Custom, Excise & Service Tax Tribunal
) M/S.The Hooghly Infrastructure ... vs Sl.No.1-20, 25-30, 34) Commissioner Of ... on 22 April, 2015
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE
TRIBUNAL, KOLKATA
EASTERN ZONAL BENCH: KOLKATA
Sl.No.1-34) Appeal Nos.Ex.Ap.70698, 70647, 70716, 70717, 70718, 76726, 70747, 70791, 70885, 70886, 71001, 71027, 71207, 71443/13, Ex.Ap.75058, 75351, 75525, 75545, 75546, 75547, 75671, 75871, 75872, 76061, 75069, 75070, 75111, 75112, 75237, 75281, 75387, 76005, 75676, 75809/14
(Arising out of Order-in-Original No.
Sl.No.1) 25/COMMR/CE/KOL-III/2012-13 dated 25.03.2013 passed by the Commissionerof Central Excise, Kolkata-III.
Sl.No.2) 30/COMMR/CE/KOL-III/2012-13 dated 28.03.2013 passed by the Commissioner of Central Excise, Kolkata-III.
Sl.No.3) 27/COMMR/CE/KOL-III/2012-13 dated 28.03.2013 passed by the Commissioner of Central Excise, Kolkata-III.
Sl.No.4) 28/COMMR/CE/KOL-III/2012-13 dated 28.03.2013 passed by the Commissioner of Central Excise, Kolkata-III.
Sl.No.5) 36/COMMR/CE/KOL-III/2012-13 dated 21.03.2013 passed by the Commissioner of Central Excise, Kolkata-III.
Sl.No.6)33/COMMR/CE/KOL-III/2012-13 dated 09.04.2013 passed by Commissioner of Central Excise, Kolkata-III.
Sl.No.7) 34/COMMR/CE/KOL-III/2012-13 dated 28.03.2013 passed by the Commissioner of Central Excise, Kolkata-III.
Sl.No.8) 35/COMMR/CE/KOL-III/2012-13 dated 21.03.2013 passed by the Commissioner of Central Excise, Kolkata-III.
Sl.No.9) 22/COMMR/CE/KOL-III/2012-13 dated 25.03.2013 passed by the Commissioner of Central Excise, Kolkata-III.
Sl.No.10)21/COMMR/CE/KOL-III/2012-13 dated 25.03.2013 passed by the Commissioner of Central Excise, Kolkata-III.
Sl.No.11)03/COMMR/CE/KOL-III/2013-14 dated 23.05.2013 passed by the Commissioner of Central Excise, Kolkata-III.
Sl.No.12)26/COMMR/CE/KOL-III/2012-13 dated 28.03.2013 passed by the Commissioner of Central Excise, Kolkata-III.
Sl.No.13) 31/COMMR/CE/KOL-III/2012-13 dated 09.04.2013 passed by Commissioner of Central Excise, Kolkata-III.
Sl.No.14) 10/COMMR/CE/KOL-III/2013-14 dated 27.11.2013 passed by Commissioner of Central Excise, Kolkata-III.
Sl.No.15) 11/COMMR/CE/KOL-III/2013-14 dated 28.11.2013 passed by Commissioner of Central Excise, Kolkata-III.
Sl.No.16) 14/COMMR/CE/KOL-III/2013-14 dated 19.12.2013 passed by Commissioner of Central Excise, Kolkata-III.
Sl.No.17) 16/COMMR/CE/KOL-III/2013-14 dated 23.01.2014 passed by Commissioner of Central Excise, Kolkata-III.
Sl.No.18) 18/COMMR/CE/KOL-III/2013-14 dated 31.01.2014 passed by Commissioner of Central Excise, Kolkata-III.
Sl.No.19) 17/COMMR/CE/KOL-III/2013-14 dated 30.01.2014 passed by Commissioner of Central Excise, Kolkata-III.
Sl.No.20) 20/COMMR/CE/KOL-III/2013-14 dated 28.02.2014 passed by Commissioner of Central Excise, Kolkata-III.
Sl.No.21) 10/COMMR/CE/KOL-IV/2014 dated 12.03.2014 passed by Commissioner of Central Excise, Kolkata-IV.
Sl.No.22) 11/COMMR/CE/KOL-IV/2014 dated 20.03.2014 passed by Commissioner of Central Excise, Kolkata-IV.
Sl.No.23) 12/COMMR/CE/KOL-IV/2014 dated 25.03.2014 passed by Commissioner of Central Excise, Kolkata-IV.
Sl.No.24) 16/COMMR/CE/KOL-IV/2014 dated 30.04.2014 passed by Commissioner of Central Excise, Kolkata-IV.
Sl.No.25) 08/COMMR/CE/KOL-III/2013-14 dated 22.11.2013 passed by Commissioner of Central Excise, Kolkata-III.
Sl.No.26) 09/COMMR/CE/KOL-III/2013-14 dated 25.11.2013 passed by Commissioner of Central Excise, Kolkata-III.
Sl.No.27) 12/COMMR/CE/KOL-III/2013-14 dated 29.11.2013 passed by Commissioner of Central Excise, Kolkata-III.
Sl.No.28) 13/COMMR/CE/KOL-III/2013-14 dated 06.12.2013 passed by Commissioner of Central Excise, Kolkata-III.
Sl.No.29) 07/COMMR/CE/KOL-III/2013-14 dated 21.11.2013 passed by Commissioner of Central Excise, Kolkata-III.
Sl.No.30) 15/COMMR/CE/KOL-III/2013-14 dated 23.12.2013 passed by Commissioner of Central Excise, Kolkata-III.
Sl.No.31) 13/COMMR/CE/KOL-II/Adjn/2013-14 dated 23.01.2014 passed by Commissioner of Central Excise, Kolkata-II.
Sl.No.32) 16/COMMR./CE/KOL-II/Adjn/2013-14 dated 26.03.2014 passed by Commissioner of Central Excise, Kolkata-II.
Sl.No.33) 09/Commissioner/CE/Kol-IV/2014 dated 07.03.2014 passed by Commissioner of Central Excise, Kolkata-IV
Sl.No.34) 19/Commissioner/CE/Kol-III/2013-14 dated 13.02.2014 passed by Commissioner of Central Excise, Kolkata-III
FOR APPROVAL AND SIGNATURE
HONBLE DR. D.M. MISRA, MEMBER(JUDICIAL)
HONBLE DR. I.P. LAL, MEMBER(TECHNICAL)
1. Whether Press Reporters may be allowed to see
the Order for publication as per Rule 27 of the CESTAT
(Procedure) Rules, 1982?
2. Whether it should be released under Rule 27 of the
CESTAT(Procedure) Rules, 1982 for publication in any
Authorative report or not?
3. Whether Their Lordship wishes to see the fair copy
of the Order?
4. Whether Order is to be circulated to the Departmental
Authorities?
1) M/s.The Hooghly Infrastructure Pvt.Ltd.
2) M/s.Empire Jute Co.Ltd.
3) M/s.Sunbeam Vanijya Pvt.Ltd.
4) M/s.The Reliance Jute Mills International Ltd.
5) M/s.Janakalyan Vinimay Pvt.Ltd.
6) M/s.Prabartak Jute Mills Ltd.
7) M/s.Agarpara Jute Mills Ltd.
8) M/s.AI Champdani Industries Ltd.
