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TMI Blog2018 (8) TMI 1072X X X X Extracts X X X X X X X X Extracts X X X X ..... etail Limited ('the Appellant') is inter alia engaged in the processing and/or trading of a wide range of cereals, pulses and flour classifiable under Chapter 10 of the First schedule to the Customs Tariff Act, 1975 ('subject goods'). The subject goods are sold by the Appellant at its supermarket and hypermarket format stores, namely 'More Stores', located in various states, including Karnataka, Andhra Pradesh, Delhi, Kerala, Maharashtra, Telangana, Tamil Nadu, West Bengal, Punjab, Haryana, UP, MP, Chandigarh and Puducherry. B. The Appellant sells the subject goods under the following brand names, 'More for you', 'More Selecta' and 'More value' (collectively referred to as 'More trademarks'), which are registered trademarks (in the name of the Appellant) under the Trade Marks Act, 1999 ('the Trade Marks Act'). Further, the packaging of the subject goods also bears the 'AdityaBirla' logo which is the registered trademark of Aditya Birla Management Corporation Pvt. Limited, under the Trade Marks Act, which trademark has been licensed to the Appellant for specified purposes. The subject goods are presently sold from its 'More Stores'. The brand name 'More', pertaining to such 'More S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ackage of such subject goods so as to enable the customers to identify and buy products based on their requirements, budget and preferences. Therefore, in respect of such subject goods, under both streams, the package also bears a declaration which acts as a quality indicator (e.g. whether the product is of standard quality, premium quality or superior quality). D. In the State of Maharashtra, the Appellant sells the subject goods under Stream 1 and Stream 2 from around twenty five More Stores located across the State. As regards the subject goods under Stream 1, the same are either processed at its processing unit located in Pune or are sourced from processing units located in other States. As regard the subject goods under Stream 2, the same are procured from various third party vendors located within or outside Maharashtra. E. In terms of the present packaging adopted by the Appellant for the subject goods sold by it under both Stream 1 and Stream 2, the same inter alia bear the trademarks registered under the Trade Marks Act, viz. 'More trademarks' and the 'Aditya Birla' logo. In terms of the relevant entries under Schedule 1 to Notification No. 1/2017-Central Tax (Rate) date ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which can be contacted, in case of consumer complaints. Food Safety and Standards Act, 2006 '23. Packaging and labelling of foods. (1) No person shall manufacture, distribute, sell or expose for sale or dispatch or deliver to any agent or broker for the purpose of sale, any packaaed food products which are not marked and labelled in the manner as may be specified by reaulations.. Food Safety and Standards (Packaging and Labelling) Regulations, 2011 'CHAPTER-2- Packaging and Labelling 6. Name and complete address of the manufacturer- (i) The name and complete address of the manufacturer and the manufacturing unit if these are located at different places and in case the manufacturer is not the packer or bottler, the name and complete address of the packing or bottling unit as the case may be shall be declared on every package of food...' G. The Appellant intends to revise the packaging of the subject goods and the manner in which the subject goods are put up for sale, to exclude from the packages the registered trademarks, namely 'More trademarks' and the 'Aditya Birla' logo. The proposed packaging of subject goods under both streams would accordingly bear the fol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fication') and Notification No.2/2017-State Tax (Rate) dated 29th June 2017) [collectively referred to as 'the Exemption Notifications']? * Question 2- Whether the subject goods proposed to be sold under Stream 2, where the package of the subject goods would have a declaration mentioning the name and registered address of the manufacturer as per the statutory requirement under the Subject Statutory Provisions as also the declaration 'Marketed by- Aditya Birla Retail Limited' can be considered as 'not bearing a brand name', and, accordingly eligible for exemption in terms of relevant entries to the Exemption Notifications? * Question 3- Whether the declarations made on the package, by inter alia using common/generic terms viz. 'Value', 'Choice' and 'Superior', for the sole purpose of indicating the quality of the product so as to enable the customers to identify and buy products based on their requirements, budget and preferences can be construed to be a 'brand name' for the purpose of the Exemption Notifications? I. Vide its Order dated 23rd March 2018 ('Impugned Order'), issued under Section 98 of the Central Goods and Service tax Act, 2017 ('CGST Act') and Maharashtra Goods ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 'Value', 'Choice' and 'Superior', for the sole purpose of indicating the quality of the product so as to enable the customers to identify and buy products based on their requirements, budget and preferences cannot be construed to be a 'brand name' for the purpose of the Exemption Notifications. 