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TMI Blog1995 (10) TMI 88X X X X Extracts X X X X X X X X Extracts X X X X ..... 1987 to 20-8-1992 in terms of para 7 read with Explanation VIII to Notification No. 175/86, dated 1-3-1986 as amended by Notification No. 223/87, dated 22-9-1987 the exemption availed by them in respect of telephones and `EPABX instruments totally valued at Rs. 3,29,74,528/- under Notification No. 175/86, dated 1-3-1986 (as amended) was not admissible since on the said goods they had used brand name Shyam which was owned by M/s. Shyam Antenna Electronics Pvt. Ltd. The show cause notice further alleged that the appellants had suppressed the fact regarding the use of the brand name Shyam on their product, and therefore, they were liable to pay the differential duty of Rs. 36,44,264/- in terms of provisions to Section 11A(1) of the Central Excises and Salt Act, 1944. By the said show cause notice the appellants were also asked to show cause as to why the seized excess stock comprising of 293 pieces of EPABX/Telephones/Amplifier valued at Rs. 3,31,400/- should not be confiscated and duty should not be recovered on shortage of 45 pieces of EPABX/ Telephone as against the recorded balance of 125 pieces in the RG-1 register. In their reply to the show cause notice and also during the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the brand name Shyam was registered under the Trade and Merchandise Act by M/s. Shyam Antenna Electronic (Pvt.) Ltd. in respect of `Antenna Systems which are entirely different from the product manufactured by the appellants. He contended that the trade mark Shyam not being the registered trade mark of M/s. Shyam Antenna Electronics (Pvt.) Ltd. or any other party in respect of Telephone and Tele-communication equipments, the provisions of para 7 read with the Explanation VIII of Notification No. 175/86 (as amended) would not be attracted in respect of the said products manufactured by the appellants. He referred to the definition of trade mark and the provisions relating to the registration of the trade mark and infringement of trade mark under the Trade and Merchandise Act and contended that the language of para 7 read with Explanation VIII of Notification No. 175/86 as amended having been adopted from the relevant provisions under the Trade and Merchandise Marks Act, 1958 the use of the brand name Shyam in respect of Electronic Push Button, Telephone Dialers and EPABX would not come within the mischief of para 7 of Notification No. 175/86 since for such goods the brand nam ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 11A is not sustainable. 4. On behalf of the respondent Shri A.K. Singhal, learned JDR submitted that on a plain reading of para 7 and Explanation VIII of Notification No. 175/86 (as amended) it follows that the exemption under the notification was not admissible in a case where specified goods manufactured by an assessee were affixed with the brand or trade name whether registered or not of another person who was not eligible for the grant of exemption under the notification. He added that there was no stipulation in the notification that the exception in para 7 was applicable only in a situation where the brand name or trade name affixed by the manufacturer to his goods was the brand name or trade name owned and registered by any other person in respect of identical goods. He contended that under these circumstances there was no force in the appellants contention that the exemption under the Notification No. 175/86 (as amended) was admissible to them in respect of EPABX and other telephone/communication equipments manufactured by them since the brand name in question was owned and registered by M/s. Shyam Antenna Electronics Pvt. Ltd. in respect of different products namely ant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cation of the indentity of that person. 7. It is seen from the impugned order that the Collector had arrived at a finding that the appellants were not eligible for exemption under Notification No. 175/86-C.E., dated 1-3-1986 as amended by Notification No. 223/87-C.E., dated 22-9-1987 in respect of EPABX and telephone equipments since they were affixing to these products the brand/trade name Shyam belonging to M/s. Shyam Antenna Electronics (Pvt.) Ltd. The Collector has justified his finding on the grounds that in terms of para 7 of the said notification the exemption contained therein was not applicable to the goods which were affixed with the brand name or trade name (whether registered or not) in a manner so as to indicate a connection in the course of trade between the specified goods in question and some other person using such name or mark. 8. The appellants case is that the Collector s finding is erroneous since the definition of the brand name or trade name in Explanation VIII to Notification No. 175/86 as amended is similar to the definition of trade mark in Section (sic) of Trade Merchandise Marks Act. 1958 under which the registration of a trade mark need not be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on i.e. `brand name or `trade name of `another person have to be read in a manner that will while advancing the purpose for which the para was introduced would not hit the people who are genuine small scale manufacturers and are using a brand name without any knowledge that another person is also using the same brand name. The `brand name of another person has to be understood to mean that a particular brand name is such as it belongs to the other person and the right of ownership to that can be established by record notwithstanding the fact that the brand name is registered or not and that the said brand name by right belongs to the other person for use on the goods of the type manufactured by the manufacturer claiming the benefit of the exemption notification. It does not matter whether the other person who has a right to the particular brand name or trade mark himself manufactures any specified goods or not. The plea made by the appellants that unless it can be shown that the brand name of the other persons is for specified goods the mischief of para 7 cannot be attracted as seen from the wording of para 7 read with Explanation VIII of the notification under which the te ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dment introduced to Notification No. 175/86-C.E. by Notification No. 1/93 and subsequent amendment thereto, eligibility to claim exemption had been made dependent upon the aggregate value of clearances and in order to ensure there was no abuse by the manufacturers who were otherwise not eligible to claim such exemption enjoying the same by creating different unit, provision for denying the exemption was introduced when the product of a unit or a manufacturer of such product uses a common brand name or trade name or mark of another whether registered or not. The High Court further held that