Custom, Excise & Service Tax Tribunal
M/S. Kali Aerated Water Works vs Cce, Trichy/Madurai/Salem on 15 October, 2015
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL SOUTH ZONAL BENCH AT CHENNAI E/518/2008 (Arising out of Order-in-Appeal No. 2/08 dated 28.08.08 passed by the Commissioner of Customs (Appeals), Trichy). E/519/2008 (Arising out of Order-in-Appeal No. 2/08 dated 28.08.08 passed by the Commissioner of Customs (Appeals), Trichy). E/181/2009 (Arising out of Order-in-Appeal No. 145/08 dated 19.12.08 passed by the Commissioner of Customs (Appeals), Madurai). E/60/2010 (Arising out of Order-in-Appeal No. 427/09 dated 30.12.09 passed by the Commissioner of Customs (Appeals), Madurai). E/148/2010 (Arising out of Order-in-Appeal No. 167/09 dated 30.12.09 passed by the Commissioner of Customs (Appeals), Trichy). E/197/2010 (Arising out of Order-in-Appeal No.8/10 dated 29.01.10 passed by the Commissioner of Customs (Appeals), Salem). E/286/2010 (Arising out of Order-in-Appeal No. 68/10 dated 23.03.10 passed by the Commissioner of Customs (Appeals), Madurai). E/507/2010 (Arising out of Order-in-Appeal No. 78/10 dated 28.05.10 passed by the Commissioner of Customs (Appeals), Trichy). E/635/2010 (Arising out of Order-in-Appeal No. 138/11 dated 17.08.11 passed by the Commissioner of Customs (Appeals), Trichy). E/245/2011 (Arising out of Order-in-Appeal No. 30/11 dated 28.02.11 passed by the Commissioner of Customs (Appeals), Trichy). E/259/2011 (Arising out of Order-in-Appeal No. 143/11 dated 22.03.11 passed by the Commissioner of Customs (Appeals), Madurai). E/260/2011 (Arising out of Order-in-Appeal No.145/11 dated 22.03.11 passed by the Commissioner of Customs (Appeals), Madurai). E/387/2012 (Arising out of Order-in-Appeal No. 97/12 dated 24.05.12 passed by the Commissioner of Customs (Appeals), Trichy). M/s. Kali Aerated Water Works : Appellants Vs. CCE, Trichy/Madurai/Salem : Respondent
Appearance Ms. Sridevi, Adv., For the applicants Shri L. Paneer Selvam, AC (AR) For the respondent CORAM Honble Shri R. PERIASAMI, Technical Member Honble Shri P.K. CHOUDHARY, Judicial Member FINAL ORDER No. 41432- 41444 / 2015 Date of Hearing/Decision: 15.10.2015 Per: P.K. Choudhary All the 13 appeals are taken up together for disposal, as the issues involved in these appeals are identical in nature. The appellants are manufacturers of Aerated Water and soft drinks under the brand name of Kali Mark. They marketed various flavours in the name of Kali Kola, Bovonto, Solo, Frutang, Captain, Trio, Club Soda etc., and claiming SSI exemption under Notification No. 8/2003-CE dated 01.03.2003 as amended. The adjudicating authority in all these cases denied the benefit of exemption notification on the ground that the brand name of Kali Mark, Bovanto and Frutang are the brand name of other persons and held that they are liable to pay central excise duty with interest under Section 11 A (1) and 11 AB of the CEA, 1944 and imposed penalty under Rule 25 of CER, 02, and rejected the appeals filed by all the appellants. Hence, the present appeals.
2. The brief facts of the cases are that M/s. Kali Aerated Water Works was founded by P.V.S.K. Palaniappa Nadar in the brand name and trade mark of Kali Mark in the year 1916 and established factories in various places viz, Virudhunagar, Madurai, Madras, Trichy, Kumbakonam, Erode and Salem in Tamil Nadu. All the 13 appeals against the corresponding OIAs and the period of dispute and duty and penalty imposed in each OIAs are listed below:-
S.No. Appeal No. Appellant OIA No. & dt.
