Customs, Excise and Gold Tribunal - Delhi
Opus India vs Collector Of Central Excise on 15 July, 1992
Equivalent citations: 1993(43)ECC51, 1992(62)ELT447(TRI-DEL)
ORDER G.A. Brahma Deva, Member (J)
1. Since the issue involved is common and the appeals are inter-connected, they are, therefore, clubbed together and are being disposed of by this common order.
2. The point to be considered in these cases is whether the appellants are entitled for S.S.I. exemption under Notification No. 175/86 dated 1-3-1986 as amended by Notification No. 223/87 dated 22-9-1987 in respect of goods manufactured by them viz., L.P.G. Gas Stoves under brand name 'Hotline'.
3. Arguing for the appellants Shri V. Lakshmikumaran, learned Advocate, submitted that point at issue is to be decided with reference to the main appellants M/s. Opus India and if the Tribunal comes to the conclusion that they are entitled to claim S.S.I. exemption under Notification No. 175/86 as amended, it would not be any difficulty for the remaining appellants to succeed on this issue as they were licensed to manufacture the gas stove with brand name of 'Hotline'. He said that in the orders relevant to these appeals while denying the benefit of S.S.I, exemption under Notification No. 175/86, the Assistant Collector held that appellants were not entitled for exemption as the brand name 'Hotline' was owned by M/s. Fusebase India Pvt. Ltd., who themselves are not entitled for S.S.I. exemption and further observed that trade mark was registered in the name of individual Ms. Akash Bajaj and not in the name of concern M/s. Opus India. The Collector (Appeals) while confirming the order had gone one step further observing that trade mark was owned by Mrs. Akash Bajaj wife of Director of M/s. Fuse Base (India) Pvt. Ltd., without any basis and in fact it was neither true nor was the case of the Department at any stage during the proceedings.
4. The sum and substance of the argument on behalf of the appellants is that M/s. Fuse Base (India) Pvt. Ltd. was the owner of trade mark 'Hotline' in respect of the goods in question upto July, 1987 and thereafter by the deed of assignment dated 31-7-1987 and for a consideration Fuse Base transferred the proprietorship of the trade mark 'Hotline' to M/s. Opus India whose sole proprietor was Ms. Akash Bajaj. This fact was evidence by the certificate issued by the Senior Examiner of Trade Marks, Trade Marks Registry, Bombay under the Trade and Merchandise Marks Act, 1958. Since the ownership of the brand name 'Hotline' of the appellants M/s. Opus India was not in dispute and cannot be disputed as such, there is no justification for denying the benefit of SSI exemption under Notification No. 175/86.
5. Shri Lakshmikumaran submitted that Trade Mark 'Hotline' had already been assigned to M/s. Opus India in July, 1987 much prior to the amendment of Notification No. 175/86 by amending Notification No. 223/87 in September. They never anticipated amendment at the time of acquisition of trade mark and had no plan to avoid tax. He contended that the provisions of para 7 of Exemption Notification No. 175/86 are not at all applicable in view of the fact that only in cases where the brand name of another person ineligible to exemption Notification No. 175/86 is affixed then only the concessional rate of duty under Notification No. 175/86 is deniable to such branded goods. He also drew our attention to the clarification issued by the Board reported in 1989 (41) E.L.T. at Page T-3 on similar facts and circumstances of the case and on the very example of trade marks 'hotline' wherein it was clarified :-
"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 'HOTLINE' 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 No. 223/87, dated 2-9-1987 cannot be relied upon to deny the exemption to Company 'A' in respect of gas stoves manufactured under their own trade name/brand name 'HOTLINE'. 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."
6. Shri K.K. Bhatia, learned JCDR appearing for the Revenue strenuously argued that provisions relating to determining ownership of trade mark, registration of assignment etc. under Trade and Merchandise Marks Act, 1958 are not relevant to decide the issue as they are nothing to do with claiming exemption under Notification No. 175/86. He said that assignment itself is not sufficient to entitle the appellants to claim exemption. Irrespective of the fact that Trade Mark of the goods in question has been assigned to, still something more is to be established to prove that these goods are not identifiable with the previous owner who is not eligible for exemption. He stated that trade mark 'HOTLINE' is an established one for Gas Stoves, T.V. Sets etc. and same cannot be assigned and even if it is transferred the previous owner continues to be the owner and Department was justified in denying the benefit of exemption as the owner of the brand name was not eligible for SSI exemption.
