Customs, Excise and Gold Tribunal - Delhi
Kores India. Ltd., Econoprint Stencils ... vs Commissioner Of Central Excise And ... on 8 October, 2003
Equivalent citations: 2003(158)ELT658(TRI-DEL)
JUDGMENT V.K. Agrawal, Member (T)
1. In these three appeals, arising out of a common Order-in-Original No. 10/Comms/C.Ex./Ind/2002 dated 19.2.2002, the issue relates to denial of benefit of S.S.I. exemption to M/s. Econoprints Stencils Pvt. Ltd. (In short ESPL) on the ground that the excisable goods manufactured and cleared by them are bearing the brand name of M/s. Kores (India) Ltd. (In short) Kores).
2. Shri M. Chandrashekharan, learned Senior Advocate, subsmitted that M/s. Econoprint Stencils Pvt. Ltd. manufacture duplicating stencil paper; that the Branch name "BCONOPRINT" registered in the name of M/s. Kores was lastly renewed with effect from 29.7.1988 for a period of seven years and thus the brand name was renewed upto 28.7.1995; that M/s. Kores did not apply for the renewal of the registration thereafter; that accordingly after 29.7.95, the ownership of M/s. Kores on the brand name "ECONOPRINT" stands ceased; the further M/s. Kores have not manufactured duplicating stencil since 1975 in "ECONOPRINT" brand; that the Appellant M/s. ESPL are manufacturing the goods under the Brand name "ECONOPRINT" since 1993 and the name ECONOPRINT is taken from their name i.e. ECONOPRINT Stencils Pvt. Ltd. The learned Senior Counsel, further, mentioned that on enquiry, Trade Mark Resigstry, under letter dated 23.2.2001, has informed that brand name "ECONOPRINT" does not appear to have been renewed; that the benefit of S.S.I. exemption notification can be denied only if there is somebody else who is the owner of the same; that in the present matters neigher M/s. Kores nor any other person is claiming the ownership of brand name; that as per Section 25 of the Trade And Merchandise Marks act, 1958, the registration of a trade mark shall be renewed for a period of seven years and that the Registrar shall send notice at the prescribed time before the expiration of last registration of a trade mark to the registered proprietor for obtaining a renewal of the registration on fulfillment of the conditions; that sub-section (3) of Section 25 provides that if at the expiration of the time prescribed, conditions have not been duly complied with, the Registrar may remove the trade mark from the register.
3. The learned Senior Counsel emphasised that as M/s. Kores have not manufactured the impugned goods and as such the benefit of S.S.I. exemption Notification can not be denied to M/s. ESPL; that it has been held by the Larger Bench of the Tribunal in the case of CCE, Chandigarh vs. Fine Industries, 2002 (53) RLT 398 (Cegat-LB) that "to attract the mischief of Para 4, the specified goods manufactured by S.S.I. unit should have been cleared under the brand name of another person who used that same brand name on identical goods. Finally, he submitted that the extended period of limitation is not involkable for demanding the duty of excise as M/s. ESPL have filed Classification Declaration under Rule 173-O of the Central Excise Rules, 1944 clearly declaring their product "ECONOPRINT" Duplicating Stencil claiming exemption under S.S.I. Notification No. 1/93 C.E., dated 28.2.93; that therefore, it cannot be said that they had falsely availed the benefit of S.S.I. exemption; that wherever, they had used the brand name, they had declared it accordingly; that in the Classification Declaration they had also declared Duplicating Stencil Paper "Kores Brand" and had indicated Tariff rate of duty; that they were under a bonafide belief that since the product bears their own name they were entitled to S.S.I. exemption.
4. Countering the arguments, Shri A.S. Bedi, learned Senior Departmental Representative, submitted that as per search report of Examiner of Trade marks, conducted on 21.7.2000, M/s. Kores (India) Ltd. continue to be the proprietor of the brand name "ECONOPRINT"; that Shri Sudhir Soni Executive Director of M/s. ESPL, has deposed in his statement dated 5.3.2001 that the brand name is owned by M/s. Kores; that no proof could be produced by the appellant also to prove that the brand name is question has been assigned by M/s. Kores to M/s. ESPL; that even if M/s. Kores did not renew their registration with Trade Mark Register, the Brand name does not cease to belong to them; they now become unregistered owner of the Brand name; that mischief of Para 4 of the S.S.I. Notification is attracted irrespective of the fact whether the brand name is registered or unregistered. He also submitted that the extended period of limitation in invokable as M/s. ESPL have suppressed the fact of using brand name of M/s. Kores from the Department ,that penalty is is also imposable on M/s. Kores as well as Shri S.S. Bhandari Under Rule 209 A of Central Excise Rules; that Shri T.S. Taksali, Chief Executive Officer of M/s. Kores deposed in his statement dated 14.2.2001 that brand name "ECONOPRINT" was not owned by Kores which is a false statement; that Shri S.S. Bhandari had dealt with the goods knowing their liability to confiscation as wrongful benefit of S.S.I. exemption wa availed by M/s. ESPL.
