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2023 (7) TMI 822 - AT - Central ExciseAssociation of brand name with manufacturer - whether the brand name 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 identity of that person - bar by time limitation under Section 11A of the Central Excise Act, 1944 - levy of personal penalty - HELD THAT - During the investigations it was observed that an affidavit had been filed with the office of the Registrar of Trade Marks, Chennai under the Trade Marks Act, 1999 where the declaration has been made to the effect that they have adopted Trade mark ABHARAN . Shri Subhas M Kamath Partner of M/s. Abharan Jewellers in his statement dated 16.12.2005 and 13.06.2006 admitted that they have made an application for registration of Logo and Marking ABHARAN before the Registrar of Trade Mark, Chennai. The photographs also show the markings as ABJ on the articles of jewellery. At no given point of time, they have withdrawn these statements. From the above its clear that expensive, premium and branded jewellery are manufactured, marketed and sold by the appellants which are liable for tax at the rate of 2%. From the facts of the present cases as discussed in the impugned order there is no doubt that the name of the manufacturer CKJ and ABJ is written on each article of jewellery as is the requirement of the notification. Whether this name or initials draw any connection between the manufacturer and the product can be clearly established through the various advertisements, hoardings and their elegant and most vibrant expensive showrooms. The statements recorded from the customers it clearly shows that the jewellery is identified with the manufacturer. In the case of KAIL LTD. (FORMERLY KITCHEN APPLIANCES INDIA LTD.) VERSUS STATE OF KERALA REPRESENTED THRGH. JT. COMMR. (LAW) 2016 (10) TMI 938 - SUPREME COURT the issue was with regard to the tax under Section 5(2) of the KGST Act on sales turnover of home appliances for Rs. 27,27,20,230/- on the ground that the appellant-Company had sold the home appliances under the brand name Sansui . The Assessing Authority - the respondent-State, while scrutinizing the second sale exemption as claimed by the appellant-Company Kail Ltd., found that it is the brand name holder of Sansui and hence the turnover of the items sold under Sansui brand name was treated as first sale under Section 5(2) of the KGST Act. What follows from the above decision is that the brand name is established through the marketing strategy adopted by the companies. So, the definition of brand name to find a connection with the trade is clearly established by the ways and means the products are publicised and marketed to woo the customers and establish their brand in the market. The fact that huge amounts were incurred by all these appellants towards hoardings and various other modes of advertisement stands testimony to their strategy to establish their brand and woo the customers. In the present case the articles of jewellery itself were embossed with the name of the manufacturer and the products were widely advertised to attract the customers in buying their products for the quality and craftsmanship of their products. As held by the Apex court the intention was very clear and specific and the legislature intended to tax only those jewellery manufacturers who had established their brand in the market. Whether it is merely a house mark or trade mark (brand name)? - HELD THAT - In the case of COMMISSIONER OF CENTRAL EXCISE, MUMBAI VERSUS M/S. KALVERT FOODS INDIA PVT. LTD. ORS. 2011 (8) TMI 24 - SUPREME COURT the issue was whether the Appellant had cleared the goods under question under any brand name. The Tribunal had held that because the brand name Kalvert was not registered in their name therefore it cannot be held that respondents were using brand name . The Tribunal further held that the name on the goods manufactured and cleared by the respondent in the market could at best be termed as House mark and not brand name/trade name. The above observations of the Apex court clearly establish the difference between the house mark and the trade mark. In the present case the appellants claim that it was only a house mark for identification. But their advertisements and marketing strategies employed clearly go to prove that they created a connection between the product and the manufacturer to attract the customers - Therefore, it s clear that the articles of jewellery manufactured and sold by these appellants was branded jewellery. In fact, these appellants had also registered their trademarks with the authorities concerned. In the present case Rule12AA was a specific provision introduced to bring every person who gets the articles of jewellery manufactured on job work basis shall obtain registration, maintain accounts, pay duty leviable on such goods and comply with all the relevant provisions of these rules, as if he is an assessee. The question of Rule 12AA overriding section 2(f) or Section 3 of the central excise act does not arise. Time Limitation - HELD THAT - In case of PUSHPAM PHARMACEUTICALS COMPANY VERSUS COLLECTOR OF C. EX., BOMBAY 1995 (3) TMI 100 - SUPREME COURT the apex court has held that the extended period of five years under the proviso to section 11A(1) is not applicable just for any omission on the part of the assessee, unless it is a deliberate attempt to escape from payment of duty. Where facts are known to both the parties, the omission by one to do what he might have done and not that he must have done does not constitute suppression of fact. The appellants therefore cannot be said to suppressed the facts as they were under the impression that they were not liable to pay duty - the proviso to section 11A cannot be invoked when there is no evidence of wilful suppression with intent to evade duty is alleged by the revenue. Therefore, the goods cleared by the appellants are branded goods and they are liable to pay duty as per Rule 12AA of the Central Excise Rules. Since no allegation of wilful suppression with intent to evade payment of duty is established from the records, the demand is restricted to normal period. Levy of Personal Penalty - HELD THAT - The personal penalty on Shri Subhas M Kamath, Partner of M/s. Abharan Jewellers, Udupi; Shri Vinod Hayagriv, Managing Director of M/s. C Krishnaiah Chetty Sons and Shri Pratap Kamath, CEO of M/s. C Krishnaiah Chetty Sons, are also not sustainable and consequently set aside. Matter remanded to the original authorities for re-quantification of the demands for the normal period along with interest. Penalty under 11AC and under Rule 25 is set aside - appeal allowed in part.
Issues Involved:
1. Whether the appellants are manufacturers of branded jewellery. 2. Whether the use of abbreviations like "CKC" or "ABJ" constitutes a brand name or trade name. 3. Whether the demand for duty is barred by limitation under Section 11A of the Central Excise Act, 1944. 4. Whether the penalties imposed under Section 11AC and Rule 25 are sustainable. Summary: 1. Manufacturer Status: The appellants argued that they are not manufacturers but that the goldsmiths and job workers are. The Tribunal, however, noted that the appellants supply raw materials and receive finished products, which are then marketed and sold under their names. Rule 12AA of the Central Excise Rules, 2002, specifies that the person who gets the articles manufactured on a job work basis is considered the manufacturer. Thus, the Tribunal held that the appellants are indeed manufacturers. 2. Brand Name or Trade Name: The Tribunal examined whether the use of abbreviations like "CKC" or "ABJ" on jewellery constitutes a brand name or trade name. The Tribunal referred to the Larger Bench's decision and various precedents, concluding that these abbreviations create a connection between the product and the manufacturer, thus qualifying as a brand name. The Tribunal emphasized the appellants' extensive advertising and marketing efforts, which further established their brand in the market. 3. Limitation under Section 11A: The appellants contended that a substantial part of the demand is barred by limitation. The Tribunal noted that there was confusion regarding the excisability of branded jewellery, as evidenced by various Board circulars. The Tribunal found no evidence of willful suppression or intent to evade duty by the appellants. Consequently, the Tribunal held that the extended period of limitation under Section 11A is not applicable, and the demand is restricted to the normal period. 4. Penalties under Section 11AC and Rule 25: Given the finding that there was no willful suppression or intent to evade duty, the Tribunal set aside the penalties imposed under Section 11AC and Rule 25. The Tribunal also set aside the personal penalties on the partners and directors of the appellant companies. Conclusion: The appeals were partially allowed. The demand for duty was restricted to the normal period, and the penalties were set aside. The cases were remanded to the original authorities for re-quantification of the demands for the normal period along with interest.
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