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TMI Blog2020 (2) TMI 1380X X X X Extracts X X X X X X X X Extracts X X X X ..... , for the purpose of indicating 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. The Circular dated 4 March, 2005 issued by C.B.E. C., after referring to the speech of the Finance Minister that excise duty of 2% would be levied on branded jewellery only, clarified that for attracting excise duty, the article of jewellery must be marketed and sold under a brand name. Three illustrations have also been given in the said Circular dated 4 March, 2005. The first illustration is of a case where a jeweller ABC Jewellers gets his articles of jewellery from job workers who put a mark/sign/initials on the article of jewellery. This is only to identify that the article of jewellery was received from a particular goldsmith and, therefore, would not be a branded jewellery. The second illustration is of ABC Jewellers , while selling articles of jewellery to customers, puts a distinctive sign/mark/initials on the jewellery. This again was said to be for the purpose of identification so that when the jewellery is returned to ABC Jewellers, it can recognize the jewellery as its own. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ral Excise Tariff Act on which the brand name or trade name is indelibly affixed or embossed were subjected to Central Excise duty at the rate of 2 per cent. by notification dated 1 March, 2005. The Explanation to the notification provides that for the purpose of the notification, brand name or trade name means a brand name or trade name, whether registered or not, that is to say, a name or a mark, such as a symbol, monogram, label, signature or invented words or any writing which is used in relation to a product, for the purpose of indicating, or so as to indicate, 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. 3. The Government of India, Ministry of Finance (Department of Revenue), Tax Research Unit, through a communication dated 4 March, 2005, in connection with the 2 per cent. Central Excise duty imposed on branded articles of jewellery of Heading 7113 of the Central Excise Tariff, pointed out that for attracting this levy, the article of jewellery must be marketed and sold under a brand name. It clarified that whether a particular name or mark or symbol is a b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aterial period was a brand name or trade name chargeable to duty as branded jewellery . The Tribunal observed that there was no dispute that the appellant was engaged in the manufacture and sale of jewellery with brand name TANISHQ which was one of the largest jewellery brand. When excise duty was levied on branded jewellery from March 1 March, 2005, the appellant discharged excise duty on branded jewellery bearing brand name of TANISHQ . It also had another brand GoldPlus which was meant for semi-urban and rural customers. Subsequently, the appellant replaced the brand name Tanishq and GoldPlus with marking Q and I . The plea of the appellant that letters Q and I were embossed only for the purpose of identification of its product and not as a brand name, was not accepted by the Tribunal. The Tribunal observed that the appellant was a reputed branded jewellery manufacturer in India which cleared branded jewellery under brand names Tanishq GoldPlus in the past but it had subsequently started embossing mark i.e. Q and I . The Tribunal, therefore, concluded that the marks Q and I embossed on the jewellery clearly identified the products of M/s. Titan Indu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llants and also to enable the appellants to identify the product after sale, if returned by customers. According to the appellant, these marks were also required to be affixed since hallmarking norms under the Bureau of Indian Standards mandated such identification for determining the standards of purity/quality/jeweller s identity. Both the appellants have BIS registration as hallmarked jewellery houses. 8. Having noticed the aforesaid activity of the appellants, it will be necessary to examine the relevant provisions. Chapter 71 of the Central Excise Tariff deals with Natural or Cultured Pearls, Precious or Semi-Precious Stones, Precious Metals, Metals Clad with Precious Metal, and articles thereof; Imitation Jewellery; Coin. The portion of Chapter 71 relevant for the purpose of this Appeal is reproduced below :- CHAPTER 71 Natural or Cultured Pearls, Precious or Semi-Precious Stones, Precious Metals, Metals Clad with Precious Metal, and articles thereof; Imitation Jewellery; Coin Notes : 1. xxxxx xxxxx ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n relation to a product, for the purpose of indicating, or so as to indicate, 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. 13. For the purposes of Heading 7113, the processes of affixing or embossing trade name or brand name on articles of jewellery shall amount to manufacture . Tariff Item Description of Goods Unit Rate of Duty (1) (2) (3) (4) I. xxxx xxxxx xxxxx II. xxxx xxxxx xxxxx III. - JEWELLERY, GOLDSMITHS AND SILVERSMITHS WARES AND OTHER ARTICLES 7113 Articles of jewellery and parts thereof, of precious metal or of metal clad with precious metal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d or not, that is to say, a name or a mark, such as a symbol, monogram, label, signature or invented words or any writing which is used in relation to a product, for the purpose of indicating, or so as to indicate, 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. 10. In the context of levy of 2 per cent. excise duty on branded articles of jewellery of Heading 7113 of the Central Excise Tariff, the Central Board of Excise and Customs [C.B.E. C.], by a Circular dated 4 March, 2005 clarified the scope of levy of excise duty on branded jewellery as follows : In this year s budget 2005-06, an excise duty of 2% has been imposed on branded articles of jewellery of Heading 7113 of the Central Excise Tariff. The duty is leviable only if the brand name or the trade name, as defined, is indelibly affixed or embossed on the article of jewellery itself. 2. In this context, relevant extracts of Finance Minister s budget speech is reproduced below : . expensive and premium jewellery is now manufactured and sold under alluring brand names. On such branded jew ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tably briefed about the scope of the excise duty levied on branded articles of jewellery so that there is no inconvenience to the trade. [emphasis supplied] 11. However, as complaints were received by the Board that even the aforesaid Circular was not being adhered to, a Circular dated 29 December, 2005 was issued by C.B.E. C. and it is reproduced below : Subject : Excise duty on branded articles of jewellery I am directed to refer to Board s Circular No. B-1/1/2005-TRU, dated 4th March 2005 [2005 (181) E.L.T. T7] on the above subject. The said circular clarifies the scope of levy of excise duty on branded jewellery. Board has clarified that the scope of the levy is only with respect to jewellery marketed and sold under such brand names as clearly understood in the trade. Certain illustrative case were also indicated in the circular so as allay the apprehensions of the trade, and field formations were requested to suitably brief gold dealers/manufacturers etc., so that there is no inconvenience to the trade. 