9) M/s.Kamarhatty Co.Ltd.
10) M/s.The Naihati Jute Mills Co.Ltd.
11) M/s.Naffar Chandra Jute Mills Ltd.
12) M/s.Jagatdal Jute & Industries Ltd.
13) M/s.Trend Vyapaar Ltd.
14) M/s.The Reliance Jute Mills International Ltd.
15) M/s.Jagatdal Jute & Industries Ltd.
16) M/s.Naffar Chandra Jute Mills Ltd.
17) M/s.AI Champdani Industries Ltd.
18) M/s.Sunbeam Vanijya Pvt.Ltd.
19) M/s.Janakalyan Vinimay Pvt.Ltd.
20) M/s.Agarpara Jute Mills Ltd.
21) M/s.Northbrook Jute Co.Ltd.
22) M/s.Angus Jute Works
23) M/s.Aditya Translink Pvt.Ltd.
24) M/s.Dalhousie Jute Co.
25) M/s.Aucland International Ltd.
26) M/s.Kanknarrah Co.Ltd.
27) M/s.Empire Jute Co.Ltd.
28) M/s.Alliance Mills Lessees Ltd.
29) M/s.The Naihati Jute Mills Co.Ltd.
30) M/s.Kamarhatty Company Ltd.
31) M/s.Ambica Jute Mills Ltd.
32) M/s.Tepcon International India Ltd.
33) M/s.RDB Textiles Ltd.
34) M/s.Prabartak Jute Mills Ltd.
Applicant (s)/Appellant (s)
Vs.
Sl.No.1-20, 25-30, 34) Commissioner of Central Excise, Kol-III
Sl.No.21, 22, 23, 24, 33) Commissioner of Central Excise, Kol-IV
Sl.No.31-32) Commissioner of Central Excise, Kol-II
Respondent (s)
Appearance:
S/Shri Dr.Samir Chakraborty,Sr. Advocate J.P.Khaitan, Sr.Advocate K.P.Dey, S.Bagaria, P.Banerjee, Advocates, D.K.Saha, S.P.Siddhanta, Consultants for the Appellant (s) Shri D.K.Acharya, Spl.Counsel, S.Sharma, Commr.(A.R.) for the Respondent (s) CORAM:
Honble Dr. D.M. Misra, Member(Judicial) Honble Dr. I.P. Lal, Member(Technical) Date of Hearing:- 22.04.2015 Date of Pronouncement :- 30.06.2015 ORDER NO.FO/A/75321-75354/2015 Per Dr. D.M. Misra:
The aforesaid Appeals are directed against respective orders of the Commissioner of Central Excise, Kolkata. Since the issues involved are common, therefore, all these Appeals are taken up together for disposal.
2. Suffice it would be, if the facts of one of the appellant, namely, M/s. Hooghly Infrastructure Pvt. Ltd. is visited for the purpose of determination of the issues involved. The Appellant, M/s. Hooghly Infrastructure Pvt. Ltd. are engaged in the manufacture of various jute products, including Hessian Bags, Sacking Bags falling under chapter sub-heading 63051030 and 63051040 of CETA, 1985. During the period March, 2011 to November, 2012 the appellant had cleared Hessian Bags, Sacking Bags without payment of duty availing the benefit of exemption Notification No.30/2004-CE dated 9.7.2004 as amended by Notification Nos.12/2011-CE dated 1.3.2011 & 30/2011CE dt.24.03.2011. Since the said Hessian Bags, Sacking Bags are printed with a brand name of those to whom the said goods were ultimately sold/supplied, therefore, the department considering this Hessian Bags, Sacking Bags as branded goods issued demand notice on 11.01.2013 denying the benefit of the said Notification. On adjudication, the ld. Commissioner confirmed the demand totaling to Rs.56,28,14,806/- and imported equal amount of penalty under section 11AC of Central Excise Act, 1944. Aggrieved by the said order, the appellant preferred the present Appeal before this Tribunal. Similar orders were also passed confirming duty and imposing penalty, while adjudicating respective show cause notice issued to other Appellants. The respective Appellants have also field the Appeals against these orders.
3. The ld.sr.Advocate appearing for the Applicant M/s.Hooghly Infrastructure Pvt.Ltd. submitted that while exercising powers conferred under section 3 of the Essential Commodities Act, 1955, the Jute Control Order is passed empowering the Jute Commissioner to control amongst other things prices and production of raw jute and jute textiles. Exercising powers conferred by Clause 4 of the Jute Control Order, the Jute Commissioner issued specific orders during the material period directing the Appellant to produce specified categories and quantities of jute bags and supply the same to such persons/agencies as would be specified by the Directorate General of Supplies and Disposals (DGS & D), Ministry of Commerce and Industries, Govt. of India, so as to meet the urgent packaging requirement for food grains by the priority sections of the people in the country.
4. He has contended that the said supply order specifically mentioned the requirement to be attached/specified so as to satisfy BIS specifications and the appellant was mandatorily required to specify in each of the said jute bags, the name, monogram as well as marking specified therein and/or specified by DGS & D. Further, from time to time DGS & D issued requisition orders for supply of jute bags and it was effecting the purchase for and on behalf of various State Governments/State Government agencies viz. FCI and others.
5. It is his submission that as per the orders of the jute Commissioner, the colours, emblem, the name of the manufacturing mill (Appellant) and BIS certification, including license number etc. are required to be printed on the bags which have been erroneously considered by the department as brand name as envisaged in the exemption notification ignoring the fact that these are required to be printed as per direction contained in the orders issued in terms of powers under statutory provisions and non-compliance with the said requirement would result prosecution under the Essential Commodities Act, 1955. It is his further submission that there is no connection in the course of trade between the subject goods and either DGS & D or the concerned State Government/Govt. agencies or FCI. The jute bags manufactured are used for packing food grains which are later sold/distributed through public distribution system (PDS) and other welfare schemes for the weaker sections of the society. Thus, there is no promotion/marketing, whatsoever, and the marks/logos etc. cannot be considered affixing brand name, as commercially understood, inasmuch as purchasers of the said jute bags get no benefit by using such marks. The buyer uses the said bags for packing essential commodities like food grains or distribution of the same under public distribution system and in compliance to various welfare schemes of the state designed for the under- privileged sections of the citizens of the country. There is no trade in such goods and the bags are not sold/given to the said consumers. The ultimate consumers is thus never exposed to the marking on the said jute bags nor the goods sold under any alleged brand name. The buyers of the bags also have no choice to use the said bags for any other purpose or for sale for any other commodity.
6. The ld. Sr.Advocate referred to a letter dated 10.01.2014 of the Deputy Jute Commissioner on the subject of demand of excise duty pursuant to the budget 201011, wherein it is clarified that in the system of procurement of jute bags by the Government there is no contract between manufacturer and the procurement agencies/FCI which clearly indicates that there is no trade, regulated or free trade involved in this case, hence, the definition of brand name is not applicable to the products manufactured and cleared by the appellant. Further explaining the purpose of the inscription/marking on the jute bags in his letter dated 18.3.2011, the jute Commissioner has informed that the said markings are only in compliance to various statutory provisions and do not contain any brand name and cannot be treated as branded goods under the said Notification. It is his submission that the specification on the jute bags are not brand name of either the appellant or its buyers. No connection can be drawn in the course of trade between the product of the appellant or its buyer beyond the said markings on jute bags. The buyers product are altogether different and no connection with the manufacturer and sale of the said goods. In support of his contention the ld.Advocate has referred to judgement of the Honble Supreme Court in the case of CCE vs. Grasim Industries Ltd. 2005(183) ELT 123(SC), CCE vs. Ace Auto Component Ltd. 2011 (263) ELT 3(SC), Terai Food Ltd. vs. CCE 2006 (198) ELT 323(SC) and CCE vs. Australian Foods (India) Pvt.Ltd. 2011 (287) ELT 385 (SC). The ld.Advocate also referred to the Circular No.947/8/2011-CX dated 21.7.2011 issued by CBEC.
