Custom, Excise & Service Tax Tribunal
Jamal Bakery vs Commissioner Of Central Excise on 11 May, 2016
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL, WEST ZONAL BENCH AT MUMBAI COURT No. I Appeal No. E/3158/06 (Arising out of Order-in-Original No. 19/2006 dated 31.07.2006 passed by Commissioner of Central Excise, Mumbai) Appeal No. E/1236, 1237/09 (Arising out of Order-in-Appeal No. YDB/31 to 33 dated 13.08.2009 passed by Commissioner of Central Excise (Appeals) Mumbai) Appeal No. E/114/11 (Arising out of Order-in-Appeal No. YDB/704/M-II/2010 dated 18.10.2010 passed by Commissioner of Central Excise (Appeals) Mumbai) Appeal No. E/1665/11 (Arising out of Order-in-Appeal No. US/310/M-II/2011 dated 28.09.2011 passed by Commissioner of Central Excise (Appeals) Mumbai) Appeal No. E/1188/11 (Arising out of Order-in-Appeal No. US/3/M-II/2011 dated 3.6.2011 passed by Commissioner of Central Excise (Appeals) Mumbai) Appeal No. E/1293/12 (Arising out of Order-in-Appeal No. 1 US/347 & 348/M-II/2012 dated 24.05.2012 passed by Commissioner of Central Excise (Appeals) Mumbai) Appeal No. E/85308/13 (Arising out of Order-in-Appeal No. US/901/M-II/2012 dated 14.12.2012 passed by Commissioner of Central Excise (Appeals) Mumbai) Appeal No. E/88065/13 (Arising out of Order-in-Appeal No. US/118/M-II/2013 dated 30.04.2013 passed by Commissioner of Central Excise (Appeals) Mumbai) Appeal No. E/86539/15 (Arising out of Order-in-Appeal No. CD/326/M-II/2015 dated 11.5.2015 passed by Commissioner of Central Excise (Appeals) Mumbai) For approval and signature: Honble Mr. M.V. Ravindran, Member (Judicial) Honble Mr. Raju, Member (Technical) ================================================
1. Whether Press Reporters may be allowed to see : No 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 : No CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
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4. Whether Order is to be circulated to the Departmental : Yes authorities?
Jamal Bakery Appellant Vs. Commissioner of Central Excise Mumbai II Respondent Appearance:
Shri M.H. Patil, Advocate with for appellant Shri T.C. Nair, Advocate Shri S. Hasija, Supdt. (AR) for respondent CORAM:
Honble Mr. M.V. Ravindran, Member (Judicial) Honble Mr. Raju, Member (Technical) Date of Hearing: 11.05.2016 Date of Decision: ..
ORDER NO Per: M.V. Ravindran These ten appeals filed by the Appellants are directed against respective Orders-in-Original/Orders-in-Appeal passed by Commissioner as an Adjudicating Authority and/or Commissioner (Appeals) as first Appellate Authority, as summarised in the annexure to this order.
