Custom, Excise & Service Tax Tribunal
M/S. Ajinomoto India Pvt. Ltd vs Cce, Chennai Ii on 13 June, 2017
IN THE CUSTOMS, EXCISE & SERVICE TAX
APPELLATE TRIBUNAL
SOUTH ZONAL BENCH, CHENNAI
E/178/2006
(Arising out of Order-in-Appeal No.61/2005 (M-II) dated 26.11.2005 passed by the Commissioner of Central Excise (Appeals), Chennai)
M/s. Ajinomoto India Pvt. Ltd. Appellant
Vs.
CCE, Chennai II Respondent
Appearance Shri P.C. Anand, Chartered Accountant for the Appellant Shri L. Paneerselvam, AC (AR) for the Respondent CORAM Honble Ms. Sulekha Beevi C.S., Member (Judicial) Honble Shri V. Padmanabhan, Member (Technical) Date of Hearing / Decision: 13.06.2017 Final Order No. 40941 / 2017 Per Bench The allegation raised against the appellant is that the appellants have manufactured and cleared the goods using the brand name of another, and thus wrongly availed the SSI exemption benefit.
2. The appellants are importing Monosodium Glutamate in bulk quantities and are repacking at 2.5 grams, 15 grams, 500 grams, 25 Kgs. packages and sell the same in the market through distributors. The product is sold and known as AJI-NO-MOTO in the market. Since the trademark AJI-NO-MOTO is exclusive property of M/s. AJI-NO-MOTO Co. Inc. Japan, the Department was of the view that the appellant is not eligible for the SSI exemption Notification as they were clearing the same using the brand name AJI-NO-MOTO which belonged to another. A show cause notice was issued raising the above allegation. After adjudication, the show cause notice culminated in confirmation of the demand along with interest and also imposed equal penalty. In appeal, the Commissioner (Appeals) upheld the same. Hence this appeal.
3. On behalf of the appellant, learned Chartered Accountant Shri P.C. Anand for the appellant submitted that M/s. AJI-NO-MOTO India Pvt. Ltd. was formed on 7.10.2003 as joint venture between AJI-NO-MOTO Co. (Thailand) Ltd. and M/s. AJI-NO-MOTO Co. Inc. Japan with equity participation of 90% and 10% respectively. A Trademark License Agreement had been entered into between M/s. AJI-NO-MOTO Co. Inc. Japan and the appellant on 28.11.2003. This agreement provided that the grand of license with the appellant shall have a non-exclusive and non-transferable license to use the trademark. He submitted that the appellant has been using the trademark as per this Trademark License Agreement and the appellant have been given the right to use the trademark in India and therefore it cannot be alleged that they are using the trademark of another and that the benefit of the exemption cannot be therefore denied.
4. Against this learned AR Shri L. Paneerselvam adverted to the Trademark License Agreement and submitted that the agreement grants a license which is non-exclusive and non-transferable with no right to said license. The agreement gives a license to use the trademark only. Since there is no assignment of ownership of the trademark, it cannot be said that the appellants are the owners of the trademark. Therefore, the appellants are not eligible to avail the SSI benefit and the demand raised denying the SSI benefit is right and proper.
5. We have heard both sides and perused the records.
6. The only issue that poses for consideration is whether as per the Trademark License Agreement, the appellants have become the owner of the trademark. The relevant portion of the agreement is reproduced as under:-
Article 2. Grant of License
1. LICENSOR hereby grants to LICENSEE a non-exclusive and non-transferable license, with no right to sublicense, to use the Trademark on the Product in the Territory (license).
2. It is agreed and understood that the Trademark shall remain as the sole and exclusive property of LICENSOR and nothing herein contained shall be construed to give LICENSEE or any other party any right, title or interest, except otherwise specifically provided for herein, or to grant the right to use the Trademark or similar marks to any products other than the Product.
7. It is thus seen that the appellants have been given license to use the trademark on payment of royalty which is fixed at 1% of the net sale of the product cleared bearing the trademark and sold by the appellant. This clearly indicates that the appellants have obtained the right over the trademark and therefore the allegation that they are clearing the goods in the name of another person will not sustain. The learned consultant has relied upon the decision of the Tribunal in the case of SPM Instrument India (P) Ltd. Vs. Commissioner of Central Excise, Hyderabad 2003 (152) ELT 115 (Tri. Bang.) wherein a similar issue was analyzed. The Tribunal observed in para 3(a) as under:-
3.?We have heard both sides and considered the submissions and find : -
(a) In terms of the collaboration agreement dt. 19-4-91 and 11-12-91, the appellant has been granted a non-transferable right and licence to use the trade name of the foreign company. Thus, the appellants are the only company entitled to use this brand name in India. The ownership of a brand name flows either from registration or by use. In this case, the appellants, by virtue of the fact that they are the only company entitled to use the brand name and no other company is entitled to use the brand name in the country, they become the owners of the brand name by continued use of the brand name. Reliance is placed on the decision of the Calcutta High Court in the case of CCE v. ESBI Transmissions Pvt. Ltd., reported in 1997 (91) E.L.T. 992. Nothing contrary has been shown to us. Therefore demand on this account cannot be sustained.
8. The facts being identical, we hold that the demand raised in the impugned order is unjustified. The impugned order is set aside and the appeal is allowed with consequential relief, if any.
(Operative portion of the order was
pronounced in open court)
(V. PADMANABHAN) (SULEKHA BEEVI C.S.)
Member (Technical) Member (Judicial)
Rex
4
5
E/178/2006