7. The ld. Sr. Advocate placed strong reliance on the decision of Supreme Court in Arasmita Captive Power Co.Pvt.Ltd. vs. Lafarge (India) Pvt.Ltd. 2013 (15) SCC 414 in support of his submission that the principle for understanding the ratio decidendi of a judgement has been emphasized in the said case at paragraph 33, 34 and 35 of the said judgement. It is his submission that the ratio laid down by the Honble Supreme Court in the case of Kohinoor Industries vs. CCE 2005(188)ELT 3(SC) is not applicable to the facts of the present case.
8. The ld. Sr. Advocate distinguishing the decision of Honble Supreme Court in Kohinoor Industries case submitted that the observation of Supreme Court in the said case was made in the background of the facts of that case and in no manner whatsoever negates or overrules the submission made by the appellant in the present case. The observation made therein was in the context of eligibility of the benefit of SSI exemption which was sought to be availed in an oblique manner on manufactured elastic bands of underwear marked with the brand name under which the owner of the brand would be selling the underwear, although the said owner was not eligible to the benefit under the SSI Notification. It is the submission that no such case is involved in the present case.
9. Further, he has submitted that the quantification of duty demand is patently erroneous which is pointed out in reply to the show cause notice, but not considered by the adjudicating authority. It is his claim that on a correct calculation of duty, the confirmed demand of Rs.56,28,14,806/-would be drastically reduced . He has also submitted that in any event imposition of penalty is unwarranted, invalid and untenable in law as the issue involved is interpretation of law i.e. benefit of an exemption notification and there is no allegation, whatsoever, that the appellant have indulged in mis-declaration or suppression of facts. The jute bags with such printings on it have been exempted earlier and also allowed to be exempted after 01.03.2013.
10. Shri J.P.Khaitan, ld.sr.Advocate appearing for Naihati Jute Mills, AIR Champdani and Nafar Chand Jute Mills Ltd., besides supporting the submissions advanced by the ld.sr.Advocate Dr.Chakraborty, added that in respect of the appeals, namely, E/70791/13, 70886/13, 71001/13, 75351/14 & 75525/14, the grounds on which the demands were raised in the show cause notices and confirmed in the respective impugned Orders are diagonally opposite, hence, the impugned order is bad in law, inasmuch as, it travelled beyond the scope of the show cause notice.
11. Further, he has submitted that to fall outside the scope of the exemption Notification No.30/2004CE dt.24.03.2011, it is required that the goods of chapter 63 must bear a brand name or sold under a brand name and as per chapter notes (iv) of chapter 63, the brand name must be used in relation to the product of chapter 63 for the purpose of indicating or so as to indicate a connection in the course of trade between such product and some person using the brand name. It is his contention that the brand name must be related to the product of chapter 63 and used for indicating connection in the course of trade between the chapter 63, and the person using the brand name.
12. Further, he has submitted that the name of the procurement agency and its emblem do not constitute a brand name in relation to the product of chapter 63, namely, jute sacks/ bags. The printing on the bags has to be viewed in its entirety. The purpose of such printing is merely to show the identification, the name and emblem of the procurement agency which are required to be mentioned along with crop year and name of the food grain. Such particulars clearly relate to the product to be packed in the bags and having nothing to do with the jute bags themselves. The particulars printed on the bags not related to any manufactured product of chapter 63, but to the agricultural produce and the procurement agency of the state/central Govt. involved in its distribution. Such agency admittedly does not trade in chapter 63 goods and the question of its having any brand name in relation to the goods of chapter 63 does not arise. There is no trade in the bags at the hands of the agency or even thereafter. It is submitted that particulars of the agricultural produce to be packed in the bags and those of the procurement agency of the Government involved in its distribution are not a brand name in relation to the bags classified under chapter 63. Thus, there is no nexus between name of the procurement agency and its emblem and the bags at the time of its sale thereof by the appellant or even the subsequent use of the bags under the public distribution system. The bags of the appellant do not bear a brand name and are not sold under brand name within the meaning of chapter note (iv) of chapter 63 and Notification bearing No.30/04-CE.
13. In support of his contention the ld.sr.Advocate referred to the decision of Honble Supreme Court in Grasim Industries Ltd. (supra). Further, distinguishing the ratio of the Honble Supreme Court in Kohinoor Elastic Pvt.Ltd.s case the ld.sr.Advocate submitted that in the said judgement their Lordships dealt with the SSI exemption Notification No.01/93-CE dated 28.2.1993. It provides exemption to the specified goods mentioned in the annexure to the Notification and the exemption was not available to such specified goods bearing a brand name of another person. In the said case small scale manufacturers manufacturing elastics with the brand name of the customer, the manufacturer of undergarments, the elastic became part and parcel of the under-garments; effectively the undergarments manufacturer enjoyed the benefit of the SSI exemption. Hence, the Honble Court was pleased to hold that this arrangement could not be permitted. It is the contention of the ld. Advocate that the said decision was rendered in the context of the small scale exemption Notification in order to prevent its abuse by large scale manufacturers who are not entitled to the benefit of said exemption. No such situation exist in the present case. The ld. Advocate referred to the decision of Honble Supreme Court in the case of Australian Foods India (P) Ltd.s case and also the Circular of the Board No.947/8/2011 dated 21.2.2011 submitted that the exemption is admissible in the present case. Further he has submitted the demand in relation to Appeal No.E-7086/13 is barred by limitation being issued on 12.06.2012 demanding duty for the period March, 2011 to May, 2011.
14. Shri S.Bagaria, ld.Advocate appearing for fifteen Appellants mostly reiterated the submissions advanced by the Ld. Senior Advocates. He has contended the computation of demand in the Appeal No.E/75872/2014 relating to M/s Aditya Translink Pvt. Ltd. is bad in law as the demand included for the period after March 2013.
15. Similar submissions also advanced by Shri N.K.Chowdhury appearing for Appellant RDB Textiles. Also, he has submitted that a portion of the demand is barred by limitation. Shri K.P.Dey, for Trend Vyapaar Ltd. & others. Also subscribed to the above arguments of the senior advocates. Further he has submitted that in view of the Larger Bench decision in the case of M/s Prakash Industries vs. Commissioner 2000 (119) ELT 30(Tri-LB), the demand is not sustainable.
16. Per contra, Shri D.K.Acharya, ld. spl. Counsel for the Revenue submitted that the present issue is: whether exemption under amending Notification No.12/11 dated 01.3.2011, further amended by Notification No.30/11-CE dated 24.3.2011, applicable to the jute bags classified under tariff heading 6305 of CETA,1985 and printed with particulars of other persons. He has submitted that as per these Notifications all jute bags (except the laminated ones under tariff heading 6305), other than those bearing a brand name or sold under a brand name, are eligible for exemption.