2. The facts relevant for decision of the present appeals are that the Appellants are manufacturing Cakes & Pastries falling under Tariff Item 1905 90 10, under their brand name Kwality since more than three decades and the said Kwality branded Cakes & Pastries are known and associated with the products being manufactured by them. The Appellants have been availing SSI exemption under relevant Notifications, from time to time. The Dept. questioned their availment of SSI exemption based on the allegations that they are not the sole owner of brand name Kwality as many others like M/s. Pure Ice Cream Co. Pvt. Ltd. of Bombay for Ice Cream, M/s. Kwality Ice Cream (CAL) Pvt. Ltd. of Calcutta for Ice Cream, Shri Harbhans Lal of Uttar Pradesh for Confessionary, Namkeen & Biscuits, Shri Nitin Kumar Goyal of Assam for Tea & Packet Tea, M/s.Kwality Petha House for Petha Dalmoth, Gajak, Rabery, Bhujia, Chips & Sweet preparations and Shri Govind Kumar of Agra for Confectionery are also using the brand name Kwality for their various products. Accordingly, Show Cause Notice dated 3.5.2005 was issued by the Additional Director General, DGCEI, Mumbai, proposing to deny SSI exemption for the period 2000-2001 to 2002-2003, which was confirmed by the Commissioner, vide Order-in-Original dated 31.07.2006 and the Appellants filed an appeal (No.E/3158/2006) against the same before this Tribunal. Thereafter, periodical SCNs issued were confirmed by the adjudicating authorities and upheld by Commissioner (Appeals) and the appellants have filed appeals before this Tribunal against each of those Orders. The denial of exemption and confirmation of demands was mainly based on the grounds that the exemption shall not apply to specified goods bearing a brand name or trade name, whether registered or not of any other person; that the brand name Kwality was owned by and registered in the name of M/s. Pure Ice Cream Co. Pvt. Ltd., Bombay and M/s. Kwality Ice Cream Pvt. Ltd., Calcutta for Ice Cream is not in dispute; that the issue is fully covered by the Honble Supreme Court decision in CCE v/s Rukmani Pakkwell Traders, reported in 2004 (165) ELT 481 (SC), which has been endorsed by Honble Apex Court in the case of CCE v/s Bhalla Enterprises, reported in 2004 (173) ELT 225 (SC); that if a manufacturer uses the registered brand name of another person, even if it is registered for some other products, he would not be eligible for exemption.
3. The learned Counsel for the appellants, after taking us through various records, would submit that the brand name of M/s. Pure Ice-Cream Co. Pvt. Ltd. Mumbai/Kolkata is for Ice Cream and the same is different from the appellants brand name inasmuch as M/s. Pure Ice-Creams brand name is a Device of a Penguin with the word KWALITY in an artistic logo script enclosed by a seal like device whereas the appellants brand name is with a bakemans symbol in a semi-circle attached to a rectangle with the word Kwality inside the same, which are totally dissimilar on its appearance itself; samples of brand name Kwality used by M/s. Pure Ice Cream Co. for their ice cream and the Kwality brand name used by the appellants for their Cakes & Pastries were brought to our notice to differentiate the same on appearance; that there are various other parties using the brand name Kwality for different products which is clear from the SCNs itself; that CBEC Circular dated 30.12.1988 holding that even if there are more than one owner of same brand, exemption cannot be denied if such brand name is used for different products; that the ratio of the Honble Supreme Court judgment in Rukhmani Pakkwell (supra) does not apply to the present case, as the appellants have contested and claimed the ownership of brand name Kwality for Cakes and Pastries; that the Honble Supreme Court in Bhalla Enterprises (supra) has clearly held that if the use of others brand name was entirely fortuitous and could not on a fair appraisal of the marks indicate any such connection, then the benefit of exemption would be available; that the said case considers judgments in Mahan Dairies - 2004 (166) ELT 23 (SC) and Rukhmani Pakkwell (supra); that Honble Supreme Court in Meghraj Biscuits, reported in 2007 (210) ELT 161 (SC) has held that registration with the trade mark registry cannot be the sole criteria for allowing or denying SSI exemption; that Honble Supreme Court in the cases of Nirlex Spares, reported in 2008 (222) ELT 3 (SC) and Stingen Immuno Diagnostics, reported in 2015 (318) ELT 585 (SC) has held that there should be a connection/nexus between the brand name, the product, the person and the use of same/similar brand name belonging to someone else, for denying the SSI benefit; that Honble Tribunal in Ideal Industries, reported in 2009 (233) ELT 379 (T) and Kunjoos Fine, reported in 2006 (193) ELT 77 (T) has held that the same brand name can be for different products and SSI exemption cannot be denied; that registration of trade mark by someone would not entitle to that person to interfere with or restrain the use of identical trade mark by any other person, provided that the said person, or