Customs, Excise and Gold Tribunal - Tamil Nadu
Precise Electronics vs Collector Of Central Excise on 1 February, 1990
Equivalent citations: 1990(30)ECR476(TRI.-CHENNAI), 1993(65)ELT69(TRI-CHENNAI)
ORDER V.P. Gulati, Member (T)
1. This is an appeal against the order of the Additional Collector of Central Excise, Madras. The brief facts of the case are that the appellants manufacture quartz wall clocks allegedly bearing the brand name 'Master Piece'. They had cleared the goods without payment of duty in terms of Notification No. 175/86. The Central Excise authorities, however, found that another manufacturer namely M/s. Doshi Electronics were also manufacturing watches with the brand name 'Master Piece'. Proceedings were drawn against the appellants for the reason that they were not eligible for the benefit of Notification No. 175/86 in view of para 7 of the said Notification which for convenience of reference is reproduced below :-
"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 the 1st day of October, 1987."
The appellants, however, contended before the lower authority that the brand name of their product was 'Master Piece Regulator' and not 'Master Piece' and, therefore, they should not be taken to be using the brand name of another manufacturer. They also contended that even otherwise, the appellants were manufacturing wall clocks which fell under Tariff Heading 9105.00, a heading specified for the benefit of the said notification, while the wrist watches fell under Tariff Heading 9102.00, a heading which was excluded from the purview of the benefit and that in this view of the matter, use of the brand name of another manufacturer of non-specified goods would not disentitle them from the benefit of the notification. The lower authority, however, did not accept the appellants' pleas and after taking note of the investigation done in regard to the brand name used, held that the appellants were in fact manufacturing quartz clocks with the brand name 'Master Piece' and held that inasmuch as in terms of para 7 of the said Notification the appellants had used the brand name of another manufacturer who was not eligible for the benefit of the notification, the appellants were required to pay duty in respect of the quartz clocks with the said brand name cleared by them and longer time limit was invoked for demanding duty of Rs. 76,050.55 and penalty of Rs. 5,000/- was also levied on the petitioner.
2. The learned Consultant for the appellants submitted that while the appellants manufactured wall clocks, the manufacturer who owns the brand name 'Master Piece' manufactured wrist watches, a different category of goods. He submitted that both the items fell under different tariff headings namely, 9105.00 and 9102.00 respectively. He pleaded that while tariff heading 9105.00 covering wall clocks was a specified heading for the purpose of availing the benefit of Notification No. 175/86, wrist watches falling under 9102.00 were, by a specific mention excluded from the purview of the benefit of the Notification. He pleaded that the brand name used in the context of non-specified goods could not disentitle the appellants from the benefit of the Notification No. 175/86 by virtue of para 7 of the said Notification (reproduced earlier). In this connection he referred to Explanation VIII to the said Notification by which 'brand name' and 'trade name' have been defined for the purpose of the said Notification which for convenience of reference is reproduced below :-
"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 person".
He pleaded that the definition of brand name is in relation to "such specified goods" and for the use of the brand name the first pre-condition is that if any brand name is used with reference to non-specified goods and another manufacturer uses the same for any specified goods, for the purpose of para 7 of the said notification, note cannot be taken of such use of the brand name. In this connection, he also drew our attention to the instructions of the Board under Board's letter F. No. 213/41/88-CX. 6, dated 30-12-1988. He drew our attention to para 3 of the said instructions which for convenience of reference is reproduced below :-
"3. The matter has been examined by the Board. It is observed that as per Section 8 of the Trade and Merchandise Marks Act, 1958, a trade mark can be registered in respect of any or all goods. In other words, a trade mark need not necessarily be in respect of all goods unless the registration has been so acquired. It is, therefore, quite possible and permissible to have the same trade mark/brand name for different classes of goods owned by different persons. In the instant case, the Company "A" are the legal registered owners of the trade mark "HOT LINE" in respect of gas stoves whereas the Company "B" are the registered owners of the same trade mark but for the commodity television. In that view, Notification 223/87, dated 22-9-1987 cannot be relied upon to deny the exemption to Company "A" in respect of gas stoves manufactured under their own trade name/brand name "HOT LINE". Therefore before denying a company benefit of SSI exemption by relying on Notification No. 223/87 dated 22-9-1987, full facts regarding the ownership of the brand name/trade name should be first ascertained".
He pleaded that the trade mark "Master Piece" is an un-registered trade mark and is owned by Doshi Electronics who started manufacture of the wrist watches in 1987 when the appellants had been manufacturing quartz wall clocks from 1982 onwards. On a query from the Bench, he clarified that the appellants and the Proprietor of M/s. Doshi Electronics, who manufacture wrist watches are brothers. Notwithstanding his other pleas he pleaded that the appellants could not be disentitled from the benefit of the notification for the reason that another manufacturer using the same brand name started manufacture much later. He further pleaded that as it is, the appellants use brand name 'Master piece Regulator' on their quartz clocks and not 'Master Piece'. He stated that no doubt the authorities had found some of the clocks which had come for repair bearing the brand name 'Master Piece' but this, he stated, was due to the fact that the sticker with the word 'regulator' on it had dropped off. At this point his attention was drawn to the findings of the lower authority in regard to the inquiries made with the buyers of the wall clock as also the description given in the invoice issued for sale of the wall clocks which bore the description 'Master Piece'. He pleaded that in the invoice the brand name 'Master Piece' was mentioned for the sake of brevity and convenience but in fact the wall clocks sold were with the brand name 'Master piece regulator'. Regarding the evidence of the buyers in this regard, he had nothing specific to say when his attention was drawn to the findings of the lower authorities with reference to the inquiries conducted with the parties who have been purchasing wall clocks from the appellants, and their averment they had been buying wall clocks with brand name 'Master Piece' as mentioned in para 6 of the show cause notice.