2. The grounds of appeal are set out in detail herein after, which are taken in the alternative and are without prejudice to one another. A. The name of the Appellant does not qualify as "brand name" in respect of the subject goods for the purpose of the Exemption Notifications 3. In terms of the relevant entries of the CGST Notification1, the exemption thereunder would be available to supplies of the subject goods where the following conditions are satisfied: (a) Where the subject goods fall under the tariff item, sub-heading, heading or Chapter as specified in the column (2) of the CGST Notification, and; (b) Where the subject goods are other than those (i) put up in unit containers, and (ii) bearing a registered brand name; or bearing a brand name on which an actionable claim or an enforceable right in the court of law is available, other than those where any actionable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... May 2017 under the Trade Marks Act, 1999. irrespective of whether or not the brand is subsequently deregistered; (B) a brand registered as on the 15th May2017 under the Copyright Act, 1957(14 of 1957; (C) a brand registered as on the 15th May2017 under any law for the time being in force in any other country." The range of cereals, pulses, etc. (subject goods), being supplied by the Appellant are covered under the various headings/sub-headings of Chapter 10 to the First Schedule to the Customs Tariff Act, 1975. The said goods would be covered under different serial numbers of the Exemption Notifications. However, as the conditions for applicability of the exemption are similar for each of such serial numbers, for ease of reference and for brevity, Sr.No.69 of the CGST Notification is reproduced above. 4. In terms of the above meaning, a name or a mark would become a 'brand name', for the purpose of the CGST Notification, only when the following conditions are satisfied: (i) When such name or mark is used in relation to specified goods; and (ii) When such name or mark is so used for the purpose of indicating a connection in the course of trade between ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oods(known as Product mark), besides using a common mark in all his products to indicate the origin of the goods from the enterprise (known as House mark). This practice is more predominant in the pharmaceutical trade. Though both are trademarks and are registrable as such, each has its own distinct function. While the House marker presents the image of the enterprise from which the goods emanate, the Product mark is the means by which goods are identified and purchased in the market place and it the focal point of presentation and advertisement."' iii. Tarai Foods Limited v. CCEx. Meerut-II 2006 [(198) E.L.T. 323 (S.C.)]- 'Furthermore the definition of the words 'brand name' shows that it has to be a name or a mark or a monogram etc. which is used in relation to a particular product and which establishes a connection between the product and the person. This name or mark etc. cannot, therefore, be the identity of a person itself. It has to be something else which is appended to the product and which establishes the link' 6. In Appellant's case, the subject goods are presently sold under the brand name 'More' from its 'More' Stores. However, from the 'More' stores, several s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat a product is recognised in the market through its brand name and may not be directly associated or identified with the name of the manufacturer/brand owner even where such manufacturer/brand owner is a reputed company. The products are associated with the brand and not with the name of the company. Further, there would also be such illustrations where the product is identified with the name of the company. An illustrative list in this regard is provided. As evident, this strictly holds true in case where the product is eponymous to the manufacturer, which is not the case of the Appellant. a. In this regard, the reliance placed on the decision of the Hon'ble Supreme Court in the case of the Commissioner of Central Excise, Trichy vs Grasim Industries Ltd [2005 (183) E.L.T. 123 (S.C.)] is totally misplaced as the facts therein are distinguishable from Appellant's case and accordingly the said decision is inapplicable. The Impugned Order therefore erroneously places reliance on the said decision to hold that the name of a company would constitute a brand name. The issue involved in the present case i.e. whether mentioning of the name of the manufacturer on the package of a product ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... C. Ex. & Customs [1978 (2) E.L.T. J 350 (S.C.)] that in a taxing statute there is no room for any intendment but regard must be had to the clear meaning of the words. 