17. Tracing the history of the exemption Notification, the ld.spl. counsel has submitted that the principal Notification i.e. Notification No.30/04-CE dated 09.07.2004 was issued way back in 2004, whereby all goods under chapter 63 of CETA,1985 irrespective of branded or unbranded jute bags were exempted from payment of duty. The jute Commissioner, under Notification S.O. 174(E) dated 11.01.2011, inter alia, Stipulated that every bag is to be branded with monogram to be specified by DGS & D, Kolkata that the name of manufacturing mill printed on it as well as BIS certification marking. Consequently, in the Union Budget of 2011 Notification No.12/2011-CE dated 1.3.2011 was issued amending the Notification No.30/2004-CE dated 9.7.2004 so as to restrict the benefit of exemption under tariff heading 6305 to the unbranded jute bags only. By virtue of Notification No.30/2011-CE dated 24.03.2011 tariff heading 6305 together with 6309 and 6310 were taken out of the ambit of the exempted goods, but the branded goods continued to remain nonexempt. By virtue of a corrigendum dated 20.04.2011 exemption was restricted to the unlaminated jute bags under tariff heading 6305, apart from the unbranded ones. It is his contention that even when the Government of India corrected the Notification No.30/2011-CE dated 24.3.2011, included the jute bags under tariff heading 6305 (except laminated ones) into the exempted categories, however, did not bring back the branded ones also into the scope of exempted categories. Therefore, it was a deliberate intention of the Government of India not to give exemption to branded and laminated jute bags.
18. Further referring to the chapter note (iv) of chapter 63 of CETA, the ld. spl.counsel submitted that brand name means a brand name, whether registered or not, i.e. to say a name or mark such as symbol, monogram, label, signature or invented words or any writing which is used in relation to a product to indicate a connection in the course of trade between the product and also some person using such name or mark with or without any indication of the identity of that person. He has submitted that the jute bags in the present case are branded with emblem/monogram of Food Corporation of India, Raipur Vipanan Sangha, Govt. of Punjab etc. This is apart from the other identification colour scheme marks like single blue strip running along the length of the bags with additional identification markings of two consecutive blue warp threads at a given distance. Such monogram/emblem do indicate a connection between the product and a person like FCI or Raipur Vipanan Sangha or Govt. of Punjab in the course of trade between the appellant M/s. Hooghly Infrastructure Pvt.Ltd. and DGS & D. Thus, all the ingredients of brand name are present in the given case. He has contended that this interpretation is further strengthened from the Notification No.8/2003-CE dated 01.3.2003. It is stipulated therein that the exemption contained in that Notification shall not apply to specified goods bearing brand name or trade name, registered or not of another person, but there are certain exceptions to the said condition also. For example, the specified goods even if bear brand name or trade name of
i) Khadi & Village Industries Commission (KVIC)
ii) State Khadi & Village Industry Board (SKVIB)
iii) National Small Industries Corporation (NSIC)
iv) State Small Industries Development Corporation (SSIDC)
v) State Small Industries Corporation (SSIC) then also the SSI exemption could be availed on the manufacture of specified goods despite the use of brand name of the afore-mentioned organization. It is his submission that brand names of aforesaid five categories have been exempted under Notification No.8/2003-CE dated 1.3.2003 as intended by the government. The ld. spl.counsel vehemently argued that in the event it was the intention of the Government to provide exemption to branded goods under Notification No.30/2011-CE dated 24.3.2011, similar provision allowing exemption to certain Government brands like Government of Punjab, FCI would have mentioned in the said Notification. It is his submission that if KVIC, SKVIV, NSIC, SSIDC and SSIC could be considered as brands in the same way FCI, Raipur Vipanan Sangha, Govt. of Punjab are also to be considered as brands. These brands are engraved, woven, etched etc. in the jute bags and make them branded jute bags attracting duty in the absence of specific exemption. The ld. spl. counsel further submitted that the Circular dated 21.6.2011 is not applicable to the jute bags falling under tariff heading 6305 and in any case the Circular cannot override the Notification which was corrected on 20.4.2011, to exclude laminated jute bags under tariff heading 6305 from exempted categories, but not corrected to include branded jute bags under tariff heading 6305 under the exempted categories. He submits that a subsequent Notification No.11/2013-CE dated 01.3.2013 amending Notification No.30/2011-CE dated 24.3.2011 had exempted all goods under chapter 63 (with a few exceptions) and the result was that both branded and unbranded jute bags under chapter 63 became exempted from 01.3.2013 onwards. It is his submission that the period from 01.3.2011 to 01.3.2013 the branded jute bags were intended to be dutiable and not exempt as the Government did not bring any such changes even through the corrigendum F.No.B-1/3/2011-TRU dated 20.4.2011 allowed certain exemptions. It is his submission that the exemption Notification has to be construed strictly and no word or figure which are not in the Notification could be imported by way of interpretation in view of various judgements on the subject. It is also settled law that the Notification does not have a retrospective effect unless mentioned otherwise.
19. Further he has submitted that there is no room for interpretation of the term brand name in the present case when the jute Commissioner describes the jute bags in question as branded, when DGS & D (traders/procurers) provides them to print the brand of FCI, Raipur Vipanan Sangha, Govt. of Punjab etc. and when the Govt. of India issues Notification accordingly, then the inevitable conclusion is that the jute bags are not eligible to exemption and there is no necessity to refer any case laws on the subject. However, he referred to the case laws namely Commissioner of C.Ex., Delhi vs. ACE Auto Comp. Ltd. 2011 (263) ELT 3 (SC), Kohinoor Elastics Pvt.Ltd. vs. CCE, Indore 2005 (188) ELT 3 (SC), Commissioner of C.Ex., Chennai-II vs. Australian Foods India (P) Ltd. 2013 (287) ELT 385 (SC).
20. Supporting the aforesaid argument, the ld. A.R. (Commissioner) Shri S.Sharma for the Revenue has submitted that the DGS & D, Kolkata in its procurement order dated 28.9.2011 had referred to the description of the brand and also the branding charges of Rs.15/- per 100 bags to be paid as extra in addition to the ex-factory prices. It is his submission that when the DGS & D itself acknowledges that the jute bags are branded and necessary branding charges are recovered from the customers, therefore, there is no room for any interpretation as to ascertain whether these jute bags are branded or otherwise. It is his submission that the eligibility to exemption Notification 30/2004-CE dated 09.07.2004 as amended by Notification No.12/2011 CE & 30/2011 CE is not dependent on the fact whether the goods are meant to be sold or otherwise; the condition therein is specific, that is, branded jute bags are not eligible to the benefit of the said Notification. In support, he has referred to the decision of the Honble Supreme Court in Kohinoor Synthetics Pvt. Ltd.s case. Further, he has submitted that the Notification does not stipulate whether the brand name is affixed by force of law or the act is a voluntary one. The condition is very specific, once the brand name of another person is affixed on the jute bags or if it was sold under a brand name then the benefit of Notification is not available. Further, he has submitted that the Circular of the Board dated 21.6.2011 issued in the context of garments is not relevant to the present case and also such Circular is not binding on the Courts/Tribunal in view of the decision of the Honble Supreme Court in the case of CCE-Bolpur vs. Ratan Melting and Wire Industries 2008 (231) ELT 22 (SC).
