Customs, Excise and Gold Tribunal - Delhi
Rajdoot Paints Ltd. vs Collector Of Central Excise on 25 October, 2000
Equivalent citations: 2000(72)ECC778, 2001(134)ELT281(TRI-DEL)
ORDER
K. Sreedharan, J. (President)
1. These seven appeals arise out of common Order-in-Original No. 25/98 dated 29-4-1998 imposing penalty of Rs. 5 lakhs on M/s. Rajdoot Paints Ltd., appellant in Appeal No. 2158/98-C. Appellant in Appeal No. 2159/98-C, M/s. Architect Paints Ltd. was directed to pay duty of Rs. 23,85,018/- and was also imposed penalty of Rs. 2,50,000/- In the case of M/s. Spred Coatings (P) Ltd. appellant in appeal No. 2160/98-C duty demanded was Rs. 43,53,521/- and penalty of Rs. 4,50,000/-. M/s. Kanwar Paints, appellant in appeal No. 2161 /98-C was directed to pay Rs. 18,52,671/- by way of duty and Rs. 2 lakhs by way of penalty. Appellant in appeal No. 2162/98-C, M/s. Ideal Coatings was found liable to pay Rs. 8,82,567/- by way of duty and Rs. 1 lakh as penalty. Against M/s. Harman Paints, appellant in appeal No. 2163/98-C duty demanded was Rs. 17,84,744/- and penalty was Rs. 1,50,000/-. As against M/s. U.K. Paint Industries, appellant in appeal No. 2164/98-C duty demanded was Rs. 4,70,671/-and penalty was Rs. 50,000/-.
2. Proceedings were initiated against the above mentioned seven appeals by issue of Show Cause Notice dated 9-2-1995. The period covered by the Show Cause Notice was from 1-4-1990 to 31-3-1994. During the above period, all these seven appellants claimed the benefit as an SSI Unit. According to the Show Cause Notice, they were wrongly availing the said benefit because they were not entitled to the benefit in view of Notification No. 223/87 dated 22-9-1987. So the primary question to be dealt with in these appeals is whether the appellants were to be denied benefit as SSI Units by virtue of Notification No. 223/87 dated 22-9-1987.
3. The relevant provision of the notification relied on by the Department for denying the benefit of exemption as SSI Unit is Clause 7 of Notification No. 223/87. For proper understanding of that clause we read the same-
"7. The exemption contained in this notification shall not apply to the specified goods where a manufacturer affixes 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 :
Provided that nothing contained in this paragraph shall be applicable in respect of the specified goods cleared for home consumption before first day of October, 1987.
Explanation VIII. - "Brand name" or "trade name" shall mean a brand name or trade name, whether registered or not, that is to say, a name or a mark, such as, symbol, monogram, label, signature or invented word or writing which is used in relation to such specified goods for the purpose of indicating or so as to indicate a connection in the course of trade between such specified goods and some person using such name or mark with or without any indication of the identity of that persons".
This shows that an SSI Unit if manufacture goods with the brand name or trade name of another who is not entitled to the exemption as an SSI Unit, is not entitled to get the benefit of such concession. If the trade mark used by the SST unit which manufactures the goods belonging to another SSI unit entitled to the benefit of notification, then the manufacturers must get the benefit of exemption as SSI Unit. In the instant case, all these Small Scale Industrial Units where using trade name of "spred". They were also having 'Glidden' printed on the product stating 'in the technical collaboration with 'Glidden' Company, U.S.A.' The goods manufactured by all these appellants, thus having two marks affixed to the product. They were "spred" and "Glidden". Are both these marks trade marks, as is contended by the Department or one alone is a 'trade mark' and the other 'house mark' having two different connotations and legal consequences as contended by the assessees ?
4. M/s. U.K. Paint Industries who are manufacturers of paint were manufacturing their products ever since 1963. They sought technical collaboration with M/s. SCM Glidden International Co., U.S.A. The said Company was having its trade mark "spred". The Govt. of India accorded sanction for the technical collaboration by its order dated 5-11-1985. Clause 12 of the conditions was in the following terms :
"Foreign brand names will not be allowed for use on the products of the internal sales although there is no objection to their use or products to be exported".
By virtue of this, M/s. U.K. Paint Industries could not use the foreign collaborator's trade mark "spred" in India. Therefore they negotiated the matter with the foreign collaborator. As a result of that negotiation, the foreign collaborator permitted M/s. U.K. Paint Industries to use the trade mark "spred" for their products in India because the foreign collaborator had no intention to use these marks themselves in India. They also sent Teleprinter message to M/s. U.K. Paint Industries on 22-2-1986 authorising to file necessary papers with the concerned authorities for permission to use the trade mark "Spred" in their own name. Thus, the trade mark held by M/s. SCM Glidden Intl. Co. U.S.A. was allowed to be used by M/s. U.K. Paint Industries and to take all legal steps for getting that trade mark registered in their own name, as provided by the Trade and Merchandise Marks Act, 1958. On 12-2-1986, pursuant to the application made by M/s. U.K. Paint Industries before the Registrar of Trade Marks, trade mark "spred" was registered in their name as per the certificate issued on 31-12-1996. The certificate issued by the Registrar of Trade Marks relate back to the date of application for the registration of the trade mark, as provided under Section 23 of Trade and Merchandise Marks Act, 1958. Thus, the trade mark "spred" became the trade mark of M/s. U.K. Paint Industries with effect from 12-2-1986. In other words, all the appellants were manufacturing finished product with the brand name "spred" owned by M/s. U.K. Paint Industries ever since 12-2-1986. The Department has no case that M/s. U.K. Paint Industries is not an SSI Unit entitled to the benefit of notification in respect of the goods manufactured by all these appellants. Other manufacturers were using the Trade mark of a unit entitled to all benefits as an SSI Unit. So all of them should get the benefits available to SSI Units.
