Customs, Excise and Gold Tribunal - Bangalore
Commissioner Of Central Excise, ... vs M/S. Brindavan Beverages (P) Ltd., & ... on 4 May, 2001
Equivalent citations: 2001(137)ELT1382(TRI-BANG)
ORDER
Shri S.S. Sekohon (Oral)
1. Revenue has filed these appeals against the common order of the Commissioner of Central Excise, Bangalore, who determining the availment of exemption under notification 175/86 and 1/93, ordered the dropping of further proceedings initiated vide a show-cause notice dated 4.5.95.
2. Vide the above said Show-cause notice, it was alleged that M/s Brindavan Beverages Pvt Ltd., (hereinafter referred to as BBPL), who were engaged in the manufacture of aerated water and were the franchise holders to M/s Parley Exports Ltd (Hereinafter referred to as PEL) in whose brand names they had manufactured goods viz 'Limca' 'Thums up', "Gold spot, had also manufactured aerated water in the name and style of 'Citra' which was said to be brand name of M.s Limca Flavours and Fragrances Ltd., (hereinafter referred to as LFFL), a holding Company of M/s PEL. They had also manufactured goods under the brand name of 'Bisleri Club Soda' with the permission of M/s Acqua Minerals (P) Ltd (hereinafter referred to M/s AMPL) and they had availed and paid duty under exemption notification 175/86, and 1/93, for the said 'Citra' and 'Bisleri Club Soda' bottles, claiming that the brand name owners, were registered with the Directorate of Industries as a Small Scale Unit and therefore they were also eligible for exemption under the said notification.
3. On the basis of intelligence gathered, that M/s Parley Exports Ltd., and Parley International Ltd., (Hereinafter referred to as PEL and PIL) were under-valuing the concentrate, and thereby evading central excise duty, investigations were caused to be made by Officers of Directorate General of Anti-evations and the Central Excise Jurisdictional Officers.
4. Enquiries were caused and statements were recorded and pursuant to the said operations, it appeared that M/s BBPL availed the SSI exemption fraudulently in conspiracy with AMPL and PEL by wilfully making a mis-statement and suppressing correct facts and central excise duty amounting to Rs 39,51,028/- for the period from July 93 to Jan 94, was demandable by invoking the longer period of limitation provided under the Central Excise Act. It was also found that the Assistant Collector had passed an order permitting BBPL, SSI exemption on 'Bisleri Club Soda' and 'Citra'. However, it was noticed that the facts disclosed in the enquiries conducted were not placed before the Assistant Collector in as much as the investigations conducted revealed the PEL are the owners of brand name such as 'Bisleri' for club soda and 'Citra' and LFPL was under-evaluating the goods to keep the turn-over below the exemption limits. It was also alleged that LFFL who own 'Citra' brand were engaged in the manufacture of flavours in their factory at Ahmedabad had availed exemption of the SSI Notifications as amended and had permitted franchise of small uses the 'Citra' brand name on terms and conditions and consequently the franchise also started availing the SSI benefit which was not eligible as the investigations revealed the 'citra' was developed and launched by the R&D efforts of PEL and was got registered as a brand name of LFFL. It was alleged that they have deliberately fragmented the manufacture of flavours to avail the benefit. The Parle Group Management, centrally and commonly, controlled the production including all aspects thereof were managed and controlled by the executives of PEL. If the shelter of corporate veil was removed, then it was seen that for purposes of other taxes it was one, but for notifications under Central Excise, they were shown as separate persons, therefore, the value of clearance of all excisable goods removed from PEL, PIL and LFFL were to be taken togetherto determine the eligibility of LFFL. The benefit which LFFL were availing of the SSI claimed by them were not elegible to them and since there was a deliberate fragmentation of manufacture to avail SSI exemption, the benefit of exemption on 'Citra' was not eligible. Therefore excise duty amounting to Rs 79,48,115/- for the period October 90 to Jan 94 in respect of 'Citra' was demandable by invoking the longer period of limitation in view of the deliberate suppression of facts.
5. We have heard both sides and considered the submissions including the written submissions filed up to 30.4.2001 and after considering the same we find:
(a) The submissions of revenue in this case are.......
Bisleri Club Soda:
Issues: Is the brand name 'Bisleri' or is it 'Bisleri Club Soda'? Who is the owner of the brand name?
Brindavan Beverages availed SSI exemption under notification 175/86 on Bisleri Club Soda, on the basis of their averment that the brand name thereof, Bisleri, was owned by another SSI unit, viz., Acqua Minerale, Delhi. The same was accepted and their CL approved on this basis.
(i) It was found in the course of investigations that Bisleri and 'Bisleri Club Soda' are two different brand names, registered separately. 'Bisleri' was registered under number 260716, 272893 and 272894 and owned by Bisleri India (P) Ltd., a subsidiary company of Parle Exports Ltd.. 'Bisleri Club Soda' was registered under number 399020 and owned by Parle Exports Ltd.