21. Heard at length the Ld. advocates for the respective appellants and the spl. counsel for revenue. The short issue involved for determination is: whether the appellants are eligible to the benefit of Notification No.30/2004-CE dated 09.7.2004 as amended by Notification No.12/2011-CE dated 01.3.2011 and Notification No.30/2011-CE dated 24.3.2011. Before examining the eligibility of the said exemption, it is relevant to refer to the Notification No.30/2004CE and its subsequent amendments which are as below:-
Textiles and Textile Articles Effective rate of duty to specified goods of Chapters 50 to 63 In exercise of the powers conferred by sub-section (1) of section 5A of the Central Excise Act, 1944 (1 of 1944) read with sub-section (3) of section 3 of the Additional Duties of Excise (Goods of Special Importance) Act, 1957 (58 of 1957) and in supersession of the notification of the Government of India in the Ministry of Finance (Department of Revenue) No. 7/2003-Central Excise dated the 1st March 2003, published in the Gazette of India vide number G.S.R. 137(E), dated 1st March 2003, the Central Government, being satisfied that it is necessary in the public interest so to do, hereby exempts the excisable goods of the description specified in column (3) of the Table below and falling within the Chapter, heading No. or sub-heading No. of the First Schedule to the Central Excise Tariff Act, 1985 (5 of 1986) (hereinafter referred to as the Central Excise Tariff Act), specified in the corresponding entry in column (2) of the said Table, from whole of the duty of excise leviable thereon under the said Central Excise Act :
Provided that nothing contained in this notification shall apply to the goods in respect of which credit of duty on inputs or capital goods has been taken under the provisions of the CENVAT Credit Rules, 2002, -
Table S. No. Chapter or heading No. or sub-heading No. Description of goods (1) (2) (3)
1. 50.04, 50.05 All goods
2. 51.05, 5106.11, 5106.12, 5106.13, 5107.11, 5107.12, 51.08, 51.09, 51.10, 51.11, 51.12 All goods
3. 52.04, 5205.11, 5205.19, 5206.11, 5206.12, 52.07, 52.08, 52.09 All goods
4. 53 (except 53.01, 53.03, 5305.31, 5305.39, 5306.90, 53.07, 5308.11 and 5308.90) All goods
5. 54.01, 54.04, 54.05, 54.06, 54.07 All goods
6. 54.02, 54.03 Yarns procured from outside and subjected to any process other than texturising, by a manufacturer who does not have the facilities in his factory (including plant and equipment) for manufacture of yarns or textured yarn (including draw twisted and draw wound yarn) of heading 54.02 or 54.03.
Explanation, - For the purposes of this exemption, manufacture of yarns means manufacture of filaments of organic polymers produced by processes, either:
by polymerization of organic monomers, such as polyamides, polyesters, polyurethanes, or polyvinyl derivatives; or
(b) by chemical transformation of natural organic polymers (for example cellulose, casein, proteins or algae), such as viscose rayon, cellulose acetate, cupro or alginates.
7. 5402.10, 5402.41, 5402.49, 5402.51, 5402.59, 5402.61, 5402.69 Nylon filament yarn or polypropylene multifilament yarn of 210 deniers with tolerance of 6 per cent.
8. 55.05 All goods, except such goods which arises during the course of manufacture of filament yarns, monofilaments, filament tows or staple fibres or manufacture of textured yarn (including draw twisted and draw wound yarn) of heading Nos. 54.02, 54.03, 55.01, 55.02, 55.03 or 55.04.
Explanation. - For the purposes of this exemption, manufacture of filament yarns, monofilaments, filament tows or staple fibres means manufacture of filaments or staple fibres of organic polymers produced by processes, either :
(a) by polymerization of organic monomers, such as polyamides, polyesters, polyurethanes, or polyvinyl derivatives; or
(b) by chemical transformation of natural organic polymers (for example cellulose, casein, proteins or algae), such as viscose rayon, cellulose acetate, cupro or alginates.
9. 55.08, 55.09, 55.10, 55.11, 55.12, 55.13, 55.14 All goods
10. 55.06, 55.07 Staple fibres procured from outside and subjected to carding, combing or any other process required for spinning, by a manufacturer who does not have the facilities in his factory (including plant and equipment) for producing goods of heading Nos. 55.01, 55.02, 55.03 and 55.04.
11. 56 (except 5601.10, 5607.10, 5608.11) All goods
12. 5702.19, 5703.90 All goods
13. 58 (except 5804.90, 5805.90, 58.07, 5808.10) All goods
14. 59 (except 5907.30) All goods
15. 60 All goods
16. 61, 62, 63 (except 6307.10) All goods [Notification No. 30/2004-C.E., dated 9-7-2004] Textiles and Textile articles Amendment to Notification No. 30/2004-C.E. In exercise of the powers conferred by sub-section (1) of section 5A of the Central Excise Act, 1944 (1 of 1944) read with sub-section (3) of section 3 of the Additional Duties of Excise (Goods of Special importance) Act, 1957 (58 of 1957), the Central Government, being satisfied that it is necessary in the public interest so to do, hereby makes the following further amendments in the notification of the Government of India in the Ministry of Finance (Department of Revenue), No. 30/2004-Central Excise, dated the 9th July, 2004 published in the Gazette of India, Extraordinary, vide G.S.R. 421 (E), dated the 9th July, 2004, namely : -
In the said notification,-
(i) in the opening paragraph, in the proviso, for the figures 2002, the figures 2004 shall be substituted ;
(ii) in the TABLE, for S.No. 16 and the entries relating thereto, the following S.No. and entries shall be substituted, namely :-(1) (2) (3)
16.
61, 62 and 63( except 6309 00 00 and 6310) All goods, other than those bearing a brand name or sold under a brand name [Notification No. 12/2011-C.E., dated 1-3-2011] Textile articles Exemption to specified carpets, adhesive tapes and sacks & bags for packing, withdrawn Amendment to Notification No. 30/2004-C.E. In exercise of the powers conferred by sub-section (1) of section 5A of the Central Excise Act, 1944 (1 of 1944), read with sub-section (3) of section 3 of the Additional Duties of Excise (Goods of Special Importance) Act, 1957 (58 of 1957) the Central Government, being satisfied that it is necessary in the public interest so to do, hereby makes the following further amendments in the notification of the Government of India in the Ministry of Finance (Department of Revenue), No. 30/2004-Central Excise, dated the 9th July, 2004 published in the Gazette of India, Extraordinary, vide G.S.R. 421(E), dated the 9th July, 2004, namely :-
In the said notification, -
(i) in the TABLE, for S.No. 12 and the entries relating thereto, the following S. No. and entries shall be substituted namely :-(1) (2) (3)
12.57
All goods other than,-
(i) Hand-made carpets, whether or not any machines have been used to achieve better finish during pre-weaving or post-weaving operations;
(ii) Carpets and other textile floor coverings, knotted, woven, tufted or flocked of coconut fibres (coir) or jute, whether or not made up, in or in relation to the manufacture of which any process is ordinarily carried on with the aid of machines; and
(iii) Other carpets and other textile floor coverings of coconut fibres (coir) or jute, whether or not made up.