5. The further question that arises for consideration is whether the writing on the container of the product namely "in technical collaboration with 'Glidden' Intl. Co. U.S.A" will disentitle the appellants from claiming the benefit as an SSI Unit. The word 'Glidden' used in the above writing is taken by the Department as a trade mark. Can this stand be sustained in view of the decision of the Supreme Court in Astra Pharmaceuticals (P) Ltd. v. C.C.E., Chandigarh [1995 (75) E.L.T. 214 (S.C)]? In that decision their Lordships have taken note of the difference between a 'trade mark' and a 'house mark'. The 'house mark' will not establish any relationship between the mark and the contents. No one will ask for the products manufactured by these appellants by reference to the word 'Glidden'. It is not so as far as the word in the case of other word 'Spred' which is a trade mark. The customer will certainly ask for the goods bearing the trade mark which is "Spred". None will ask for the product 'Glidden'. In such a situation, the said marks can only be treated as distinct and different from trade mark. This distinction which was recognised by the Supreme Court in the case of M/s. Astra Pharmaceuticals (P) Ltd. was followed by a Bench of this Tribunal in the Weigand India (P) Ltd. v. C.C.E., New Delhi [1997 (94) E.L.T. 124 (T)] in relation to machinery, systems and others dealt with therein. The Bench of CEGAT was also concerned with the SSI exemption notification, the same notification relating to SSI exemption as in the instant case. Relying on the identical wording of explanation in the tariff seen in the notification and the notification dealt with by the Supreme Court, this Tribunal came to the conclusion that 'house marks' cannot disentitle the manufacturer of an SSI Unit from claiming the protection of notification. This Tribunal categorically observed "the reference to the circumstance that the technical know-how was provided by somebody else cannot be regarded as amounting to using the brand name of another person". This statement of the law based on the decision of the Supreme Court applies on all forces to the facts on hand. In the instant case also the appellants only stated that they used the technical know-how obtained from 'Glidden'.
6. In Weigand India (P) Ltd., this Tribunal came to a conclusion that the decision in Festo Controls (P) Ltd. v. C.C.E., Bangalore [1994 (72) E.L.T. 919] and Sonoma Aeromatics (P) Ltd. v. C.C.E., Bangalore [1995 (78) E.L.T. 285(T)] are not good law in view of the decision of the Supreme Court in Astra Pharmaceuticals (P) Ltd. The decision of this Tribunal in the case of Sonoma Aeromatics (P) Ltd. (supra) was taken up in appeal to the Supreme Court. Their Lordships of the Supreme Court dismissed that appeal as could be seen from 1997 (93) E.L.T. A70 (S.C). In that case the use of foreign company's brand name was the issue involved. The facts on hand shows that it is not the foreign company's brand name that was used by the manufacturing units. It was only the 'house mark' that was used by them as held by the Supreme Court in Astra Pharmaceuticals (P) Ltd. So, when the distinction between 'trade mark' and 'house mark' is taken note of the confirmation of the decision of the Tribunal in Sonoma Aeromatics (P) Ltd. (supra) cannot be of any assistance to the Revenue in this case.
7. In the instant case, we have to examine the difference between the marks 'Spred' and 'Glidden' printed on the container. The word 'Glidden' was used show that the manufacturer got technical know-how from the Company in U.S.A. That statement printed on the containers cannot be taken as trade mark. As far as 'Spred' is concerned, it was the trade mark owned by M/s. SCM Glidden Intl. Co. U.S.A. That trade mark was allowed to be used by M/s. U.K. Paint Industries, when the collaboration agreement was entered into between the parties. Pursuant to that agreement, the trade mark 'Spred' was got registered in their name under the Trade and Merchandise Marks Act, 1958. So the word 'Spred' and that alone is the trade mark used by the appellants in their product. Other word 'Glidden' was only 'house mark' and no customer recognised the final product with reference to that word 'Glidden'.
8. In view of what has been stated above, we are clear in our mind that all the seven appellants before us were not manufacturing goods using the trade mark of a firm which was not entitled to the benefits as an SSI Unit. This finding will give a quites to the dispute in these appeals. Therefore, we are not going into the contention raised by the ld. Counsel, Shri V. Lakshmi Kumaran, representing the appellants that the Show Cause Notice was hopelessly barred by limitation. In support of this argument, ld. Counsel brought to our notice the statement given by Shri Chandrasekhar to the Excise authorities on 9-12-1991. In that statement, he divulged all facts relating to the use of the trade mark and the house mark to the Departmental authorities. When those facts were so made known to the Departmental authorities way back in December, 1991, the authorities were not justified in issuing SCN on 9-12-1995 for the period from 1-4-1990 to 31-3-1994. We find much force in this contention. We are not pursuing this issue further because the finding arrived at by the Adjudicating Authority that the appellants were using the trade mark of another who was not entitled to the benefits as an SSI Unit is found to be incorrect.
9. In view of what has been stated above, order impugned in these appeals is set aside in its entirety with consequential relief, if any. All the seven appeals are allowed of in the above terms.