Bombay High Court
The Commissioner Of Central Excise vs M/S.Ramply (India) Ltd on 11 June, 2009
Author: Ferdino I. Rebello
Bench: F.I. Rebello, J. H. Bhatia
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IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
CENTRAL EXCISE APPEAL NO.34 OF 2009
The Commissioner of Central Excise, )
Raigad Commissionerate, Kendriya )
Utpad Shulk Bhavan, Plot No.1, )
Sector 17, Khandeshwar, New Panvel, )
Navi Mumbai-410 206. ig )...Appellant.
Versus
1.M/s.Ramply (India) Ltd., )
Ram House, 4, Gaiwadi Industrial Estate )
S.V.Goregaon, Mumbai-400 062. )
2.M/s.Ram & Company (Interiors) Pvt. Ltd. )..Respondents
Mr. R.V.Desai, Senior Counsel with Mr. Rajinder Kumar for the
Appellant.
Mr.S.P. Mathew i/b. V.B. Kanoria, for the Respondents.
CORAM : FERDINO I. REBELLO &
J.H. BHATIA, JJ.
DATED : 11TH JUNE, 2009
JUDGMENT (PER FERDINO I. REBELLO, J.)
1. Admit on the following question:-
::: Downloaded on - 09/06/2013 14:38:34 ::: 2"1.Whether CESTAT was justified in holding that non-
declaration of brand name does not amount to suppression and hence the extended period of limitation would not apply?
2. Whether in the light of the fact that the assessee had full knowledge of brand name not belonging to them, have used the same and not disclosed to the Department, amounts to suppression of facts.
3. Whether the CESTAT was justified in holding that proviso (2) to Section 11(A) of Central Excise Act does not apply?"
2. A few facts may be set out. The Respondent admittedly was not the owner of the mark "Ram's" which belonged to M/s.Rammaica (India) Ltd., earlier known as M/s.Ram Decorative and Industrial Laminates Ltd. Admittedly M/s.Rammaica (India) Ltd., was not entitled to the exemption of payment of excise duty whereas the respondent being a small scale industry would be entitled to the concessional rate of duty, if otherwise eligible.
::: Downloaded on - 09/06/2013 14:38:34 ::: 33. Revenue on information received intercepted a lorry and seized goods belonging to the respondent, on which the mark st "Ram's" was used. A show cause notice was issued on 21 April, th 1995. On 11 August, 1997 an order came to be passed by the Commissioner, confirming the demand of Central Excise Duty in the sum of Rs.44,39,794/- and a penalty of Rs.44.00 lakhs. A direction was given to appropriate the bank guarantee of Rs.6.00 lakhs for the release of the goods. The Respondents aggrieved preferred an Appeal before the CESTAT. The Tribunal by its order st dated 31 December, 2002 allowed the Appeal. The Revenue preferred Civil Appeal to the Supreme Court, being Civil Appeal No.5383-84/2004 against the order of CESTAT. The Supreme Court remanded the matter back, to decide the issue of limitation th th by its order of 30 September, 2004. By order dated 10 September, 2007, CESTAT set aside the demand of duty for the th period from April, 1990 to 30 September, 1994 along with the penalty and order for confiscation of the goods in the godown and ::: Downloaded on - 09/06/2013 14:38:34 ::: 4 confiscation of said vehicle. The issue was remanded back to the Adjudicating Authority for limited purpose of quantification of the th demand for the period October, 1994 to 14 November, 1994 and consequent penalty. The Tribunal in partly allowing the appeal was pleased to observe that the question of affixing the brand name was a contentious one and the appellant had not erred in non-declaring the brand name in the classification list. It is this order which is the subject matter of the present appeal.
4. At the hearing of this appeal on behalf of the appellant-
Revenue, learned Counsel submits that the learned Tribunal totally misdirected itself in holding that the question of affixing brand name was contentious and in these circumstances the extended period of limitation would not apply.
On the other hand on behalf of the assessee it is submitted that no fault can be found with the finding of the Tribunal on the issue of limitation. It may be mentioned that before the Tribunal it had been argued on behalf of the appellant that they are not ::: Downloaded on - 09/06/2013 14:38:34 ::: 5 challenging the issue on merits but only on the ground of limitation and rightly so considering the order of the Supreme Court. The same argument has also been advanced before this Court.