appealed against Period of dispute Duty u/s 11 AC of CEA,1944 Penalty under Rule 25 of CER,02 1 518/08 Kali Aerated Water works 2/08 dt. 28.08.08 Feb,05 to Jan,06 19,02,229 20,000 2 519/08 -do- 2/08 dt. 28.8.08 Feb,06 to Dec,06 17,14,733 20,000 3 181/09 -do- 145/08 dt. 19.12.08 20.05.05 to 29.06.06 1,24,467 Nil 4 60/10 -do- 427/09 dt. 30.12.09 July,06 to Aug,06 22,399 22,399 5 148/10 -do- 167/09 dt. 30.12.09 Jan,07 to Feb,07 and Apr,07 to Oct,07 22,01,026 20,000 6 197/10 -do- 8/10 dt. 29.01.10 Nov, 02 to May,05 2,97,583 2,97,583 7 286/10 -do- 68/10 dt.23.03.10 01.04.07 to 16.10.07 70,916 70,916 8 507/10 -do- 78/10 dt. 28.05.10 Nov,07 to Feb,08 & Apr,08 to Jul,08 20,95,251 20,95,251 9 635/10 -do- 138/11 dt. 17.08.10 Aub,08 to Mar,09 4,83,678 4,83,678 10 245/11 -do- 30/11 dt.28.02.11 01.04.09 to 22.07.09 12,35,955 3,00,000 11 259/11 -do- 143/11 dt. 22.3.11 01.04.09 to 09.07.09 34,138 34,138 12 260/11 -do- 145/11 dt. 22.03.11 01.04.08 to 22.08.08 83,018 83,018 13 387/12 -do- 97/12 dt. 24.05.12 01.04.10 to 19.06.10 15,44,913 3,75,000
3. The Ld. Advocate Ms. Sridevi appearing on behalf of the appellants submits that their business was done as a family business under the HUF identity till the same was partitioned on 31.03.77 and pursuant to this partition w.e.f. 01.04.77 all the units located at different places started functioning with their own financial investments as an individual unit and managed by the descendents of the founder and they continued the business in the name of Kali Aerated Water Works with the name of the place suffixed. They used the brand name concurrently without registration in the name of the owners of such independent units. Shri K.P.R. Sakthivel, Proprietor of the Madras unit got registration of the brand names vix., Kali Mark, Kali, Bovonto, Frutange etc. in his name from the Trade Mark Registry. Consequently, there was a family MOU dated 12.03.1993, mentioned the area of their business as well as using the brand names in their respective business areas specified therein. Each unit got a separate SSI registration. She further submits that prior to 1995, the Commissioner (Appeals) allowed the appeals of the assessee granting the benefit of SSI exemption and against those OIAs the department preferred appeals before the Tribunal and the Tribunal allowed the Revenue appeals in the case of CCE, Madurai, Coimbatore & Salem Vs. Kali Aerated Water Works 2005 (190) ELT 475 (Tri.-Chen.). Against this order of the Tribunal, the assessees preferred Civil appeal No. 3611 and 4387-4392/2005 before the Honble Supreme Court and the Honble Supreme Court vide order dated 13.05.2015 in the case of Kali Aerated Water Works Vs. CCE, Madurai reported in 2015 (320) ELT 692 (S.C.) allowed their appeals. She produced the copy of the Honble Supreme Court order and submits that out of 13 appellants, 12 appellants have paid the entire duty demand under protest. She prays to set aside the OIAs with consequential relief.
4. The Ld. AC (AR) Shri Paneer Selvam, appearing on behalf of the Revenue reiterated the findings of the OIA. He submitted that the Commissioner (Appeals) has rightly denied the benefit of SSI exemption under the Notification No. 8/2003 dated 01.03.2003 as amended since they were using the brand name of other persons. He further submits that they have not included the value of the exempted goods into the aggregate value. Hence, the appellants are not eligible for SSI exemption under the said notification.
5. We have carefully considered the submissions from both sides and perused the records, Tribunals Order in the assessees own case (supra) and the Honble Supreme Court order in the assessees own case (supra), we find that the Bench had discussed the issue in detail and denied the SSI exemption benefit and allowed the Revenue appeal. In this regard, we find that the Honble Supreme Court in the appellants own case (supra) set aside the order of the Tribunal and held that the appellants are the owners of the brand name and the relevant portion of the said decision is reproduced as under:-
3.?We find that the aforesaid observation is against the record and contrary to the Deed of Mutual Agreement which has been entered into between the erstwhile partners. Para 9 of the recital to this family arrangement is as under :
Since all the parties herein have mutually intend to carry forward the reputation and well established Trade Mark KALI MARK in future also thus carrying out to the future generations, a meeting was held among the parties herein, who are the direct male lineal decedents and users of established abovesaid Trade marks and who at present have interest in various factories being run in the name of Kali Aerated Water Works in various parts of Tamil Nadu and discussed the pros and cons and also to preserve the established Trade Name and Trade Marks throughout the future generation and agreed on certain terms and conditions and all the parties herein have agreed to abide by them and hence this Deed of Mutual Agreement.
1. Thereafter, this aspect is dealt with in Paras L. M. and N thereof, which read as under :
(L)?If any party comes to know about any infringement and passing of use of any deceptively similar mark on any imitation by any person in the market, then the party in whose area the said imitation, infringement or passing off takes place shall take immediate legal steps against such erring persons at his cost, under the provisions of Trade and Merchandise Mark Act, 1958 or any other common law in which suitable an effective remedies are provided.