Explanation. - For the purpose of chapter 57 the term machines shall not include manually operated implements, used independently by hand, such as hooking guns, tufting guns and knitted guns.
(ii) in the TABLE, for S.No. 14 and the entries relating thereto, the following S.No. and entries shall be substituted, namely :-
(1) (2) (3)14.
59 (except 5906 10 00) All goods.
(iii) in the TABLE, for S.No. 16 and the entries relating thereto, the following S.No. and entries shall be substituted, namely :-(1) (2) (3)
16.
61, 62 and 63 (except 6305, 6309 00 00 and 6310) All goods other than those bearing a brand name or sold under a brand name. [Notification No. 30/2011-C.E., dated 24-3-2011]
22. The nerve chord of the dispute between the appellants and the Revenue is that whether jute bags manufactured by the Appellant and classifiable under Chapter Heading 6305, printed with some particulars of other person, could be considered as bearing a brand name or sold under a brand name. The expression bearing a brand name or sold under a brand name is not defined under any of the aforesaid Notifications, therefore, its meaning has to be understood as defined at chapter note (iv) of chapter 63 of CETA, 1985, which reads as under:-
(iv)In relation to products of this Chapter, brand name means a brand 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 identify of that person;
23. The facts of the case are not in dispute. The appellant are manufacturer of jute bags used to affix/print certain particulars on the jute bags viz. the mills name, manufactured in India, buyers name, logo, year of manufacture, BIS mark with license number etc.. It is the contention of the revenue that since these printings on the jute bags satisfy the meaning of brand name, prescribed at chapter note (iv) of chapter 63 of CETA,1985, the appellant are not eligible to the benefit of exemption Notification No.30/2004 dated 09.07.2004 as amended by Notification No.12/2011-CE dated 01.3.2011 and 30/2011-CE dated 24.3.2011.
24. The main thrust of the appellants argument on the other hand is that since this printing/writing on the jute bags have been carried out pursuant to the direction issued by the jute commissioner, being a requirement of the relevant law, therefore, such particulars printed on the jute bags cannot make the jute bags as branded one; secondly, the second part of the meaning of brand name at chapter note(iv) is also not satisfied as there is no connection in the course of trade of jute bags and the buyer whose particulars are printed on the jute bags, hence, they are entitled to the benefit of the aforesaid exemption Notification.
25. Before entering into the analysis of the facts in determining the eligibility or otherwise of the benefit of the said exemption Notification, it is necessary to refer the principles governing the interpretation of an exemption notification. In a recent case, B.P.L Ltd. Vs. Commr. C.Ex., Cochin-II 2015 (315) ELT 556(SC), their Lordships of the Honble Supreme Court referring to the earlier decisions on the subject observed as:
18. We approve the aforesaid reasoning and rational given by the Tribunal in coming to the conclusion that the goods of the appellant would not qualify the description contained in Notification Nos.8/96 and 4/97. It is trite that strict interpretation is to be given to the exemption notifications and it is upon the assessee to approve that he fulfills all the conditions of eligibility under such Notifications. This is so held by this Court in Rajasthan Spinning and Weaving Mills, Bhilwara, Rajasthan v. Collector of Central Excise, Jaipur, Rajasthan (1995) 4 SCC 473 = 1995 (77) E.L.T. 474 (S.C.), wherein this principle was stated in the following manner:
16.Lastly, it is for the assessee to establish that the goods? manufactured by him come within the ambit of the exemption notification. Since it is a case of exemption from duty, there is no question of any liberal construction to extend the term and the scope of the exemption notification. Such exemption notification must be strictly construed and the assessee should bring himself squarely within the ambit of the notification. No extended meaning can be given to the exempted item to enlarge the scope of exemption granted by the notification.
19. This principle has been reiterated time and again. It is not necessary to take note of all such cases. We would however like to reproduce the restatement of this member by the Constitutional Bench of this Court in Commissioner of Central Excise, New Delhi v. Hari Chand Suri Gopal & Ors. (2011) 1 SCC 236 = 2010 (260) E.L.T. 3 (S.C.), as follows:
29.?The law is well settled that a person who claims exemption or concession has to establish that he is entitled to that exemption or concession. A provision providing for an exemption, concession or exception, as the case may be, has to be construed strictly with certain exceptions depending upon the settings on which the provision has been placed in the Statute and the object and purpose to be achieved. If exemption is available on complying with certain conditions, the conditions have to be complied with. The mandatory requirements of those conditions must be obeyed or fulfilled exactly, though at times, some latitude can be shown, if there is a failure to comply with some requirements which are directory in nature, the non-compliance of which would not affect the essence or substance of the notification granting exemption.
30. In Novopan Indian Ltd. (Navopan India Ltd. v. CCE and Customs,1994 Supp (3) SCC 606)), this Court held that a person, invoking an exception or exemption provisions, to relieve him of tax liability must establish clearly that he is covered by the said provisions and, in case of doubt or ambiguity, the benefit of it must go to the State. A Constitution Bench of this Court in Hansraj Gordhandas v. CCE and Customs (AIR 1970 SC 755 - (1996) 2 SCR 253, held that:
16.. such a notification has to be interpreted in the light of the words employed by it and not on any other basis. This was so held in the context of the principle that in a taxing statute, there is no room for any intendment, that regard must be had to the clear meaning of the words and that the matter should be governed wholly by the language of the notification, i.e., by the plain terms of the exemption.
26. It is the contention of the Revenue that the wordings of the exemption Notification are clear and unambiguous, inasmuch as, it stipulates that if the goods are bearing a brand name or sold under brand name then the same are not eligible to the benefit of the Notification, irrespective of the fact that whether the brand-name is affixed/printed voluntarily or under compulsion of law.
27. It is also argued on behalf of the Revenue that it is not the intention of the government to extend the exemption to the manufacturers of Jute bags on affixing the logo and other particulars of user of the jute bags, who are state government/Central government undertakings like, Food Corporation of India(FCI) etc.. To buttress their aforesaid argument, the Revenue referred to and relied on the SSI exemption Notification No.08/2003-CE dated 01.3.2003, wherein, even though under the said notification, branded goods fall outside its scope, however, goods which are branded with the customers name/logo, namely KVIC,SKIV,NSIC, SSIDC,SSIC etc., allowed to enjoy the benefit of the said Notification. Since such an exception is not prescribed under the present Notification, hence, merely because the customers are Central/State agencies, the benefit of the notification cannot be extended to the manufacture of branded jute bags. Also, it is argued by the revenue that the jute bags are branded cannot be disputed by the appellants inasmuch as while calculating the price of the jute bags, branding charges @Rs.15/- per hundred bags, has been included in the cost of the jute bags.
28. In support of their respective arguments both sides have referred the following leading judgments of the Honble Supreme Court viz. Tarai Food Ltd. Vs. CCE, 2006 (198) ELT 323(SC) (ii) CCE Vs. Grasim Industries Ltd. (iii) CCE Vs. Australian Foods India Pvt. Ltd. 2013 (287) ELT 385 (SC), and Kohinoor Elastics Pvt. Ltd. Vs. CCE 2005 (188) ELT 3(SC).
