This is also clear from a visual inspection of the labels produced before us by the learned Counsel. We find that the Hon ble Apex Courts judgment in Rukhmani Pakkwel Traders 2004 (2) TMI 69 - SUPREME COURT OF INDIA relied upon by the Dept. has been considered by the Hon ble Apex Court in the case of Bhalla Enterprises 2004 (9) TMI 109 - SUPREME COURT OF INDIA and held that if the use of others brand name was entirely fortuitous and could not on a fair appraisal of the marks indicate any such connection, then the benefit of exemption would be available. We also find that the Hon ble Supreme Court in Meghraj Biscuits 2007 (3) TMI 5 - SUPREME COURT OF INDIA also has held that registration with the trade mark registry cannot be the sole criteria for allowing or denying SSI exemption. We find that the Hon ble Apex Court in the case of Stingen Immuno Diagnostics 2015 (6) TMI 155 - SUPREME COURT OF INDIA has held that there should be a connection/nexus between the brand name, the product, the person and the use of same/similar brand name belonging to someone else, for denying the SSI benefit. On a careful consideration of the aforesaid judgments of Hon ble Apex Court, one has to come to a conclusion that if someone is manufacturing any product bearing a brand name of another person, benefit of SSI exemption is not available to such person, which emphasis that there should be a connection/nexus between the brand name, the product, the person and the use of brand name belonging to someone else, for denying the SSI benefit. In the present case, the Dept. has proceeded mainly based on the Hon ble Apex Court judgment in Rukhmini Packkwell (supra) and there was no occasion for the Adjudicating Authority to examine other judgments of Hon ble Apex Court cited by the appellants and come to a proper conclusion. We find that the ratio of the judgment in M/s. Stangen Immuno Diagnostics (supra) goes to the root of the case and the present case also has to be looked into based on the said ratio, as the facts and circumstances are somewhat identical. We are of the considered view that the Adjudicating Authority has not looked into the issue of brand name. Therefore, the matter needs to go back to the Adjudicating Authority for reconsideration of the issue of brand name and availability of SSI exemption under relevant Notifications in the light of our observations and the ratio judgments of Hon ble Apex Court discussed above. Invokation of extended period of limitation - eligibility for SSI exemption - Demand - appellant contended that the brand name quality belongs to them because of their continued and uninterrupted use for long period of time and, therefore, they were not expected to inform the Dept. that they are using somebody else brand name on their products. Till the proceedings initiated by the Dept. they were not aware that the brand name quality used by them on their products was registered in the name of someone else, including M/s. Pure Ice Cream Co. - Held that - the Adjudicating Authority s findings in Para 34 of the impugned Order dated 31.7.2006 that the appellants had suppressed from the Department their manufacture of quality branded products, despite the fact that this brand did not belong to them, lacks credence and the Dept. have not brought any evidence to support such an allegation. We find that even today the Appellants are claiming that the brand name quality, in the manner & style used by them, belongs to them alone and nobody else. We also find that the demand covered in Appeal No. E/1236/09, beyond the normal period one year also cannot sustain, as the fact of using the disputed brand name quality on Cakes & Pastries was well within the knowledge of the Department when first SCN dated 3.5.2005. Therefore, the Dept. cannot allege suppression to invoke extended in subsequent SCN pertaining to appeal No. E/1236/09, which is supported by catena of judgments of Hon ble Supreme Court cited by the appellants. We also note that there had been confusion with regard to brand name issue and consequential availability of SSI exemption in view of differing views expressed by Hon ble Apex Court at different point of time and, therefore, the benefit of doubt should go to the Appellants. Therefore, we are of the view that it cannot be held that there was an attempt on the part of the Appellants to suppress any facts and they have acted on a bona fide belief that the brand name quality is owned by them; therefore, they are eligible for SSI exemption under relevant Notification. We, therefore, hold that the entire demand covered under Appeal No. E/3158/2006 and demand beyond normal period of one year in Appeal No. E/1236/2009 is barred by limitation and, therefore, not sustainable. Cum-duty benefit - Held that - since the Adjudicating Authority has already granted the benefit of cum-duty in the Order impugned in the first appeal (E/3158/2006) and the same has not been challenged by the Dept. Therefore, we are of the view that the benefit of cum-duty should be extended to the appellants in remaining matters also. This issue also needs to be looked into by the Adjudicating Authority in the denovo proceedings. Imposition of penalty - appellants were under a firm belief that they are the owners of brand name quality in the form in which it is used on their products no malafides can be attributed to their claim of SSI exemption for the products - Held that - the issue in dispute relates to interpretation of law and there can be a possibility of differing interpretations of the same. Considering overall facts and circumstances of the case, holistically we are of the view that there was no willful suppression of facts or mis-statement on the part of the appellants. Therefore, the penalties imposed on them are not sustainable. Accordingly, we set aside the same. - Appeals disposed of
Issues Involved:
1. Eligibility for SSI exemption under relevant notifications. 2. Ownership and usage of the brand name "Kwality". 3. Applicability of the extended period for demand. 4. Entitlement to cum-duty benefit. 5. Imposition of penalties. Detailed Analysis: 1. Eligibility for SSI Exemption: The appellants, manufacturers of Cakes & Pastries under the brand name "Kwality", claimed SSI exemption under relevant notifications. The Department denied this exemption, arguing that the appellants were not the sole owners of the brand name "Kwality" as it was also used by other entities for different products. The Department's stance was supported by the Hon’ble Supreme Court decisions in CCE v/s Rukmani Pakkwell Traders and CCE v/s Bhalla Enterprises, which stated that if a manufacturer uses a registered brand name of another person, even if for different products, they are not eligible for exemption. 2. Ownership and Usage of the Brand Name "Kwality": The appellants contended that their brand name, although similar in wording, was distinct in appearance and design from that of M/s. Pure Ice Cream Co. Pvt. Ltd., which used a different logo and device. They argued that their brand name had been in continuous use for decades and was recognized in the market for Cakes & Pastries. They cited various Supreme Court judgments, including Meghraj Biscuits and Stingen Immuno Diagnostics, which held that registration with the trademark registry alone should not be the sole criterion for denying SSI exemption and emphasized the need for a connection between the brand name, product, and person for denying the exemption. 3. Applicability of the Extended Period for Demand: The appellants argued that the demand for the period beyond the normal one-year limitation was unsustainable as there was no deliberate suppression of facts. They claimed that they were unaware that the brand name "Kwality" was registered to another entity and that their use of the brand name was bona fide. The Tribunal found merit in this argument, noting that the Department had not provided evidence of suppression and that the appellants' belief in their ownership of the brand name was reasonable. 4. Entitlement to Cum-Duty Benefit: The Tribunal noted that the Adjudicating Authority had granted cum-duty benefit in the initial order, which was not challenged by the Department. Therefore, the Tribunal directed that this benefit should be extended to the appellants in all related matters. 5. Imposition of Penalties: The Tribunal found that the appellants' belief in their ownership of the brand name "Kwality" was bona fide and that there was no willful suppression of facts or misstatement on their part. Given the differing interpretations of the law and the Supreme Court's judgments on similar issues, the Tribunal held that the penalties imposed on the appellants were not sustainable and set them aside. Conclusion: The Tribunal set aside the demands for the periods beyond the normal limitation and the penalties imposed on the appellants. It remanded the matters to the Adjudicating Authority for a fresh decision on the issue of the brand name and the availability of SSI exemption, directing the authority to consider the Tribunal's observations and the cited judgments. The Adjudicating Authority was also instructed to determine any duty liability after extending the cum-duty benefit and to observe the principles of natural justice in the de novo proceedings.
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