10. It is also relevant to note that, in terms of the Exemption Notifications, to constitute a brand name, it needs to be established that the same has been purposefully used to indicate a connection between the goods and the person. Reliance in this regard is placed on the decision of the Hon'ble Supreme Court in the case of Commissioner of C. Ex., Hyderabad-IV v. Stangenlmmuno Diagnostics [2015 (318) E.L.T. 585 (S.C.)] wherein, relying on the decision of the Hon'ble Supreme Court in the case of Commissioner of Central Excise, Chandigarh-ll v. Bhalla Enterprises [2004 (173) E.L.T. 225 (S.C.)] it was inter alia held that 'the assessee would be debarred only if it uses on the goods in respect of which exemption is sought, the same/similar brand name with the intention of indicating a connection with the assessees goods and such other person or uses the name in such a manner that it would indicate such connection. If there is no such intention or that the user of the brand name was entirely fortuitous and could not on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation, any connection between the subject goods and the Aditya Birla logo. Further, the manner of usage of such colors on the proposed package do not in any manner exert recall with regard to the Aditya Birla logo. In fact, in certain cases, the proposed packaging uses colors which are not a part of the Aditya Birla logo. Without prejudice to the fact that the said observation does not form a substantive basis of the findings made in the Impugned Order, it is submitted that said observation is extraneous to the terms of the Exemption Notifications as the definition of the term 'brand name' therein neither includes a 'combination of colours' nor does it borrow the meaning of 'mark' from the Trade Marks Act. It is well established inter alia in terms of the decision of the Hon'ble Supreme Court in the case of Hemraj Gordhandas v. Assistant Collector of C. Ex. & Customs [1978 (2) E.L.T. J 350 (S.C.)] that in a taxing statute there is no room for any intendment but regard must be had to the clear meaning of the words. 13. It is settled law that the declaration of name of the company as per the statutory requirements would not amount to 'bearing a brand name' 14. The ARA has failed to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... packing bore all other details except the words "Inland Valley". They classified their first packing under sub-heading No. 2001.10 and cleared the same from the factory by paying duty at the rate of 8% as prescribed in that sub-heading. But the second packing had been classified by them under sub-heading 2001.90 and cleared at nil rate of duty - The definition of 'brand name' considered in this case was similar to the definition as stated in the Exemption Notifications. - The department had contended that the definition of 'brand name' would include the name of the manufacturer which was printed on the products. - In the above context, the Hon'ble Supreme Court on the issue as to whether the name of the manufacture can be considered to be a 'brand name' held as follows: "Under the Standard Weights and Measures (Packets Commodities) Act, 1977 every packet is required to bear thereon or on a label squarely affixed thereto a definite, plain and conspicuous declaration as to, inter alia, the name and address of the manufacturer (see Rule 6 & 10). In other words, unit containers would have to bear the name of the manufacturer. If the name of the manufacturer were ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee's own case, CCEx v. Pepsi Foods Ltd., [2003 (156) E.L.T. 1013 (Tri. - Del.)] and in the case of Nirula and Company Pvt. Ltd. v. CCEx [2005 (186) E.LT. 412 (Tri. - Del.)], stating that mere printing of the name of the company on unit container does not make the package branded, unless the brand itself is printed specifically. 17. It is well settled that in terms of Article 141 of the Constitution of India, the law laid down by the Hon'ble Supreme Court is binding on all the Courts and authorities in the country. Accordingly, in terms of the above decisions of the Hon'ble Supreme Court, mere mention of the name and address of the manufacturer as per the requirement under the Subject Statutory Provisions, without actually printing the brand on the product packaging, would not render the product as bearing a 'brand name'. 18. Reliance is further placed on the decision of the Hon'ble Madras High Court in the case of CCE v. CESTAT Chennai, [2015 (318) ELT 238 (Mad)], wherein the issue pertained to denial of SSI exemption on account of the assessee clearing manufactured goods using the superscription 'manufactured and packed by SVS & Sons', which was contended to be an affixa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r, which is indicated on such package'. In terms of the language employed, the requirement of goods being 'put up in unit container', and, bearing a 'brand name' would have to be cumulatively satisfied so as to exclude the corresponding goods from the purview of the exemption. 22. In terms of Section 18 of the Food Safety and Standards Act, 2006 ('FSSA') 'no person shall manufacture, distribute, sell or expose for sale or dispatch or deliver to any agent or broker for the purpose of sale, any packaged food products which are not marked and labelled in the manner as may be specified by regulations'. Rule 6 of the Food Safety and Standards (Packaging and Labelling) Regulations, 2011 ('FSS Regulations') in turn mandates provision of details of the manufacturer of the product on the corresponding package. Therefore, in case it is construed that name of the manufacturer is a brand name in itself, then every food product which is sold in packed form would be considered as branded. To this extent, the requirement that the product should bear a brand name would be rendered redundant, considering that a product sold in a unit container (and therefore being governed by FSSA and FSSA Regulat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and name was printed, and, was claiming benefit under the Small Scale Exemption Notification No. 1/93-C.E. dated 28th February 1993 ('SSI Exemption') in respect of some cookies sold loosely from the same retail counter. The question