Custom, Excise & Service Tax Tribunal
C.C.E. & S.T.-Vadodara-I vs Taj Haberdashery Products Pvt Ltd on 4 February, 2015
CUSTOMS EXCISE & SERVICE TAX APPELLATE TRIBUNAL, West Zonal Bench, Ahmedabad -ooOoo- Appeal No. : E/89, 202/2007 [Appln No. : E/MA(EXTN)/15299/2014] [ Arising out of OIA-COMMR-A-/195AND196/VDR-I/2006 dtd 31.10.2006 Passed by Commissioners of Central Excise, Customs and Service Tax-VADODARA-I ] 1. C.C.E. & S.T.-Vadodara-i 2. Taj Haberdashery Products Pvt Ltd Appellant(s) Vs. 1. Taj Haberdashery Products Pvt Ltd 2. C.C.E. & S.T.-Vadodara-i Respondent (s)
Represented by :
For Revenue : Shri T K Sikdar (AR) For Assessee : Shri Anoli Patwa (Adv.) For approval and signature :
Mr. P.K. Das, Hon'ble Member (Judicial) Mr. R.K. Singh, Honble Member (Technical) 1 Whether Press Reporter may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982? No 2 Whether it should be released under Rule 27 of CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not? No 3 Whether their Lordships wish to see the fair copy of the Order? Seen 4 Whether Order is to be circulated to the Departmental authorities? Yes CORAM :
Mr. P.K. Das, Hon'ble Member (Judicial) Mr. R.K. Singh, Honble Member (Technical) Date of Hearing / Decision : 4/2/2015 ORDER No. A/10232-10233 / 2015 dtd 4/2/2015 Per : Mr.P.K. Das, These appeals are arising out of a common order and therefore, both are taken up together for disposal.
2. The relevant facts of the case, in brief, are that the assessee was engaged in the manufacture of Zip Fasteners classifiable under Heading No. 9607.0000 of the Schedule to the Central Excise Tariff Act 1985. On 18.1.2005, the Central Excise Officers of Head Quarter Preventive unit visited the assessees factory and found that they were manufacturing Zip Fasteners bearing brand name MIG, GVM and TLR belonging to M/s Madura Coats Pvt Ltd and cleared without payment of full rate of duty and wrongly availed SSI exemption Notification No 9/2003 dt 1.3.2003. The said officers seized the goods bearing brand name of other persons. Show cause notices were issued proposing demand of duty alongwith interest and to impose penalty on the assessee and its Managing Director, denying the benefit of SSI exemption Notification No 9/2003-CE dtd 1.3.2003 (SSI exemption for assessee availing Cenvat Credit) on the ground that the assessee cleared their products Zip Fasteners bearing brand name of MIG, GVM and TLR belonging to M/s Madura Coats Pvt Ltd to their own central depot.
3. The Adjudicating Authority confirmed the demand of Central Excise duty of Rs 5,09,803/- short paid on goods bearing brand name of M/s Madura Coats Pvt Ltd and also Rs 16,000/- on the goods cleared without payment of duty alongwith interest, and the amount of Rs 16,000/- as deposited was appropriated and adjusted against the duty liability. It has confiscated the seized goods and imposed redemption fine of Rs 10,000/-A penalty of Rs 5,25,803/- and Rs 50,000/- were imposed on the Assessee and its Managing Director of the assessee company respectively. By the impugned orders, Commissioner (Appeals), upheld the demand of duty of Rs 5,25,803/- alongwith interest and set aside the penalties on the assessee and its Managing Director of the company. The demand of Rs 16,000/- alongwith interest is set aside by way of remand with the direction to give an opportunity to the assessee to co-ordinate commercial invoices with the corresponding excise invoices. The Revenue filed the appeal against the setting aside of the demand of duty of Rs 16,000/- and penalty. The assessee also filed an appeal against the demand of duty of Rs 5,09,803/- alongwith interest.