5. In reply the learned Senior Counsel submitted that Shri R.V. Deora, Corpn. Advisor in M/s. Kores (India) Ltd. has affirmed in his affidavit dated 27.12.01 that trade mark "ECONOPRINT" was owned by M/s. Kores till 28.7.95 and did not get it renewed after 28.7.95 when its validily expires and that M/s. Kores (India) Ltd. had relinquished the said trade mark since 29.7.95 and ceased to be the owner of the said trade mark and have not claimed to it.
6. We have considered the submissions of both the sides. Para 4 of the relevant S.S.I. Notification Provides that the benefit of Notification shall not apply to the specified goods, bearing the brand name or trade name (registered or not) of another person. It has been contended by the appellants that the brand name "ECONOPRINT" was initially registered with the trade mark authorities in the name of M/s. Kores (India) Ltd. who did not get it renewed it further after 28.7.95 In support of this they have brought on record an affidavit of the Corpn. Advisor of M/s. Kores (India) Ltd. It is also the contention of the M/s. ESPL that "ECONOPRINT" is not a brand name but it is taken from the name of the Appellant Company. On the other hand, the learned Senior Departmental Representative has contended that M/s. Kores (India) Ltd. continued to be the owner of the brand name "ECONOPRINT" even after 28.7.95. They only difference is that after 28.7.95 the brand name is not more registered in their name. We find substantial force in the submissions of the learned Senior Departmental Representative in as much as nothing has been brought on record by M/s. ESPL or even by M/s. Kores (India) Ltd. who are also Appellant before us to show any document under which they had relinquished their title to to the brand name "ECONOPRINT" with effect from 29.7.95. In fact the learned Senior Departmental Representative has referred to the statement of Shri Sudhir Soni, Executive Director of M/s. ESPL who has in his statement dated 5.3.01 clearly deposed that the brand name "ECONOPRINT" is owned by M/s. Kores (India) Ltd. and the same was assigned to M/s. ESPL under the agreement and accordingly M/s. ESPL is using the said brand name. It is also on record that no copy of assignment document assigning the brand name to M/s. ESPL by M/s. Kores (India) Ltd. has been brought on record. In fact Shri Sudhir Soni in his statement dated 9.4.2001, has deposed that copy of the agreement under which M/s. Kores (India) Ltd. had assigned "ECONOPRINT" brand to M/s. ESPL and at present copy of the agreement "is not traceable as such we are unable to furnish the same." In view of this it cannot be claimed by M/s. ESPL that brand name "ECONOPRINT" did not belong to M/s. Kores (India) Ltd. It is also not necessary for attracting the mischief of Para 4 of S.S.I. exemption notification that the brand name should be only registered one. The brand name may be registered or unregistered. We, therefore, hold that during the relevant period brand name "ECONOPRINT" belonged to M/s. Kores (India) Ltd.
7. M/s. ESPL have also submitted that duplicating stencil paper which bears the brand Name "ECONOPRINT" is not manufactured by M/s. Kores (India) Ltd. and as held by the Larger Bench of the Tribunal in the case of Fine Industries, the benefit of S.S.I. notification can not be denied to them. We observe that Three Member Bench of the Tribunal in the case of Fine Industries answered the reference made to it as under :
"The Revenue had to show that the brand name/trade name owner was also manufacturing the specified goods and clearing the same under this brand name/trade name............ To attract the mischief of Para 4, the specified goods manufactured by the S.S.I. unit and cleared under the brand name of another person should be identical to that manufactured by the brand name owner in which event only the goods could become indistinguishable in the market from those manufacture by the brand name owner."