before the Hon'ble Supreme Court was 'whether the manufacture and sale of specified goods that do not physically bear a brand name, from branded sale outlets, would disentitle an assessee from the benefit of S.S.I. Notification'. In this context, the Hon'ble Supreme Court inter alia held that to determine whether a product bears a brand name, one needs to look into the environment and that that 'a specific, dedicated and exclusive outlet from which a good is sold is often the most crucial and conclusive/actor to hold a good as branded'. It has been further held that 'whether the brand name appears in entirety or in parts or does not appear at all cannot be the chief criterion; primary focus has to be on whether an indication of a connection is conveyed in the course of trade between such Specified goods and some person using the mark'. On this basis, it was held that cookies sold loosely from the 'Cookie Man' counter would be considered to be branded. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax that he is voluntarily foregoing his actionable claim or enforceable right on such brand name as defined in Explanation (ii)(a), and' (b) the person undertaking packing of such goods in unit containers which bear a brand name shall, on each such unit containers, clearly print in indelible ink, both in English and the local language, that in respect of the brand name as defined in Explanation (ii)(a) printed on the unit containers he has foregone his actionable claim or enforceable right voluntarily' Accordingly, the decision of the Hon'ble Supreme Court in the case of Australian Foods is not applicable to the facts of the present case. Also, to this extent, the finding in the Impugned Order, that 'the goods are being supplied through the More stores which is registered brand as on the 15th May 2017', is in excess of the conditions stipulated in the Exemption Notifications, which is only concerned with the nature of disclosures made on the unit container alone. e. Further the decision of Hon'ble Supreme Court in the Australian Foods case (supra) is clearly distinguishable on facts and therefore not applicable to the present case. It is an admitted fact that, in Appella ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ' are only aimed at creating a clearly identifiable distinction between different quality versions of the same product. Considering that the said terms would therefore not indicate any connection in the course of trade between the Appellant and the products, but would only reflect its quality versions, the same would not qualify as a 'brand name'. b. In this regard, it is also relevant to refer to Section 9 of the Trade Marks Act, which lays down the 'absolute grounds of refusal of registration' of a name or mark or a logo, as a trademark under the said Act. Section 9(l)(b) states that a trade mark 'which consist exclusively of marks or indications which may serve in trade to designate the kind, quality, quantity, intended purpose, values, geographical origin or the time of production of the goods or rendering of the service or other characteristics of the goods or service', shall not be registered. The definition of 'trademark' as provided in Section 2(zb) of the Trade Marks Act is broadly similar to the definition of the term 'brand name' under the Exemption Notifications to the extent it includes a mark or a name that indicates 'a connection in the course of trade between ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r case in view of the GST notification. The Advocates confirmed that the Appellant is not raising the issue about point no. 2 i.e. the cases where the goods of stream will be sold by mentioning name of the Appellant as "Marketed by". 27. The departmental representative argued that in view of the judgment in case of M/s Grasim, even name can be treated as brand name. Also, the Appellant never brought on records the facts about their link with the products. He further stated that the branding concept keeps on changing and it cannot be decided based on the past records of the Appellant. He stated that intentions of the Appellant are not free from doubt as they had earlier proposed for the goods being marketed by them (2nd question before AAR) and now withdrew the same as their claim of declaring the details on packages as per statutory requirements was not found valid by AAR. Written submissions were also tendered to fortify their say. Discussions 28. We have heard both the parties and gone through the written submissions made in the matter. Of the three points raised before the AAR, the Appellant is raising only points no. 1 and 3, thereby dropping the issue of products pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . If a person stole any of the cattle, anyone else who saw the symbol could deduce the actual owner. Over time, the practice of branding objects extended to a broader range of packaging and goods offered for sale. In modern times the term has been extended to mean a strategic personality for a product or company, so that 'brand' now suggests the values and promises that a consumer may perceive and buy into. A brand, as we understand the term now, is a name, term, design, symbol,': or other feature that distinguishes an organization or product from its rivals in the eyes of the customer. Brands are used in business, marketing, and advertising. Name brands are sometimes distinguished from generic or store brands. Branding is a set of marketing and communication