4. After hearing both the sides and on perusal of records, we find that the dispute relates to mainly, admissibility of exemption on manufacturing and clearance of Zip Fasteners with sliders bearing the brand name of TLR, MIG and TLR belonging to the Madura Coats Pvt Ltd. The Ld Advocate on behalf of the assessee submits that the sliders bearing the brand name or trade name were supplied by M/s Madura Coats Pvt Ltd to fix in the Zip fasteners and the SSI exemption cannot be denied to them, as the sliders were not manufactured by them. They have manufactured only Zip Fasteners, which do not bear any brand name. It is further submitted that Madura Coats Pvt Ltd supplied the sliders to fix with the Zip Fasteners. Thus, the assessee have not used any brand name of others in their final products. She relied upon following decisions :
a. Maharashtra Metal Industries vs CCE, Aurangabad -2003.156.ELT.399 Tri Mumbai b. CCE, Hyderabad vs Sri Industries Ltd 2006.193.ELT.438 Tri. Bang.
c. Maharashtra Steels vs CCE, Aurangabad 2002.146.ELT.690 Tri.Mumbai d. Vimal Printery vs Collector of CE, Vododara 1999.110.ELT.982
5. The Ld Authorised representative for the Revenue submits that the issue is no more res integra on this issue in view of the decision of the Honble Supreme court in the case of Kohinoor Elastics Pvt Ltd vs CCE, Indoor 2005.188.ELT.3 (SC).
6. The Ld Advocate for the appellant attempted to distinguish the decision of the Honble Supreme Court in the case of Kohinoor Elastics Pvt Ltd (Supra). She submits that in that case, the assessee manufactured elastics as per the specific orders of the customers, who are manufacturer of under garments. As per the orders of the customers, the appellant affixed trade names belonging to the respective customers on the elastic manufactured for the customer. She submits that in the present case, the assessee had not affixed any brand name in the Zip fasteners.
7. We are unable to accept the contention of the Ld Advocate. For the purpose of proper appreciation of the case, we reproduce the relevant portion of the decision of the Honble Supreme Court in the case of Kohinoor Elastics Pvt Ltd (Supra) as under:
It is on just such a reasoning that the Full Bench of the Tribunal has held that the exemption is not lost. We are afraid that there is complete misreading and a misunderstanding of the Notification. As set out hereinabove, Clause 4 of the Notification is clear and unambiguous. It says that the exemption is lost if the goods bear the brand/trade name of another. There are no other qualifying words. The term goods admittedly refers to goods which are otherwise excisable except for the exemption granted by the Notification. In this case admittedly goods are the elastic manufactured by the Appellants. As stated above Clause 4 does not provide that exemption is lost only for goods (elastic) which are sold in the market or on those goods (elastic) which reach customers without any change in form. Clause 4 does not provide that the exemption will not be lost if the goods (elastic) are only used as inputs in the manufacture of other goods. Most importantly Clause 4 does not provide that exemption is not lost if the goods (elastic) are manufactured as per orders of a customer and for use only by that customer. Explanation IX nowhere detracts from this position. It is correct that the words that is to say qualify the words Brand name or Trade name. However the words 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 cannot be read de hors Clause 4. They have to be read in the context of Clause 4. The words used indicates use by the manufacturer. It is the manufacturer, in this case the Appellant, who is applying/affixing the brand/trade name on the goods. Thus the words for the purpose of indicating refers to the purpose of the manufacturer (Appellant). The course of trade is of that manufacturer and not the general course of trade. Even if a manufacturer only manufactures as per orders of customer and delivers only to that customer, the course of trade, for him is such manufacture and sale. In such cases it can hardly be argued that he has no trade. In fairness it must be stated that it was not argued that there was no trade. Such a manufacturer may, as per the order of his customer, affix the brand/trade name of the customer on the goods manufactured by him. This will be for the purpose of indicating a connection between the goods manufactured by him and his customer. In such cases it makes no difference that the goods as manufactured did not reach the market. The use of the brand/trade name was in the course of trade of the manufacturer for the purpose of indicating a connection between the goods and the customer who used the brand/trade name. Clearly in such a case