5. To understand the issue it would be gainful to reproduce the relevant portion of Section 11A of the Central Excise Act, 1944 which reads as under:-
"11A. Recovery of duties not levied or not paid or short-
levied or short-paid or erroneously refunded.-- (1) When any duty of excise has not been levied or paid or has been short-levied or short-paid or erroneously refunded, whether or not such non-levy or non-payment, short-levy or short payment or erroneous refund, as the case may be, was on the basis of any approval, acceptance or assessment relating to the rate of duty on or valuation of excisable goods under any other provisions of this Act or the rules made thereunder, a Central Excise Officer may, within one year from the relevant date, serve notice on the person ::: Downloaded on - 09/06/2013 14:38:34 ::: 6 chargeable with the duty which has not been levied or paid or which has been short-levied or short-paid or to whom the refund has erroneously been made, requiring him to show cause why he should not pay the amount specified in the notice.
Provided that where any duty of excise has not been levied or paid or has been short-levied or short-paid or erroneously refunded by reason of fraud, collusion or any wilful mis-statement or suppression of facts, or contravention of any of the provisions of this Act or of the rules made thereunder with intent to evade payment of duty, by such person or his agent, the provisions of this sub-section shall have effect, as if for the words one year, the words 'five years" were substituted....."
It would thus be clear that two periods of limitation are set out. In a case where duty of excise has not been levied or not paid or short-levied or short-paid or erroneously refunded or the like, a ::: Downloaded on - 09/06/2013 14:38:34 ::: 7 power is conferred on the Central Excise Officer within one year from the relevant date to issue show cause notice why the assessee should not pay the amount specified in the notice. The proviso, however, sets out that in a case where duty has not been levied or paid or short paid or erroneously refunded by reason of fraud; collusion or any willful mis-statement or suppression of facts or contravention of any of the provisions of the Act or of the Rules made thereunder, with intent to evade payment of duty, then the period of limitation is five years.
6. With this background we may now examine the record. A st Notification was issued being General Exemption No.I dated 1 March, 1986. The relevant portion of which reads as under:-
"7. The exemption contained in this notification shall not apply to the specified goods where a manufacturer affixed the specified goods with a brand name or trade name (registered or not) of another person who is not eligible for the grant of exemption under this notification."
::: Downloaded on - 09/06/2013 14:38:34 ::: 8There appeared to have been some dispute on the application of this Notification. The Central Board of Excise and Customs, th therefore, issued a Circular dated 30 December, 1988 in which some clarifications were given. It noted that the same trade mark may be owned by different person using it on different goods. It noted that in such a case when the goods are different the benefit of the Notification namely Clause 7 cannot be denied to such a person. In that case the brand name "HOTLINE" was used for community gas stoves by company A and for the community television by company B. It is in this context that the Board noted that the Company "A"
which was a legal registered owner of trade mark "Hotline" in respect of gas stove cannot be denied exemption in respect of gas stoves manufactured in their own brand name "Hotline".
Clause 7 of the Notification was otherwise clear. That a manufacturer who uses the brand name of another manufacturer ::: Downloaded on - 09/06/2013 14:38:34 ::: 9 who was not entitled to exemption would not be entitled to the benefit of exemption under the Notification.
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7. A second Notification came to be issued on 28 February, 1993. The relevant portion of this Notification reads as under:-
"4. The exemption contained in this Notification shall not apply to the specified goods, bearing a brand name or trade name (registered or not) of another person........"
8. Clause 4 of the Notification of 1993 made it clear, that the Notification shall not apply to specified goods bearing a brand name or trade name of another person. The anomaly in the earlier notification in the matter of "brand" and "goods" was therefore, cleared.
9.It was sought to be contended on behalf of the respondents that there was a dispute amongst the various Tribunals and the High Courts in the matter of interpretation of clause 7 and Clause 4 and ::: Downloaded on - 09/06/2013 14:38:34 ::: 10 under these circumstances the Tribunal was right in holding that it was a contentious issue.
10. A few additional facts may also be set out. A show cause th notice was issued amongst others to the Respondents dated 20 April, 1995 on the basis that they have suppressed the fact of affixing their goods with labels containing the monogram of "Ram's", registered in the name of M/s.Rammaica (India) Ltd.
Considering the reply filed the Commissioner by his original order dated 21-7-1997/61 on the admission by Shri Rambtar Jhunjhunwala, Director of the assessee company held that affixing of sticker and monogram of 'Ram's' was never informed to the Central Excise Department. The matter ultimately reached the Supreme Court at the instance of Revenue. That appeal was disposed off with various other Appeals and the orders were set aside and the matters were remanded. While disposing of the Appeal the Supreme Court noted that the object of the notification was clear, which was, to grant benefits only to those industries ::: Downloaded on - 09/06/2013 14:38:34 ::: 11 which otherwise do not have advantage of a brand name. The Supreme Court also dealing with the apprehension of the assessees that they may be denied exemption merely because some other traders even in a remote area of the country had used the trade mark earlier, held that such fear was unfounded. The Court noted that the Notification clearly indicates 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 such goods and such other person uses the name in such a manner that it would indicate such connection. The Court further held that the assessee is entitled to the benefit of exemption. if the brand name belongs to the assessee himself although someone else may be equally entitled to such name.