29. In Tarai Food Ltd.s case (supra) the issue before the Honble Supreme Court was whether French Fries should be classified under sub-heading 2001.10 or 2001.90 . The appellant in that case were manufacturers of French Fries and sold the same sometimes under the brand name Inland Valley and sometimes without such name. Those packets which contain the brand name of Inland Valley were cleared on payment of duty under tariff heading No.2001.10 and the packets which did not contain the said name were cleared under tariff heading 2001.90 and no excise duty was paid. Interpreting the said entries their Lordship observed that the assessee should be allowed to avail the advantage of the brand name in its trade and if the assessee opts not to take advantage of the brand name in its trade, it could at least have the benefit of the rate of duty applicable to unbranded product. We do not find the said observation of the Honble Supreme Court could be said to be relevant to the present case.
30. In the case of Grasim Industries Ltd. (supra), the issue for determination was: whether the cement manufactured by the assessee and packed in bags printed with manufactured by Dharani Cement Ltd., a subsidiary of Grasim Industries Ltd. could be eligible to the benefit of exemption Notification No.5/98-CE dated 02.6.1998. Interpreting the said notification, their Lordships observed that the assessee was using the name of other persons, hence, the cement cleared by them were not eligible to the benefit of the said Notification. Reading this judgement also, we do not find any support in applying the principles laid down therein to the facts of the present case.
31. In Australian Foods (India) Pvt.Ltd.s case (supra) the question of law arose for consideration was whether the appellant therein are eligible to SSI benefit under Notification No.01/93-CE dated 28.2.1993. The appellant therein were engaged in the manufacture and sale of cookies from branded retail outlet named as cookie man. The brand name was acquired from M/s.Cookie Man Pvt.Ltd., Australia. The appellant were selling some of the cookies in plastic pouches on which the brand name cookie man was printed and no brand name was affixed or inscribed on the cookies when it was sold in loose from the counter of the same retail outlet. The question was whether these cookies sold in loose form from the said retail out let would be eligible to the SSI exemption. Their Lordships after examining the issue in detail observed that the cookies sold from the branded outlet would not be eligible for exemption under the SSI exemption notification as there is no requirement that the cookies should bear the brand name. This case also, in our opinion, do not lend much support to the Appellants case before us. In the present case there is no dispute that the jute bags were sold printed with others name, logo etc. and there is no dispute on the said facts.
32. However, reading the judgement of the Honble Supreme Court in the case of Kohinoor Elastics Pvt. Ltd.s case (supra), we see the observations/principles laid down therein would be more relevant to determine the present issue as in the said case their Lordships while deciding the legal issues raised before it had analyzed the judgement of the Larger Bench of the Tribunal in Prakash Industries vs. Commissioner 2000 (119) ELT 30(Tri-LB) involving facts more or less similar to the present one. Therefore, it is relevant to visit the facts of the Prakash Industries case first before venturing to discuss the principle laid down in Kohinoor Synthetics case.
33. The facts in issue in Prakash Industries case was that the appellants therein were manufacturers of HDPE sacks solely for the supply to M/s Orissa Cement Ltd. on which they had printed/affixed the brand name of the buyers. The Appellant claimed the benefit of SSI exemption Notification No.175/86-CE dated 1.3.1986. On reference of the issue, whether the Appellant are eligible to the said exemption, the Larger Bench of the Tribunal had observed that affixation of the buyers name on the HDPE sacks/bags, would not come within the mischief of para 7 of the Notification No. 175/86-CE, accordingly, the benefit of SSI exemption Notification No.175/86 dated 1.3.1986 could not be denied to them. The reasoning and observation of the Larger Bench of the Tribunal in this case was specifically overruled by the Honble Supreme Court in Kohinoor Elastics Pvt.Ltd.s case.
34. In Kohinoor Elastics Pvt.Ltd.s case, the appellant therein are manufacturer of elastics as per specific orders of their customers who are manufacturer of under-garments. As per the order of the customers, the appellants affixed brand/trade name, belonging to the respective customers on the elastics manufactures for those customers. The Appellant claimed exemption from payment of duty under Notification 01/98-CE dated 28.2.1998. The said Notification was proposed to be denied on the ground that the appellant had used the brand name of another person. The relevant portion of the Notification for interpretation came for interpretation before the Honble Apex Court reads as follows:-
The exemption contained in this?4. notification shall not apply to the specified goods, bearing a brand name or trade name (registered or not) of another person :
Provided that nothing contained in this paragraph shall be applicable to the specified goods which are component parts of any machinery or equipment or appliances and cleared from a factory for use as original equipment in the manufacture of the said machinery or equipment or appliances and the procedure set out in Chapter X of the said Rules is followed :
Explanation IX. - 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, [Code number, design number, drawing number, 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 person
35. After a detailed deliberation on various aspects, their Lordships recorded the arguments and conclusions as follows:-
?6.Mr. V. Sridharan, learned Counsel for the Appellants placed strong reliance upon Explanation IX set out hereinabove. He submitted that the words that is to say qualify the words Brand name or Trade name. He submitted that Explanation IX thus makes it clear that the brand name or the trade name must have been used so as to indicate a connection in the course of trade between such specified goods and some person using such name or mark. He submitted that a brand/trade name has significance only because it conveys to the customer in the market a connection between the product and some person. It was strenuously submitted that the words so as to indicate a connection in the course of trade make it clear that the brand/trade name must be used on goods which ultimately reach a customer. He submitted that a brand/trade name has relevance only because the customer associates the product bearing the brand/trade name with a person. He submitted that in this case the customers associated the brand/trade names (used by the Appellants) not with the elastics (which never reached the market) but with undergarments manufactured by the Appellants customer. He submitted that the elastic manufactured by the Appellants was never sold in the market and was only supplied to the customer who so ordered it. He submitted that thus the use by the Appellants of the brand/ trade name could never be considered to be for purposes of indicating a connection in the course of trade between the goods and the person/s using the brand/ trade name. He submitted that the use of brand/trade names on elastics, which are not sold in the open market, does not convey to the ultimate customer that the elastics have any connection with the owner of the brand/trade name. He submitted that the customer only gets the final product i.e. the undergarments and thus the customer only associates the brand/trade name with the undergarment and not with the elastics. He submitted that in such cases the exemption is not lost.