3. The learned DR for the Department pleaded that there was enough evidence on record to show that the appellants manufactured the goods with the brand name 'Master Piece' and the same has not been rebutted. He pointed out that the lower authority had clearly held in his findings that the appellants have been manufacturing wall clock with the brand name 'master piece regulator' also and the dispute is only in respect of 'Master Piece' wall clocks which was found with reference to the finding on record to have been sold with the brand name 'Master Piece'. He pleaded that the invoices clearly showed and also the findings of the buyers, that the appellants had sold wall clocks with the brand name 'Master Piece'. He pleaded that it makes no difference for the purpose of para 7 of the Notification No. 175/86 whether the brand name used by the other manufacturer was on specified goods or non-specified goods. He pleaded that once it is established that the appellants have used the brand name of another manufacturer who was not eligible for the benefit of Notification No. 175/86, the appellants were not entitled to the benefit of the said notification.
4. We observe that the two conditions stipulated in para 7 of the notification for the purpose of excluding the manufacturer from the ambit of the benefit of Notification No. 175/86 are (1) that he uses, on the specified goods manufactured by him, the brand name of another person and (2) that the said another person himself is not eligible for the grant of exemption under this notification.
5. The first question that arises for consideration is whether the use of another's brand name by itself alone, when the other manufacturer is not eligible for the benefit of the Notification simpliciter would disentitle the manufacturer from the benefit of the notification. Now it has so happened that the brand name may be used by a number of persons for different products and the said brand name may or may not be registered and the manufacturer claiming the benefit of the notification may or may not be aware of the use of the said brand name and there may or may not be a claim to the legal ownership of the brand name. If the mere use of the brand name belonging to another person would disentitle the manufacturer from the benefit of the exemption notification it would spell disaster on many unwitting users of the brand name which may also be used by another person for his products. Such an interpretation which will hit the users of the brand name and who have used the same without the conscious knowledge that another person at the relevant time was also using the said brand name, has to be avoided. Para 7 of the notification was obviously introduced to take care of the mischief where a manufacturer of a particular brand of goods to avoid payment of duty in respect of the goods he would like to place in the market with his brand name parcels out the production to small scale units or even may set up such units by keeping front men. In this background, therefore, the words used in paragraph 7 of the notification i.e. 'brand name' or 'trade name' of 'another person' have to be read in a manner that will while advancing the purpose for which the para was introduced would not hit the people who are genuine small scale manufacturers and are using a brand name without any knowledge that another person is also using the same brand name. The 'brand name' of 'another person' has to be understood to mean that a particular brand name is such as it belongs to the 'other person' and the right of ownership to that can be established by record notwithstanding the fact that the brand name is registered or not and that the said brand name by right belongs to the other person for use on the goods of the type manufactured by the manufacturer claiming the benefit of the exemption notification. It does not matter whether the other person who has a right to the particular brand name or trade mark himself manufactures any specified goods or not. The plea made by the appellants that unless it can be shown that the brand name of the other persons is for specified goods the mischief of para 7 cannot be attracted as seen from the wording of para 7 read with Explanation VIII of the notification under which the terms 'brand name' or 'trade name' have been defined. The learned Consultant for the appellant has cited the instructions of the Board in regard to the brand name wherein the Board has clarified that use of a particular brand name registered for one product of another person does not attach any disability for the purpose of the notification in case the same is used for another product. This goes to show that the intention in para 7 is to actually disentitle such of the manufacturers who use the brand name of other persons to which the other persons have a right for use on the product manufactured by the manufacturer claiming the benefit of the notification. In the present case, we find the appellants have been found to be using the brand name of another person who is using it on watches. The lower authority has not examined whether the other persons namely M/s. Doshi Electronics who use the brand name 'master piece' on the watches hold the legal right for using the same on other categories of watches and clocks. Unless it can be shown that the brand name 'master piece' belongs to M/s. Doshi Electronics for use on the wall clocks also, the appellants cannot be held to be within the mischief of para 7. Further we find that there is no finding whether Doshi Electronics themselves are ineligible for the benefit of the notification. The criteria regarding the eligibility of the brand name to the benefit of the notification is also required to be established before the provision for availing of the benefit of the concession under para 7 can be invoked. In regard to both the parameters as described above, there are no findings of the lower authority. In view of what we have discussed above, the lower authority's order is not maintainable and we, therefore, set aside the same and remand the matter to the lower authority for de novo adjudication, in the light of our observations after giving the appellants an opportunity of hearing.