methods that help to distinguish a company or products from competitors, aiming to create a lasting impression in the minds of customers. The key components that form a brand's toolbox include a brand's identity, brand communication (such as by logos and trademarks), brand awareness, brand loyalty, and various branding (brand management) strategies. Many companies believe that there is often little to differentiate between sev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder licence agreement. Thus the goods are being identified by consumers/customers by names 'More' and 'Aditya Birla Retail'. As confirmed by the Appellant, huge investment and time is involved in establishing the brands by way of consistent advertising and marketing to register in the minds of consumers/customers. There is accordingly a lot of value attached to such brands which hire some part of Customer's mind to differentiate the goods from rival manufacturers/brands. 33. The Appellant has largely depended on the Apex Court judgment in the case of Tarai Food Ltd. [2006(198) ELT 323(SC)] to claim that the manufacturer's name on packets is not sufficient to classify the same as branded. We would like to reproduce the para 11 of the said judgment to show that facts of the case before us are different from the facts and circumstances of the case before Hon'ble Supreme Court: "There is a value attached to the brand name, a value which has been recognized in the tariff entry by providing for levy of excise duty on goods bearing a brand name. It may be that the appellant had deliberately omitted the brand name in selling the 'French Fries' to avail of the nil rate of tariff. This ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rds proposed to be retained on new packing and prominently displayed on it are already associated with the brand 'More' and registered in the minds of the customers who can identify the said goods by these words. 35. Additionally, it is also proposed to continue to the brand name 'Aditya Birla Retail', but without the Group Company Logo, on the package in the form of manufacturer's name. By mentioning the manufacturer's name on the packages, albeit as per statutory requirements, the Appellant is taking advantage of their registered brand, the logo of which they have opted to remove from the said goods. The Appellant has argued that if manufacturer's name on the package, declared as per statutory requirements under FSSAI and or Legal Metrology Rules, is accepted as brand name then every packaged commodity will be considered as branded. This is not true in every case. Instead, if every reputed manufacturer whose brand name is covered in their name can just remove their brand from the package and avail the exemption of the said notification, no one would be covered under GST. For example, M/s. Patanjali Ayurved Ltd. selling Cow Ghee under the registered brand name 'Patanjali' were to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... trated above that there is direct connection between the said goods and the brand 'More' and the manufacturer Aditya Birla Retail Ltd., thus the use of name of manufacturer on packages can be considered as brand name. 37. Two Court rulings are relied upon to substantiate our say: (a) Hon'ble Supreme Court's order in the case of Australian Foods India(P) Ltd., [2013 (287) ELT 385 (SC] has specifically mentioned that a scrutiny of the surrounding circumstances is not only permissible but necessary to decipher the same. Hon'ble Court has ruled in this case that physical manifestation of brand name on goods is not a compulsory requirement. The scrutiny of surrounding circumstances, as done in above paras, clearly shows that the said goods, even though without affixing brand on them, will be considered as bearing the brand of 'More'. The 'bearing' a brand as mentioned in the said notification and vehemently argued by the Appellant, does not necessarily mean affixing on the unit container/goods. The notification does not provide specifically about the affixing the said brand on the goods itself and Hon'ble Apex Court has ruled, in similar case, that physical manifestation of bran ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8) ELT 585(SC)], the issue pertained to the use of brand name of other person. Two persons were using same logo/trademark simultaneously. (f) Bhalla Enterprises, [2004(173) ELT 225(SC)], -- same brand name used by different persons. (g) Jaya Stores,[2010(251)ELT 145(Tri. Bang.)]-In this case, no brand existed at any pint of time whereas in the instant case there exists a registered brand name 'More' which appellant proposes to remove from packages without altering the environment. (h) In case of Rajdoot Paints Ltd., [2001(138) ELT 281 ( Tri- Delhi)], the issue pertained to the distinction between 'House Mark' and 'Trade Mark'. (i) Commissioner of Central Excise, Pudducherry, [2015(318)ELT 238(Mad.)]-The issue does not state anything about the environment kept intact to take advantage of the earlier brand being used on the goods as is being done by the Appellant in the instant case. 39. The other judgments cited by the Appellant pertain to the interpretation of the Statue. Here, the issue of interpretation is the exemption notification and we are strictly following what is prescribed under the said notification regarding the brand name. We are not inclin ..... X X X X Extracts X X X X X X X X Extracts X X X X
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