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11. On remand, by order dated 10 September, 2007 the learned Tribunal noted that the assessees are not challenging the order on merits, but only on the ground of limitation. They further ::: Downloaded on - 09/06/2013 14:38:34 ::: 12 held that in the assessees own case, a larger Bench by its order th dated 25 July, 2007 had considered the reason whether non-
declaration of brand name in the classification list would amount to suppression. They held that the omission to disclose the use of brand name of another person in the classification list cannot lead to application of extended period. The learned Tribunal held that the question of affixing the brand name is a contentious one and the Respondents had been following the procedure by filing classification list and clearing the goods subsequently and as such the appellant has not erred in non-declaring the brand name in the classification list. Hence set aside the demand for duty for th the period between October 1994 to 14 November, 1994. Also set aside the order of confiscation of the goods and confiscation of the vehicles. It may be mentioned that in respect of duty for th the period between October, 1994 to 14 November, 1994 and penalty on the same remanded the matter for computation and consequential order.
::: Downloaded on - 09/06/2013 14:38:34 ::: 1312. The first question that arises for our consideration in the context of the extended period of limitation, is whether there was suppression by the respondents and whether at all, the Tribunal could have held that the issue was contentious. There is a factual finding that the Respondents in the classification list did not disclose the use of the brand name belonging to another person. In so far as the Notification of 1993 is concerned, a perusal of Clause 7 clearly sets out, that where a manufacturer affixes the specified goods with a brand name or trade name of another person who is not eligible for the grant of exemption under this Notification, then they are not entitled to the exemption.
The issues which came up before the Tribunal were not on the use of the trade name of an assessee by another who was not eligible for exemption. Some of the cases were in respect of the same brand name used by two different persons. At any rate irrespective of this and what the Tribunal held the order of the larger Bench was ultimately set aside by the Supreme Court.
Clause 7 in our opinion is clear and explicit. The issue of ::: Downloaded on - 09/06/2013 14:38:34 ::: 14 entitlement to benefit when the same brand name or make was used by two persons was clarified by the Circular of the Board in 1988, before the Respondent herein began its manufacturing operations. In the instant case the Respondents admittedly was using the mark of another company, may be a group company.
That group company was not eligible for exemption. To contend that this is a contentious issue, in our opinion, is begging the issue. Similarly, in so far as Clause 4 of the Notification dated th 28 February, 1993, it is clear that the exemption contained in the Notification shall not apply to the specific goods, if the brand name or trade name used is registered or owned by another person. In other words, if the assessee uses the brand name of another person then he is not entitled to exemption. On the face of the language in the notification it cannot be said that the interpretation of the notification was contentious. The assessee was using a brand name or trade name on his goods admittedly which belonged to another and did not disclose them in the classification list. Clearly, therefore, the finding recorded by the ::: Downloaded on - 09/06/2013 14:38:34 ::: 15 Tribunal that this is a contentious issue is devoid of any merit.
13. Apart from that on behalf of the appellant their learned Counsel drew our attention to the judgment of the Supreme Court in Commissioner of C.Ex., Pune vs. Vora Products, 2008 (221) E.L.T. 321 (S.C.) where considering the proviso to Section 11A of the Central Excise Act in a case where an assessee was using the brand name of another and had not disclosed the same in the classification list and had contended that it was done in ignorance of law, that defence was rejected. The Court posed to itself the question whether there was a willful default. The Court in the circumstances held that the predicates were satisfied and that the assessee was liable. This further supports the view that we have taken.
14.In the instant case it may be that the mark Ram's belongs to the sister company of the respondent.However,the sister company was not eligible for exemption nor could the respondent knowing ::: Downloaded on - 09/06/2013 14:38:34 ::: 16 that the mark belongs to another use the same. This really cannot be said to be contentious. This was clearly a case of 'suppression'. Therefore, the Appeal as filed is allowed. The original order is restored. The questions as framed are answered as under:-
(i) Question No.1 is answered in the negative against the assessee and in favour of the Revenue.
(ii) We answer Issue No.2 in the affirmative in favour of the Revenue and against the assessee.
(iii)In so far as Question No.3, we answer the same in the negative against the assessee and in favour of the Revenue.
Appeal disposed of accordingly.
(J.H . BHATIA, J.) (FERDINO I. REBELLO, J.)
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