for the purposes of excise duty and application of rates it is the totality of clearances that have to be taken into account and not the clearances in respect of different products when exemption is sought to be claimed under the notification in question, since the notification apart from stipulating mere user of the brand or trade name of another person, does not carry any further limitation on such user that it should be in respect of similar or identical goods also and the various explanation to para 4 of the notification would go to show that total value of clearances has to be taken into acc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or trade name or mark of another whether registered or not. 12. While that be the position, can the petitioners be held to be entitled to the exemption merely because the products of the units are different notwithstanding the common or identical brand name used for the products. For the purposes of excise duty and application of the rates, it is the totality of the clearances that have to be taken into account and not the clearances in respect of different products when exemption is sought to be claimed under the notifications in question. The notification, apart from stipulating the mere user of the brand or trade name of another person, does not carry any further limitation on the said user that lt should be in respect of similar or identical goods also. The various explanations to paragraph 4 of the Notification in question would go to show that the total value of clearance have to be taken into account in adjudicating upon the eligibility or otherwise of the claim for exemption. In view of the above, I am of the view that the claims of the petitioners have to fail and consequently these writ petitions shall stand dismissed. No costs." Since no contrary judgment of any oth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gible for the exemption under Notification 175/86 (as amended). In this regard they have stated that their views regarding the interpretation of the provisions relating to brand name or trade mark in the said notification have been confirmed by the Board vide their letter No. 213/41/88-CX, dated 30-12-1988 and also by the Tribunal by its order in the case of Precise Electronics v. Collector (supra). 10. From the impugned order we find that the appellants claim that the use of the brand name Shyam on their product was within the knowledge of the excise authorities was rejected by the Collector on the grounds that it is not clear from the statements dated 28-3-1987 and 14-8-1987 that they were actually recorded by the Central Excise officers during their visits to the appellants factory. He has observed that even if these statements were admitted they would not constitute a declaration by the appellants to the department. In this regard the Collector has also observed that even otherwise these statements were given prior to the issue of the amending Notification No. 233/87, dated 22-9-1987 which came in force w.e.f. 1-10-1987 and accordingly even if it could be said that in Mar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... v. Collector (supra). 12. We find that there is sufficient force in the appellants contention that in terms of Rule 173B no responsibility was cast on them to declare the trade name or brand name affixed by them on their goods. Having regard to the clarification issued by the Board in their letter S/213/41/88-CX, dated 30-12-1988 and the Tribunal s decision in the case of Precise Electronics v. Collector (supra) we are inclined to hold that there is sufficient force in the contention of the learned counsel for the appellants that they had acted on the bona fide belief that they were eligible for the exemption under Notification No. 175/86 as amended Notification No. 223/87 in respect of their Electronic Telephone equipment and EPABX Exchange since the brand/trade name Shyam was not owned or registered by any other person in respect of identical goods namely Telephone/Tele-communication equipment. In the case of Collector v. Champhor Drugs and Liniments, reported in 1989 (40) E.L.T. 276, the Apex Court has held that the extended period of 5 years is applicable when something positive other than mere inaction or failure on the part of the manufacturer is proved and conscious or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ention of any provision of any Act, is a question of fact depending upon the facts and circumstances of a particular case. The Tribunal, however, had held contrary to the contention of the appellants. The Tribunal noted that dhoop sticks are different products from agarbaties even though they belonged to the same category and the Tribunal was of the view that these were to be treated differently. Therefore, the clarification given in the context of the agarbaties could not be applicable to dhoop sticks etc., and the Tribunal came to the conclusion that inasmuch as the appellant had manufactured the goods without informing the Central Excise authorities and had been removing these without payment of duty, these would have to be taken to attract the mischief of the provisions of Rule 9(2) and the longer period of limitation was available. But the Tribunal reduced the penalty. Counsel for the appellants contended before us that in view of the trade notices which were referred to by the Tribunal, there is scope for believing that agarbaties were entitled to exemption and if that is so, then there is enough scope for believing that there was no need of taking out a licence under Rule 17 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n failure either to take out a licence or to pay duty on that belief, when there was no contrary evidence that the producer or the manufacturer knew that these were excisable or required to be licensed, would not attract the penal provisions of Section 11A of the Act. If the facts are otherwise, then the position would be different. It is true that the Tribunal has come to a conclusion that there was failure in terms of Section 11A of the Act. Section 35L of the Act, inter alia, provides that an appeal shall lie to this Court from any order passed by the Appellate Tribunal relating, among other things, to the determination of any question having a relation to the rate of duty of excise or to the value of goods for purposes of assessment. Therefore, in this appeal, we have to examine the correctness of the decision of the Tribunal. For the reasons indicated above, the Tribunal was in error in applying the provisions of Section 11A of the Act. There were no materials from which it could be inferred or established that the duty of excise had not been levied or paid or short-levied or short-paid or erroneously refunded by reason of fraud, collusion or any wilful mis-statement or suppre ..... X X X X Extracts X X X X X X X X Extracts X X X X
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