his predecessor, has continuously used their trade mark from a date prior to the registration of trade mark by the third party; that the Appellants have been using the brand name Kwality continuously since decades and, hence, registration of brand name Kwality in favour of any other person would not affect the right already vested in them based on Section 34 of the Trade Marks Act, 1999, which is also supported by the Tribunal judgment in the case of Mankoo Machine Tools, reported in 2012 (284) ELT 515 (Tri-Del); to support their contention that the appellants have been manufacturing Cakes and Pastries bearing the brand Kwality since decades and in the market Kwality is known as a brand name for Cakes & Pastries manufactured by the appellants our attention was drawn to the certificates/ letters from traders dealing with the Cakes & Pastries manufactured by the appellants; that the usage of the brand name Kwality since decades and the establishment of identity of the said brand name with the goods manufactured by the appellants substantiate that the brand name Kwality belongs to them; that for claiming exemption under Notification No.8/2003-CE, it is not necessary that the brand name/trade name has to be registered; that the Honble Apex Court in Meghraj Biscuits (supra) has held that registration of the brand name with the Trade Marks Registry will not automatically provide benefit of exemption to SSI unit; that the allegation that brand name Kwality is owned by and registered in the name of M/s.Pure Ice Cream Co. and that there are other parties using the said brand name Kwality for different products is without adducing any evidence; that the usage of brand name Kwality on their products is not with any intention to indicate any connection of their products with that of M/s. Pure Ice Cream Co.; that till initiation of the proceedings, the appellants were not even aware that Kwality brand is owned or registered in the name of M/s.Pure Ice Cream Co. or other parties as mentioned in the SCNs; that benefit of Notification is not deniable to them based on the Apex Courts decision in Bhalla Enterprises (supra); that their use of Kwality brand name is entirely accidental/unusual without any intention of indicating any connection with any brand name of any other person whatsoever and even the Department has not substantiated with any evidence that there is any indication or any connection whatsoever with the said brand name Kwality owned and used by M/s. Pure Ice Cream Co. or any connection with the said M/s.Pure Ice Cream Co.; that Honble Apex Court in Rukmani Pakkwell would also support the appellants contention that for disentitlement of exemption, the usage of brand name should indicate a connection in the course of trade, which is absent in the present case and the Department has also failed to prove the same; that the very fact that various other persons are also using the brand name Kwality for different products would support the appellants contention that their use of Kwality brand name is purely accidental and not intentional; that the brand name Kwality belongs to a family concern initially known as M/s. Kwality Bakery & Stores which belonged to the father and his brother of the present Partner, Shri Parvez Saghir Ansari; that after the demise of his father and division/partition in the family, Shri Parvez Ansari started his firm under the name & style M/s.Jamal Bakery since 1987 and continued to manufacture Cakes & Pastries under the brand name Kwality and, therefore, they are eligible for SSI exemption based on Honble Supreme Court judgment in the case of Kali Aerated Water Works, reported in 2015 (320) ELT 692 (SC); that the valuation in first appeal is done based on certain hypothetical average prices; that the Appellants were offering 17% discount upto 1.4.2003 and 28% discount w.e.f. 1.4.2003 and this discount ought to have been reduced from the turnover arrived at by the Dept.; that when the Commissioner granted cum-duty benefit in the Order dated 31.7.2006, which is not challenged by the Dept. said benefit should have been extended in all other cases also; that entire demand covered under Appeal No.E/3158/2006 and major portion of demand covered under Appeal No.E/1236/2009 is barred by limitation in the absence of any conscious and deliberate suppression of facts; that the brand name Kwality used by the appellants is owned or used by any other person was not known to them; that by their continued and uninterrupted use of the said brand name Kwality for more than three decades, they are the owners of the brand name Kwality in the form and style in which it is used by them; that second SCN invoking extended period is not sustainable, when first SCN has already been issued on the very same issue; that based on aforesaid reasons and submissions, penalties imposed are also not sustainable and, in any case, when issue relates to interpretation of law extended period and/or penalty is unwarranted. The learned Counsel for the Appellants have submitted certain compilations of provisions and case laws in support of his various propositions.
