2017 (6) TMI 759 - AT - Central Excise

SSI exemption - use of brand name of others - Revenue was of the view that trademark AJI-NO-MOTO is exclusive property of M/s. AJI-NO-MOTO Co. Inc. Japan, and as appellant used the said trade name, they are not eligible for exemption - whether as per the Trademark License Agreement, the appellants have become the owner of the trademark? - Held that - the appellants have been given license to use the trademark on payment of royalty which is fixed at 1% of the net sale of the product cleared bearing the trademark and sold by the appellant. This clearly indicates that the appellants have obtained the right over the trademark and therefore the allegation that they are clearing the goods in the name of another person will not sustain - demand set aside - appeal allowed - decided in favor of appellant.

Summary

Issues:
Allegation of wrongly availing SSI exemption benefit by manufacturing and clearing goods under another brand name.

Analysis:
The case involved the appellant being accused of using the brand name of another entity to clear goods and inappropriately availing the SSI exemption benefit. The appellant imported Monosodium Glutamate, repackaged it under the brand name "AJI-NO-MOTO," which belonged to a different company. The Department alleged that this action made the appellant ineligible for the SSI exemption. A show cause notice was issued, leading to the demand confirmation with interest and penalty by the Commissioner (Appeals). The primary contention was whether the appellant became the owner of the trademark as per the Trademark License Agreement.

The appellant argued that a Trademark License Agreement was in place, granting them a non-exclusive and non-transferable license to use the trademark. They emphasized that they had the right to use the trademark in India, as per the agreement, and hence were not wrongfully using another entity's brand name. On the other hand, the respondent contended that the agreement did not transfer ownership of the trademark to the appellant, making them ineligible for the SSI benefit.

Upon review, the Tribunal examined the relevant portion of the Trademark License Agreement, which specified that the appellant had the right to use the trademark upon payment of royalty. Citing a previous Tribunal decision, the Tribunal noted that ownership of a brand name can be established through use, and since the appellant was the sole entity entitled to use the brand name in India, they effectively became the owners of the brand name. Consequently, the demand raised against the appellant was deemed unjustified, and the impugned order was set aside, allowing the appeal with any consequential relief.

In conclusion, the Tribunal ruled in favor of the appellant, emphasizing that they had obtained the right over the trademark through the Trademark License Agreement, thereby dismissing the allegation of wrongfully availing the SSI exemption benefit and setting aside the demand raised by the Department.