?7.It is on just such a reasoning that the Full Bench of the Tribunal has held that the exemption is not lost. We are afraid that there is complete misreading and a misunderstanding of the Notification. As set out hereinabove, Clause 4 of the Notification is clear and unambiguous. It says that the exemption is lost if the goods bear the brand/trade name of another. There are no other qualifying words. The term goods admittedly refers to goods which are otherwise excisable except for the exemption granted by the Notification. In this case admittedly goods are the elastic manufactured by the Appellants. As stated above Clause 4 does not provide that exemption is lost only for goods (elastic) which are sold in the market or on those goods (elastic) which reach customers without any change in form. Clause 4 does not provide that the exemption will not be lost if the goods (elastic) are only used as inputs in the manufacture of other goods. Most importantly Clause 4 does not provide that exemption is not lost if the goods (elastic) are manufactured as per orders of a customer and for use only by that customer. Explanation IX nowhere detracts from this position. It is correct that the words that is to say qualify the words Brand name or Trade name. However the words 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 cannot be read de hors Clause 4. They have to be read in the context of Clause 4. The words used indicates use by the manufacturer. It is the manufacturer, in this case the Appellant, who is applying/affixing the brand/trade name on the goods. Thus the words for the purpose of indicating refers to the purpose of the manufacturer (Appellant). The course of trade is of that manufacturer and not the general course of trade. Even if a manufacturer only manufactures as per orders of customer and delivers only to that customer, the course of trade, for him is such manufacture and sale. In such cases it can hardly be argued that he has no trade. In fairness it must be stated that it was not argued that there was no trade. Such a manufacturer may, as per the order of his customer, affix the brand/trade name of the customer on the goods manufactured by him. This will be for the purpose of indicating a connection between the goods manufactured by him and his customer. In such cases it makes no difference that the goods as manufactured did not reach the market. The use of the brand/trade name was in the course of trade of the manufacturer for the purpose of indicating a connection between the goods and the customer who used the brand/trade name. Clearly in such a case the exemption is lost. Now in this case there is no dispute on facts. The course of trade of the Appellant is making elastics for specified customers. It is an admitted position that the Appellants are affixing the brand/trade name of their customers on the elastics. They are being so affixed because the Appellants and/or the customer wants to indicate that the goods (elastic) have a connection with that customer. This is clear from the fact that the elastics on which brand/trade name of A is affixed will not and cannot be used by any person other than the person using that brand/trade name. As set out hereinabove once a brand/trade name is used in the course of trade of the manufacturer, who is indicating a connection between the goods manufactured by him and the person using the brand/trade name, the exemption is lost. In any case it cannot be forgotten that the customer wants his brand/trade name affixed on the product not for his own knowledge or interest. The elastic supplied by the Appellants is becoming part and parcel of the undergarment. The customer is getting the brand/trade name affixed because he wants the ultimate customer to know that there is a connection between the product and him. Of course the intention of the customer is not relevant for the purposes of this Notification. This is being mentioned only to indicate that interpretation sought to be placed by Mr. Sridharan would enable manufacturers, who are otherwise not eligible, to get manufactured from small scale industries like the Appellants their goods or some inputs, affix their brand/trade name and still avail of exemption. When the wording of the Notification are clear and unambiguous, they must be given effect to. By a strained reasoning benefit cannot be given when it is clearly not available.
36. A plain reading of the aforesaid observation of their Lordships makes it clear that on affixing the brand name/trade name of another person, an assessee would be ineligible to avail the benefit of the exemption notification. It flows from the said observation that it is not necessary to examine the reason/cause for affixing the brand-name of another person. It is also clearly laid down that trade does not indicate a trade in its general sense that the goods be brought to the market for sale, but the dealing/trade between the assesse-manufacturer and its customers would meet the requirement. Also, it has been clearly laid down that the goods manufactured need not be sold to the customers, but even if it is used captively by the person whose brand name has been used, the manufacturer would not be eligible to the benefit of the said notification.
37. The appellants have vehemently argued that the said judgment is not applicable to the present case for the reason that it has been delivered in the context of availing of the benefit under SSI exemption notification where the intention of the Government was not to allow the SSI benefit to be availed by large manufacturer in an oblique or indirect manner. We are not impressed with the said argument of the Advocates for the appellants inasmuch as the Notification in Kohinoor Elastics case refers to the exemption from levy of excise duty on the goods manufactured and the said exemption was allowed only if the goods does not bear a brand name/trade name of another person or sold under a brand name. Reading the conditions of the said Notification and the exemption notifications under dispute, we find more or less similar words/expressions have been used in both the notification which have been interpreted and settled by the Honble Supreme Court.
38. Now applying the laid down principle in the said case to the facts of the present case, we find that undisputedly the appellants have affixed the names, logos and other particulars of another person i.e. FCI etc. to whom the bags are sold/cleared. Therefore, in our opinion, on affixing the particulars which have also been considered as branding by the jute commissioner, since branding charges are also included in the price of the jute bags, hence, it cannot be denied that the jute bags bear the brand name of another person and accordingly not eligible to the benefit of Notification No.12/2011-CE dated 1.3.2011 and 30/11-CE dated 24.3.2011.
39. Further, we find that the circular bearing no. 947/8/2011-CX dt.21.06.2011 referred to by the Appellant in the context of levy of excise duty on garments and also it is not binding on the interpretations advanced by the courts as has been held by the Honble Supreme Court in the case of CCE, Bolpur vs. Ratan Melting & Wire Industries 2008 (231) ELT 22(SC).
40. We do not find merit in the contention of the Ld. Adv. Shri J.P.Khaitan that the Ld. Adjudicating authority has travelled beyond the scope of Show Cause Notice relating to Appeal Nos. E/70791/13, 70886/13, 71001/13, 75351/14 & 75525/14 in passing the impugned Order, hence it is bad in law. We find that the Show Cause Notices were issued proposing denial of the benefit of the exemption Notifications, which have been adjudicated by the Ld. Commissioner on the basis of a fair interpretation of the Notifications and the principles of law settled by the courts and Tribunal on the issue and concluded that the benefit of the exemption notification is not admissible. Hence, in our opinion, the Ld. Adjudicating authority has not travelled beyond the scope of the Notice.
41. We find that in the impugned order the ld. Commissioner has imposed penalty and in few cases confirmed demand, wherein extended period of limitation is invoked. We do not find merit in the said conclusion of the ld. adjudicating authority, inasmuch as, the present issue relates to interpretation of the concept of brand name referred to under the relevant Notification No.12/11-CE dated 01.03.2011 and 30/11-CE dated 24.3.2011 and the brand name has been printed/affixed pursuant to the direction of jute commissioner; besides all facts were within the knowledge of the department as the appellant have been engaged in manufacturing and clearing such branded jute bags which are exempted before 01.03.2011 and the exemption was restored w.e.f. 01.3.2013 to such manufacturers. Therefore, we set aside the impugned Order to the extent of imposition of penalty and also confirmation of the demands, wherever extended period of limitation has been invoked. In such cases, the duty however, should be computed for the normal period of limitation. Besides, we also find that the computation of demand has been challenged by the appellant; the ld. sr.Adv. Dr.Samir Chakraborty has submitted that their grievance on the excessive demand has not been addressed and if the computation of demand is properly carried out, then it would be drastically reduced. In support of his submission he has submitted a chart to show the errors. Shri S.Bagaria, Ld. Adv. argued that even after issuance of exemption Notification 11/2013CE dt. 01.3.2103, the period thereafter has been included in computation. Therefore, we are of the opinion that the computation of the demand in M/s Hoogly Industries case and in all other cases, wherever such dispute has been raised, need to be addressed by the adjudicating authority. In the result, the appeals are partly allowed to the extent of imposition of penalty and demand for extended period, and all the appeals are remanded to the adjudicating for re-computation of demand & interest for normal period taking into consideration the grievance of the Appellant on the computation errors. Consequently, the impugned Orders are modified and the Appeals are allowed partly to the above extent.
(Pronounced in the court on 30.06.2015.)
SD/ SD/
(I.P.LAL) (D.M.MISRA)
MEMBER(TECHNICAL) MEMBER(JUDICIAL)
sm
2
Appeal Nos. Ex.Ap.70698, 70647, 70,716, 70717, 70718, 70726, 70747, 70791, 70885, 70886, 71001, 71027, 71207, 71443 /2013, 75058, 75351, 75525, 75545, 75546, 75547, 75671, 75871, 75872, 76061, 75069, 75070, 75111, 75112, 75237, 75281, 75387, 76005, 75676, 75809/2014