4. The learned Authorised Representative for the Department reiterated the findings of lower authorities and claimed that the appellants are manufacturing Cakes and Pastries using brand name Kwality belonging to M/s.Pure Ice Cream Co. that they are not entitled to SSI exemption under Notn.No.8/2013-CE dated 01.03.2003; that brand name Kwality is registered in the name of M/s.Pure Ice Cream for ice cream; that brand Kwality is related to the Pure Ice Cream and its use by the Appellants shows nexus with the said brand/person; that Search Report of M/s.Varikasery & Varikasery, Trade Mark and Patent Attorneys, dated 21.12.2001 (mentioned in para 30 of Order-in-Original No.19/2006 dated 31.07.2006 in Appeal No.E/3158/06) confirmed that the brand name Kwality was already registered in the name of Pure Ice Cream; that applications for registration of Shri Harbans Lal of Uttar Pradesh for Namkeens and Biscuits, Shri Nitin Kumar Goyal for Tea and Packet Tea, Shri Govind Kumar of Agra for Petha, Gajak etc. are also pending; that from the above search report, it can be seen that as on 21.12.2001, M/s.Pure Ice Cream are the legal owners of the brand Kwality and such report do not mention even application filed by the appellants; that the appellant was neither legal owner of the brand name nor are they authorised to use such brand name; that once a brand is registered with Department of Brands, such person will be the owner of the brand and nobody else can claim the ownership thereof; that if any manufacturer claim the benefit of any of Notification, the onus to prove eligibility to such claim is upon the said person for entitlement of the said claim; that the appellants cleared the goods under brand name Kwality without taking registration and without informing the Department; therefore extended period is very well invocable in the present case. The learned AR has also relied upon various judgments.
5. We have considered the rival submissions and perused the records.
5.1 We find certain force in the submissions made on behalf of the appellants that they have not used the brand name or logo of anybody else and the brand name Kwality used by them on their products, in the manner and style, is their own brand name, which is different from the brand name/logo used by M/s.Pure Ice Cream Co. for their Ice Cream. This is also clear from a visual inspection of the labels produced before us by the learned Counsel. We find that the Honble Apex Courts judgment in Rukhmani Pakkwel (supra) relied upon by the Dept. has been considered by the Honble Apex Court in the case of Bhalla Enterprises (supra) and held that if the use of others brand name was entirely fortuitous and could not on a fair appraisal of the marks indicate any such connection, then the benefit of exemption would be available. We also find that the Honble Supreme Court in Meghraj Biscuits (supra) also has held that registration with the trade mark registry cannot be the sole criteria for allowing or denying SSI exemption. We find that the Honble Apex Court in the case of Stingen Immuno Diagnostics (supra) has held that there should be a connection/nexus between the brand name, the product, the person and the use of same/similar brand name belonging to someone else, for denying the SSI benefit. On a careful consideration of the aforesaid judgments of Honble Apex Court, one has to come to a conclusion that if someone is manufacturing any product bearing a brand name of another person, benefit of SSI exemption is not available to such person, which emphasis that there should be a connection/nexus between the brand name, the product, the person and the use of brand name belonging to someone else, for denying the SSI benefit. In the present case, the Dept. has proceeded mainly based on the Honble Apex Court judgment in Rukhmini Packkwell (supra) and there was no occasion for the Adjudicating Authority to examine other judgments of Honble Apex Court cited above by the appellants and come to a proper conclusion. We find that the ratio of the judgment in M/s. Stangen Immuno Diagnostics (supra) goes to the root of the case and the present case also has to be looked into based on the said ratio, as the facts and circumstances are somewhat identical. We are of the considered view that the Adjudicating Authority has not looked into the issue of brand name in the perspective as discussed above. Therefore, the matter needs to go back to the Adjudicating Authority for reconsideration of the issue of brand name and availability of SSI exemption under relevant Notifications in the light of our observations and the ratio judgments of Honble Apex Court discussed above.