8. It is thus apparent that the Larger Bench has only considered the case of brand name owner who is manufacturing the goods and in that event, as per the decision in Fine Industries case, the goods manufactured by both S.S.I unit and the brand name owner should be identical. We observe that in the present matter M/s. Kores (India) Ltd. are dealing in the impugned goods manufactured and cleared by m/s. ESPL. Under the agreement M/s. Kores (India) Ltd. has been appointed as selling agent of M/s. ESPL for selling their products. The issue "whether the benefit of small scale exemption under Notification No. 175/86 ...........and subsequent exemption notification No. 1/93 C E dated 28.2.93 was available in terms of Para 7 of Notification No. 175/86 C E and Para 4 of Notification NO. 1/93 C E when the specified excisable goods were affixed with the brand name of a person who was not a manufacturer has been considered by a Larger Bench of Five Members in the case of Nemtech Systems and Other vs. CCE, Bangalore and Others 2000 (36) RLT 35 (CEGAT).
The Larger Bench has answered the question as under :
"On a careful consideration of the matter in all its relevant aspect, we are of the view that the benefit of small scale exemption under Notification No. 175/86-C E dated 1.3.86 (as amended) and Notification No. 1/93-C E dated 28.2.93 (as amended) was into available to the specified goods where the manufacture affixes the said specified goods with the brand name or trade name of a foreign person and of a non-manufacturing trader .The reference is answered accordingly."
9. It is not in dispute that in the present matter M/s. Kores (India) Ltd. are dealing with duplicating stencil paper. Thus M/s. ESPL bad used the brand name of another person who is a trader in duplicating stencil paper. The Larger Bench of the Tribunal in Namtech System case has observed that "the expression used in the relevant provisions was "another person". The expression person is wider than the expression 'manufacturer'. It has to be assumed that the Legislature has used the expression 'person' purposely and the same expression can not be detached from the context". Accordingly we hold that M/s. ESPL were manufacturing and clearing the impugned goods bearing the brand name of another person and accordingly the benefit of S.S.I. exemption notification will not be available to them. The extended period of limitation for demanding duty is invokable in the present matter as the fact of using the brand name of another person was never disclosed by M/s. ESPL to the Department. In the classification declaration field by them, they have simply mentioned duplicating stencil paper - "ECONOPRINT" unbranded. As observed earlier shri Sudhir Soni has clearly admitted in his statement dated 5.3.2001 that the brand name "ECONOPRINT" is owned by M/s. Kores (India) Ltd. further, he has mentioned that the same had been assigned to M/s. ESPL. In view of this, it cannot be claimed by M/s. ESPL that they were under the bonafide belief that the impugned product was bearing their own name. However, the benefit of MODVAT credit of the duty paid on inputs, if any, will be available to M/s. ESP on production to duty paying documents to the satisfaction of the Adjudicating Authority within one month of receipt of this Order .It has also been claimed that the price should be treated as cum-duty price in terms of decision of the Larger Bench of the Tribunal in the case of Shreechakra tyres vs. CCE, 1999 (32) RLT 1 CEGAT. The Adjudicating Authority will extend the benefit of statutory deduction under Rule 4 (4) (d) (ii) of the Central Excise Act by treating the price as cum-duty price and deduction of duty now payable has to be allowed to arrive at the assessable value.
10. Penalty is imposable on M/s. ESPL as they have cleared the goods by wrongly availing the benefit of exemption Notification. However, the penalty of Rs. 5 laksh on M/s. ESPL will meet the ends of justice. We, therefore, reduce the amount of penalty on M/s ESPL to Rs. 5 lakhs. M/s. Kores (India) Ltd. is also liable for penalty under rule 209 A of the Central Excise Rules, as they were receiving the goods in question from M/s. ESPL without payment of duty and the goods were bearing their own brand name. However, the penalty of Rs. 10 lakhs imposed on them is on higher side which is reduced to Rs. one lakh. A penalty has also been imposed on Shri S.S. Bhandari in the impugned Order on the ground that he had mislead the department by suppressing the fact regarding ownership of brand name "ECONOPRINT" and was responsible for availment of wrongful benefit of S.S.I. exemption notification by M/s. ESPL. We agree with the Adjudicating Authority that a penalty is impassable on Shri S.S. Bhandari. However, we reduce the same to Rs. 10,000/-. All the three appeals stand disposed of in the above manner.