(M)?In any party falls to initiate legal action against such erring persons in order to protect the Trade Mark and Trade name, then any other party can take action against such defaulting parties as well as against the person committing such infringement, passing off or imitation for suitable remedy.
(N)?For removal of doubts, it is clarified specifically that the right to use the Trade name M/s. Kali Aerated Water Works and Trade Marks mentioned above are solely vested with the parties 2 to 10 herein who are the direct male lineal descendents and subject to clause G herein the parties herein cannot and shall not permit or give their existing rights to any female descendents or any third person, nor the parties 2 to 10 herein have right to transfer/sell for consideration or without consideration to third parties. If any party herein or their respective male descendents wants to close down the business they shall have to either sell their rights of Trade name and Trade Marks to other remaining parties or to their male lineal descendents only. Such parties shall acquire the rights subject to the terms and conditions of this Agreement and are liable to exercise their rights within the terms of this Mutual Agreement.
4.?It is clear from the above that the trade name Kalimark Aerated Water Works and trade mark mentioned in the said agreement would remain vested in all the parties including the appellant and the appellant was also allowed to use the same. The agreement further provides that the user of this trade mark, therefore, shall not make any payment of royalty or remuneration to any other party. This very fact was correctly appreciated by the Commissioner who decided the appeal in favour of the appellant. The discussion in the order of the Commissioner, on this aspect, reads as under :
23.?During the personal hearing Shri Rathina Asohan drew my attention to the certificates issued by the Trade Mark Registry from the year 1948 to 1985 which were filed before the lower authority. I find the appellants name also figures in the certificates issued in the year 1962 and 1970 when he became one of the partner of the erstwhile HUF Firm. The appellant have been marketing his products only within his own marketing area. It is not the case of the Revenue that any other person is using the same Brand names in the same area. Similarly the appellant is not selling his goods outside his marketing area. So far his business is concerned the appellant appears to be the only legal owner of the Trade Mark within his marketing area. This has been clearly brought out in the Mutual Agreement dated 12-3-1993 which has been duly presented on 12-3-1993 itself for registration whereas the impugned Notification No. 59/94 came into effect only from 1-4-1994 and hence no motive can be attributed against the appellant in respect of the Mutual Agreement. I have read the entire contents of Mutual Agreement. I find that Mr. K.P.R. Sakthivel is also a party to the said Mutual Agreement and no royalty is also payable to the said K.P.R. Sakthivel. Even Mr. K.P.R. Sakthivel has specifically agreed that he cannot use the brand name in the marketing area of the appellant. Thus there seems to be recognition of individual proprietary rights over the brand names within the respective specified marketing area. The nature of succession of the proprietary rights of the brand names have also been clearly dealt with. It clearly establishes that the appellant and the male descendants are alone are entitled to succeed over the ownership of the brand name within their marketing area. It is not the case of the Revenue that the appellant is marketing his products outside his marketing area.
24.?I find that the appellant is the legal owner of the trade Marks used in his product in his own marketing area, the Trade Mark certificates produced before me clearly establish that the appellant had been having the right of ownership over the Brand names in the year 1962 itself when he became the coparcener in the HUF firm. The appellant has had his exclusive ownership rights even prior to the said impugned notification. Hence the subsequent notification cannot take away the ownership right of the appellant over the brand names KaliMark Bovonto and Frutang and other brand names and applying the same to the specified goods manufactured by the appellant and marketing the same within his own marketing area in exclusion of others. On perusing the trade mark certificates, Decree of the Civil Court, Mutual Agreement dated 12-3-1993 and also considering the above contentions, I find that the appellant is the legal owner of the brand names within his marketing area.
5.?It is thus manifest that the appellant has been using its own brand name Kalimark and it belongs to the appellant. In view thereof, the case of the appellant is squarely covered in its favour by the judgment of this Court in Civil Appeal No. 9157 of 2003 titled CCE, Hyderabad-IV v. Stangen Immuno Diagnostics decided on 19-3-2015 [2015 (318) E.L.T. 585 (S.C.)].
6.?All the appeals are disposed of accordingly.
6. Since the Apex Court has settled the issue of using the brand name and trade name in the appellants own case, by respectfully following the Apex Courts decision above, we hold that the appellants are using their own brand name and are eligible for SSI exemption under Notification No. 8/03-CE dated 01.03.2003. Hence, penalties involved in all the appeals are not sustainable. Accordingly, all the impugned orders are set aside and all the appeals are allowed with consequential relief.
(Order dictated and pronounced in the open Court)
(P.K. CHOUDHARY) (R. PERIASAMI)
JUDICIAL MEMBER TECHNICAL MEMBER
BB
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