5.2 As regards the appellants claim of time bar of the demand covered under Appeal No.E/3158/2006 and Appeal No.E/1236/2009, we find that it has been their consistent stand that the brand name Kwality belongs to them because of their continued and uninterrupted use for long period of time and, therefore, they were not expected to inform the Dept. that they are using somebody elses brand name on their products. It was the submission of the appellants that till the proceedings initiated by the Dept. they were not aware that the brand name Kwality used by them on their products was registered in the name of someone else, including M/s.Pure Ice Cream Co. Therefore, we are of the view that the Adjudicating Authoritys findings in Para 34 of the impugned Order dated 31.7.2006 that the appellants had suppressed from the Department their manufacture of Kwality branded products, despite the fact that this brand did not belong to them, lacks credence and the Dept. have not brought any evidence to support such an allegation. We find that even today the Appellants are claiming that the brand name Kwality, in the manner & style used by them, belongs to them alone and nobody else. We also find that the demand covered in Appeal No.E/1236/09, beyond the normal period one year also cannot sustain, as the fact of using the disputed brand name Kwality on Cakes & Pastries was well within the knowledge of the Department when first SCN dated 3.5.2005. Therefore, the Dept. cannot allege suppression to invoke extended in subsequent SCN pertaining to appeal No.E/1236/09, which is supported by catena of judgments of Honble Supreme Court cited by the appellants. We also note that there had been confusion with regard to brand name issue and consequential availability of SSI exemption in view of differing views expressed by Honble Apex Court at different point of time and, therefore, the benefit of doubt should go to the Appellants. Therefore, we are of the view that it cannot be held that there was an attempt on the part of the Appellants to suppress any facts and they have acted on a bona fide belief that the brand name Kwality is owned by them; therefore, they are eligible for SSI exemption under relevant Notification. We, therefore, hold that the entire demand covered under Appeal No.E/3158/2006 and demand beyond normal period of one year in Appeal No.E/1236/2009 is barred by limitation and, therefore, not sustainable. Since we are setting aside the demand covered under appeal No.E/3158/2006 on time bar, we are not dealing with any submissions made on valuation, etc. 5.3 With regard to the claim of the appellants for cum-duty benefit, we find that since the Adjudicating Authority has already granted the benefit of cum-duty in the Order impugned in the first appeal (E/3158/2006) and the same has not been challenged by the Dept. Therefore, we are of the view that the benefit of cum-duty should be extended to the appellants in remaining matters also. This issue also needs to be looked into by the Adjudicating Authority in the denovo proceedings.
5.4 So far as the penalty imposed is concerned, we find that the appellants were under a firm belief that they are the owners of brand name Kwality in the form in which it is used on their products no malafides can be attributed to their claim of SSI exemption for the products. Be that as it may, even there were divergent decisions from the Honble Apex Court on the issue of use of brand and availability of SSI exemption in various circumstances. We also find that the issue in dispute relates to interpretation of law and there can be a possibility of differing interpretations of the same. Considering overall facts and circumstances of the case, holistically we are of the view that there was no wilful suppression of facts or mis-statement on the part of the appellants. Therefore, the penalties imposed on them are not sustainable. Accordingly, we set aside the same.
5.5 With the above discussions, we set aside the demand covered under Appeals No. E/3158/2006 and No.E/1236/2009 beyond the normal period of one year, as time barred. We also set aside the penalties imposed on the appellants in each of the appeals. We remand all matters to the Adjudicating Authority for fresh decision on the issue of brand name based on our observations and judgments cited. We also direct the Adjudicating Authority to determine duty liability, if any, after extending the cum-duty benefit, as discussed above. Needless to add here that the Adjudicating Authority shall observe the principles of natural justice in the denovo proceedings. The appeals are disposed of on the above terms.
(Order Pronounced in Court on) (Raju) Member (Technical) (M.V. Ravindran) Member (Judicial) nsk ??
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1 16Appeals No. E/3158/06, 1236, 1237/09, 114, 1188, 1665/11,1293/12, 85308, 880065, 86539/13