the exemption is lost. Now in this case there is no dispute on facts. The course of trade of the Appellant is making elastics for specified customers. It is an admitted position that the Appellants are affixing the brand/trade name of their customers on the elastics. They are being so affixed because the Appellants and/or the customer wants to indicate that the goods (elastic) have a connection with that customer. This is clear from the fact that the elastics on which brand/trade name of A is affixed will not and cannot be used by any person other than the person using that brand/trade name. As set out hereinabove once a brand/trade name is used in the course of trade of the manufacturer, who is indicating a connection between the goods manufactured by him and the person using the brand/trade name, the exemption is lost. In any case it cannot be forgotten that the customer wants his brand/trade name affixed on the product not for his own knowledge or interest. The elastic supplied by the Appellants is becoming part and parcel of the undergarment. The customer is getting the brand/trade name affixed because he wants the ultimate customer to know that there is a connection between the product and him. Of course the intention of the customer is not relevant for the purposes of this Notification. This is being mentioned only to indicate that interpretation sought to be placed by Mr. Sridharan would enable manufacturers, who are otherwise not eligible, to get manufactured from small scale industries like the Appellants their goods or some inputs, affix their brand/trade name and still avail of exemption. When the wording of the Notification are clear and unambiguous, they must be given effect to. By a strained reasoning benefit cannot be given when it is clearly not available.
It must be mentioned that reliance was sought to be placed on the meaning of the terms brand name and trade name as well as the words indicating a connection in the course of trade in the context of Trade Marks. In our view, the Notification has to be interpreted in the context in which the words are used in the Notification. Context in which such words are used under the Trade Marks Act or under principle governing trade marks have no relevance for purposes of interpreting such a Notification.
5. In the present case, it is an undisputed fact that the assessee manufactured and cleared Zip fasteners with sliders bearing the brand /trade name MIG, GUN, TLR belonging to Madura Coats Pvt Ltd. The main argument of the Ld Advocate is that the slider was supplied by the Madura Coats Pvt Ltd, which was fixed in their manufactured goods. So, they have not affixed any brand name on the finished goods. We find that it is clearly evident from the record that the appellant cleared Zip fasteners with sliders, which were bearing the brand /trade name of Madura Coats Pvt Ltd. Para 4 of SSI exemption notification No 9/2003 provides that the exemption contained in this notification shall not apply to the specified goods bearing a brand name or trade name, whether registered or not, of another person. So, it is to be considered as to whether the goods were cleared by the assessee bearing any brand name of other person. As per Notification No. 9/2003 (supra), it is not relevant, whether the manufacturer affixed the brand name or not. It may be noted that in the earlier SSI exemption Notification No. 175/86, 1/93 it was specifically mentioned where a manufacturer affixes the specified goods with a brand name, which are absent in the present SSI exemption notification. Admittedly, the assessee had cleared the specified goods bearing brand name of other person. So, the cases laws relied upon by the Learned Advocate are not applicable in the present case. In our considered view, the case of Kohinoor Plastics Ltd (supra) would squarely apply in the present case. Therefore, we do not find any merit in the submissions of the Ld Advocate.
6. Regarding the setting aside of the penalties by the Commissioner (Appeals), we agree with the findings of the Commissioner (Appeals) that the issue involved in this case is the interpretation of the notification. There is no material available of suppression of facts with intent to evade payment of duty. So, the Commissioner (Appeals) rightly set aside the penalty.
7. In view of the above discussions, we find that there is no reason to interfere the order of the Commissioner (Appeals). Accordingly, both the appeals filed by the assessee and the Revenue are dismissed. The assessee who filed application for extension of period of stay order is also dismissed.
(Dictated and pronounced in the Court) (R.K. Singh) (P.K. Das) Member (Technical) Member (Judicial) swami ??
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