1993 (1) TMI 169 - AT - Central Excise

Summary

Issues:
Interpretation of Notification No. 175/86 for exemption eligibility based on brand name or trade name affixed to goods.

Analysis:
The case involved a dispute regarding the eligibility for exemption under Notification No. 175/86 based on the affixation of brand names or trade names to goods sold to government undertakings. The appellants, a small-scale unit, argued that they had a strong prima facie case for exemption as their customers, such as Indian Airlines and ITDC hotels, did not engage in the trade of the goods but merely used them as part of their services. The appellants contended that the brand names or trade names affixed to the goods did not meet the criteria outlined in Explanation VIII of the Notification, which requires a connection in the course of trade between the goods and the person using the name or mark. They emphasized that the customers were not eligible for the exemption and, therefore, para 7 of the Notification should not apply to them.

The Departmental Representative, on the other hand, argued that the wording of para 7 of the Notification referred to any person, not necessarily a manufacturer, whose brand name or trade name is affixed to the goods. They contended that since the brand names of Indian Airlines and the hotels were affixed to the goods, the appellants had attracted the restriction under para 7 of the Notification, making them ineligible for the exemption.

Upon considering the submissions of both parties, the Tribunal agreed with the appellants' contention. The Tribunal held that the goods were marked with the names of Indian Airlines and the hotels, not their trade names or brand names. The Tribunal interpreted Explanation VIII of the Notification to require a connection in the course of trade between the goods and the person using the trade mark, which was not present in this case. Additionally, the Tribunal noted that the customers were not engaged in the trade of the goods but were merely users, making them ineligible for the exemption under the Notification. Therefore, the Tribunal granted the stay prayed for by the appellants and transferred the appeal to CEGAT, New Delhi for disposal by the concerned Special Bench, in line with a previous decision.