2009 (3) TMI 436 - HC - Central Excise

Readymade garments- Exemption under Notification No. 12/2001-C.E. dated 1.3.2001- This appeal is filed against the order of the Tribunal cancelling the demand of Excise Duty in respect of clearance of readymade garments by the respondent assessee for the months of March and April 2001. The commodity enjoyed exemption from excise duty only up to 28-2-2001. Thereafter duty was made applicable to readymade garments sold under registered brand name. While exemption Notification 12/2001 was issued with effect from 1-3-2001 there was an exclusion therein whereby duty was payable on goods cleared under registered trade mark. While the application for trade mark registration was pending when the department levy duty. Tribunal has relied on the Trade Notice issued where accepting the position that pendency of the trade mark application is no guard to deny exemption and actual registration is required for charging duty for the clearance of the goods in brand name. we therefore dismiss the appeal.

Summary

Issues:
Interpretation of exemption notification for excise duty on readymade garments sold under a registered brand name.

Analysis:
The High Court of Kerala heard an appeal against the Tribunal's decision to cancel the demand of Excise Duty on the clearance of readymade garments by the respondent assessee for March and April 2001. The exemption from excise duty for the commodity was valid only until 28-2-2001, after which duty was applicable to goods sold under a registered brand name. The respondent argued that their trade mark registration application was pending during the disputed period. The department sought to levy duty retrospectively from the date of filing of the application in 2003, covering the clearance period. The standing counsel referred to Section 23 of the Trade Marks Act, stating that the pendency of the application is sufficient for using the trade mark, making clearances during this period subject to duty. However, the senior counsel for the respondent argued that duty is applicable only when goods are sold under a registered trade mark. The Tribunal agreed with this interpretation, stating that liability cannot be imposed on the respondent retroactively due to the subsequent registration of the trade mark.

The Tribunal also considered a Trade Notice issued by the Madras Commissionerate, which supported the position that pending trade mark applications do not disqualify goods from exemption, and actual registration is necessary for imposing duty on the clearance of branded goods. Based on this reasoning, the High Court dismissed the appeal, upholding the Tribunal's decision that duty cannot be imposed on the respondent for the clearances made under a pending trade mark application.