2005 (4) TMI 64 - SC - Central Excise

Whether the Respondents were entitled to benefit of Notification No. 1/93-C.E.? Held that - The Tribunal was clearly erroneous. As indicated the Explanation makes it clear that it need not be a trade name or brand name as commonly understood. Any name or mark or writing, even the name of a company is sufficient so long as it is used for the purpose of indicating a connection between the product and that Company. The use of the words A quality product from ITL group clearly showed an intention to show a connection between the product and the ITL group. These words indicated that the quality of the product was the same as that of a product of ITL group. If use of such words did not disentitle a party from the benefit of the Notification, we fail to understand what sort of words would disentitle a party. The decision of the Tribunal in this case is clearly erroneous and will stand overruled. In this view of the matter, we set aside the impugned Judgment and restore the Order passed by the Commissioner of Central Excise dated 19th May, 1999. However, by this Order, the Commissioner has also imposed penalty in a sum of ₹ 10,00,000/- under Rule 173Q of the Central Excise Rules. While the conclusions of the Commissioner that the Respondents were not entitled to the benefit of the Notification are correct, the fact still remains that the Tribunal has in a number of matters given an interpretation as understood by the Respondent. It therefore cannot be said that the Respondents could not have taken the view they did. It cannot be said that they could never have concluded that they were entitled to the benefit of the Notification. We therefore feel that this is a case where penalty should not be imposed. We therefore delete the imposition of penalty on the Respondents.

Summary

Issues Involved:
1. Entitlement to the benefit of Notification No. 5/98-C.E., dated 2nd June, 1998.
2. Interpretation of "brand name" or "trade name" under the Notification.
3. Consistency of Tribunal's previous judgments with Supreme Court decisions.
4. Imposition of penalty under Rule 173Q of the Central Excise Rules, 1944.

Detailed Analysis:

1. Entitlement to the Benefit of Notification No. 5/98-C.E., dated 2nd June, 1998:
The core issue was whether the Respondents were entitled to the benefit of Notification No. 5/98-C.E., which provided certain excise duty exemptions. The Respondents used the name "Grasim Industries Ltd." on their cement bags, which led to a dispute on whether this constituted the use of a "brand name" or "trade name" of another company, thus disqualifying them from the exemption.

2. Interpretation of "Brand Name" or "Trade Name" Under the Notification:
The Notification's explanation clarified that a "brand name" or "trade name" could be registered or unregistered and included any name, mark, symbol, monogram, label, signature, or invented word used to indicate a connection in the course of trade between the product and some person. The Supreme Court found that the use of "Grasim Industries Ltd." by the Respondents was intended to indicate a connection between the product and Grasim Industries Ltd., a well-known cement manufacturer. This usage fell within the definition of a "trade name," thus disqualifying the Respondents from the Notification's benefits.

3. Consistency of Tribunal's Previous Judgments with Supreme Court Decisions:
The Tribunal had relied on earlier judgments, including Astra Pharmaceuticals (P) Ltd. v. Collector of Central Excise, which dealt with different contexts and phrases. The Supreme Court clarified that the interpretation of "brand name" or "trade name" in the current context was different from "patent or proprietary medicines" considered in Astra Pharmaceuticals. The Tribunal's reliance on Astra Pharmaceuticals was thus a misconstruction. The Supreme Court overruled the Tribunal's decisions in related cases such as Nippa Chemicals (Pvt.) Ltd. and Commissioner of Central Excise, Hyderabad v. Sarat Electronics, finding them to be based on erroneous interpretations.

4. Imposition of Penalty Under Rule 173Q of the Central Excise Rules, 1944:
The Commissioner had imposed a penalty of Rs. 10,00,000/- under Rule 173Q. However, the Supreme Court noted that the Tribunal had previously interpreted the Notification in a manner that could have led the Respondents to believe they were entitled to the exemption. Given this, the Supreme Court found it inappropriate to impose a penalty, as the Respondents' interpretation, although incorrect, was not unreasonable. The penalty was thus deleted.

Conclusion:
The Supreme Court set aside the Tribunal's judgment and restored the Commissioner's order, denying the benefit of the Notification to the Respondents. However, the imposition of the penalty was deleted due to the reasonable belief of the Respondents based on prior Tribunal interpretations. The appeals were disposed of with no order as to costs.