2. Despite the scope of duty liability on branded jewellery being clarified in detail in Board s Circular dated 4th March 2005, complaints have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or manufactured from various job workers on their behalf. The job workers get the input materials from the Noticee and manufacture articles of jewellery and return the same to the Noticee. These articles of jewellery are manufactured by the job workers on behalf of the Noticee are embossed with a marking CKC which are indelible in nature. These markings are also made on the articles of jewellery by the job workers as per the instructions of the Noticee. Thus the first condition required under the provisions of the Central Excise Tariff Act, 1985, is satisfied in the present case. In the instant case, the Noticee is putting the alphabets CKC on the articles of jewellery and selling the same from their outlet at Bangalore. The alphabets CKC marked on the articles of jewellery even though not registered with the Trade Marks Authorities, clearly indicate a connection in the course of trade between the articles and the Noticee, which is the requirement under chapter note 12 of Chapter 71 of the Central Excise Tariff Act, 1985 read with Notification No. 5/2005, to consider the articles of jewellery as branded jewellery for levy of Central Excise Duty. In view of the above, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to take out a registration and pay duty in respect of branded jewellery as an assessee and the powers of Government to make Rules in this regard under Section 37 of the Act, I do not accept the argument of the Advocate on this count and hold that M/s. C. Krishnaiah Chetty Sons (P) Ltd., are the manufacturers of branded jewellery sold by them and they are liable to pay Central Excise Duty. [emphasis supplied] 13. A perusal of the aforesaid order of the Commissioner would indicate that in regard to the issue as to whether articles of jewellery are branded or not, the Commissioner found that the articles of jewellery manufactured by the job workers on behalf of the appellant are embossed with marking CKC which are indelible in nature and they indicate a connection in the course of trade between the articles and the appellant. The Commissioner also found that the appellant was a manufacturer of branded jewellery for the reason that the job workers had not exercised any option to take registration and pay duty. 14. Heading 7113 contained in Chapter 71 of Central Excise Tariff deals with articles of jewellery and parts thereof, of precious metal or of metal clad with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r mark or symbol is a brand name or not, is an issue of fact and can be ascertained from how the name is understood in common parlance. As an example, it has been stated that in jewellery trade, there are certain well-known brand names like Tanishq , Sangini and the scope of the levy was with respect to jewellery marketed and sold under such brand names as clearly understood in the trade. 16. It became necessary for the Board to again issue a Circular dated 29 December, 2005 since despite the earlier Circular dated 4 March, 2005, complaints were being received that Commissioners were not following the instructions issued by the Board. The Commissioners were, therefore, reminded that in the event they were not in a position to decide whether a particular jewellery was branded jewellery or not, the matter should be referred to the Board. 17. It, therefore, clearly transpires that excise duty of 2% can be levied only on articles of jewellery on which brand name or trade name is indelibly affixed or embossed on the articles of jewellery. Brand name or trade name has been clearly explained in the Notification dated 1 March, 2005 and the Circular dated 4 March, 2005 issu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... excise duty was levied with effect from 1 March, 2005, it started paying excise duty, but subsequently started embossing alphabets Q and I on the jewellery, which the Tribunal found indicated a connection between the product and the company. The Tribunal also found that in addition thereto, marks AEI and AE were also embossed to indicate the person who manufactured the jewellery. 22. At this stage, it will be appropriate to refer to the decision of the Tribunal in MMTC v. Commissioner of Central Excise, Delhi-I [2018 (362) E.L.T. 647 (Tri. - Del.)]. The appellant had a brand name Sanchi and a house mark MMTC . It embossed the house mark in the case of medallion made out of gold or silver. It also embossed house mark on the silver articles and in this case the brand name appeared only on the boxes containing the silver articles. The appellant claimed that the brand name Sanchi had not been embossed on any of these items. However, the Department proceeded to demand duty considering such a house mark to be in the nature of brand name. The Tribunal referred to the Circular dated 25 March, 2011 issued by C.B.E. C. clarifying that only such jewellery or other articles ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a mere mark of identity put by a jeweller or the job worker, commonly known as a house mark shall not be considered a brand name. The above clarification shows that only such jewellery or other articles of precious material which either bear or are marked and sold under the brand name attract this levy. In the case the medallions of gold/silver only the house mark MMTC Logo is applied on the articles. The brand name Sanchi is not appearing either on the articles or packing. Hence we are of the view that Central Excise duty of 1% will be not payable on each goods. In the case of silver articles, it is on record that such articles bear the house mark but are sold with the brand name which appears in the packing material. Consequently, such articles are to be considered as sold with the brand name and hence will attract the levy of 1% in terms of notification. [emphasis supplied] 23. Thus, what has to be seen in each case is whether the brand name or trade name, which could be a mark used in relation to the product, 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 in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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