As regards clarification issued by the Board he submitted that neither it is applicable nor binding on the Tribunal. He said that further it was stated in the said Notification that full facts regarding ownership of the brand name/trade name should be ascertained while considering the exemption under Notification No. 175/86.
7. Both the sides have referred to the decision of Bombay High Court in the case of Sunder Pannanand Lalwani and Ors. v. Caltex (India) Ltd. (AIR 1969 Bombay 24) with reference to proprietorship of trade mark and discretionary powers of the authorities in registering trade mark under Trade and Merchandise Marks Act, 1958 in support of their respective contentions. Shri Bhatia also referred to the observations made by Tribunal as per Order No. 53/92-C dated 14-2-1992 in the case of Thio Phar-ma, Falna v. Collector of Central Excise, Jaipur , in support of his argument and submitted that since brand/trade name belonging to M/s. Fuse Base (India) Pvt. Ltd., the appellants are not entitled to claim exemption as per definition given in Explanation VIII of the Notification. Shri Lakshmikumaran said that definition of 'Brand Name' given in the Central Excise Act as well as in Trade and Merchandise Marks Act, 1958 is pari materia and further clarification given by the Board is a contemporaneous exposition of Government Understanding of the exemption Notification relying upon the ratio of the decision in the case of Dunlop India v. Union of India, reported in 1990 (45) E.L.T. 197 (S.C.) .
8. We have carefully considered the submissions made by both sides with reference to the facts of the case and perused the records. The decision of the Bombay High Court in the case of Sunder Pannanand Lalwani and Ors. (supra) has not dealt with the present issue with reference to the excise law as it was mainly concerned with modes of acquisition of proprietorship of trade mark and discretionary powers of authorities in registering the trade mark. Similarly determination of ownership of trade mark through assignment was not an issue in the case of Thio Phanna, Falna (supra) cited by the Departmental Representative. There is no dispute about availing benefit of Small Scale exemption with reference to Exemption Notification No. 175/86 since the appellants are SSI Unit manufacturing Gas Stoves. But since the Notification No. 175/86 dated 1-3-1986 was amended by Notification No. 223/87-C.E., dated 22-9-1987 by inserting Para 7 and Explanation-VIII, whether the appellants are hit by Para 7 and Explanation-VIII to deny the benefit of exemption is the point to be considered in this case. Hence Para No. 7 and Explanation VIII are relevant and same are reproduced as under :-
"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 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 :
Provided further that nothing contained in this paragraph shall be applicable to the specified goods where a manufacturer affixes the specified goods with a brand name or trade name (registered or not) of Khadi and Village Industries Commission or of the State Khadi and Village Industries Board.
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."
9. On a perusal of para 7 of the Notification No. 175/86-C.E. it is clear that the exemption contained in this notification will 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. Hence it is clear that it is the ownership of the brand name which determines whether the manufacturer becomes ineligible to the benefit of Notification No. 175/86. In this case the specified goods are Gas Stoves under the brand name of 'HOTLINE' and hence issue revolves around the ownership of the branded goods. Since trade mark 'Hotline' was duly transferred in favour of the appellants M/s. Opus India owned by sole proprietor Ms. Akash Bajaj by assignment deed and same was duly registered under Trade & Merchandise Marks Act, 1958, there cannot be any dispute about the ownership of the branded goods as it was rightly argued by the appellants' counsel. Since trade mark of 'Hotline' with reference to Gas Stoves stands in the name of the appellants with effect from 31-7-1987 as it was duly registered under the relevant statute, we fail to understand that assignment itself is not sufficient but something is more required to be produced as contended by the Departmental Representative. It is not even the case of the Department that M/s. Fuse Base (India) Pvt. Ltd. are manufacturing these specified goods (Gas Stoves) under the trade name 'Hotline" even after assignment. According to para 7 of the notification if a manufacturer affixes the brand/trade name of another person with reference to specified goods he is not entitled to claim exemption in respect of specified goods. In other words if the brand name or trade name is of his own the benefit of exemption cannot be denied. Trade name of another person refers to Trade name belonging to another. "Of, as meaning belonging to as per the dictionary meaning as given in the Stroud's Judicial Dictionary. Since ownership is the criteria to determine the eligibility of exemption with reference to Para 7 of the Notification and in view of the fact that trade mark belongs to appellants M/s. Opus India, we do not find any justification to deny the benefit of exemption under Notification No. 175/86. In the view we have taken, all these appeals are allowed with consequential relief.