(ii) The trade marks pertaining to 'Bisleri' were assigned to Acqua Minerale, a family concern of Shri Ramesh Chauhan by a deed of assignment dated 17 November 1987. 'Bisleri Club Soda' was not assigned to anybody till July 1993, when Parle Exports corrected the deed of assignment for 'Bisleri' saying that by omission they had not transferred the brand name 'Bisleri Club Soda' to Acqua Minerale.
(iii) As duty is leviable at the time and place of clearance of goods, the correct duty payable on Bisleri Club Soda cleared by Brindavan Beverages during the period before july 1993 is what should have been paid on the basis of facts as they existed at that time. For argument it can be asked whether, if they had been correctly been paying duty at full rate on the branded goods without availing the exemption, they could have been eligible for refund on the basis of the correction made in 1993. Clearly they would not have been eligible for refund.
(iv) It has been held by the Commissioner that the brand name was only 'Bisleri' and not 'Bisleri Club Soda' because there was a disclaimer stipulated in respect of the words 'Club Soda'. (para 57 of his order). This is an erroneous conclusion, as a perusal of Section 17 of the Trade and Merchandise Marks Act 1958 would show: (Regarding Disclaimer -) "Trade mark is a monopoly right in the use of a particular mark for a particular trader; but this right cannot be exercised to the detriment of others. In other words, a trader cannot have monopoly of descriptive matter or matters which other persons in the same trade are entitled to use. Hence, although the mark may be registered as a whole, yet in certain elements of the mark the trader will not have the right to its exclusive use." Thus it is clear that while the whole trade mark is registered, there are restrictions on the monopoly granted thereby.
(v) The trade name 'Bisleri Club Soda' was owned by Parle Exports Ltd., which was a unit not eligible for SSI exemption for the period under consideration. The ineligibility of Parle Exports Ltd for the SSI exemption is not in dispute, except for the period 1992-93 when they did avail it, and for which period also they have been issued a notice proposing to deny it.
(vi) Even after July 93 (i.e., after transfer of the brand name to an SSI unit Acqua Minerale), Parle Exports remained the effective owner of the brand name. Thus the brand strategy, promotion of the brand name, market research, advertising, monitoring of production and sales etc. of Club Soda remained with Parle Exports. This is discussed in para 3 (c) (i) to (vii) of the show cause notice and para 17.4, 17.5, and 20 to 32 of the Statement of Facts to the notice. The notification 175/86 disallows the exemption to units who use the brand name, whether registered or not, of ineligible others. This may be read as, whether or not registered in the name of the ineligible others. In other words, the criterion is whether the effective owner of the brand name is eligible on ineligible for the exemption.
(vii) The concept of "who is calling the shots" as formulated in Calcutta Chromotype is applicable here by analogy. It is Parle Exports who is calling the shots in connection with Bisleri Club Soda, as discussed above. Hence, even for the period after July 1993 Parle Exports remained the effective owner of the brand name Bisleri Club Soda, and as Parle Exports were not eligible for exemption under notifn 175/86, the users of the brand name were also not eligible for their clearances of these branded goods.
Citra The brand name owner here is Limca Flavours and Fragrances, a small-scale unit which is holding company of Parle Exports Ltd. On the basis of the brand name Citra being owned by a small-scale unit, the users M/s Brindavan Beverages were permitted to avail the exemption under 175/86 for clearances of Citra.
However investigations showed that (1) Limca Flavours and Fragrances were the owners in name only and promotion of the brand name as well as quality of the branded product were the concerns of Parle Exports, who were thus the effective owners of the brand name. Parle Exports, as discussed above in the context of Soda, were not eligible for the exemption, and therefore Brindavan Beverages were also not eligible for exemption on clearances of Citra. (para 19 to 32 of Statement of Facts to the show cause notice).
(2) Limca Flavours and Fragrances were undervaluing the beverage base manufactured by them in order to stay within exemption limit.(para 19 of statement of facts). Rightly even they were not eligible and therefore users were also not so.
(b) As regards the submissions of the respondents that from EA-5 filed by the appellants indicate the amount of duty of only Rs 79,48,115/- and their submissions that the appeal pertains only to the portion of the impugned Order-in-Original covering manufacture and clearances of 'Citra' and since the appellants has not sought to set aside the portion of the Order relating to 'Bisleri Club Soda' by not including the amount of duty involved Rs 40,41,674/-; We find that a letter No. IV/3/437/98. Review dated 25.4.2001 addressed by Addl Commissioner-I to the Senior Departmental Representative, has been submitted along with written statements dated 30.4.2001 by the learned SDR which explains......
"3. In column 8 of the form EA.5-Reiefs claimed in the appeal, it is mentioned as, "To set aside the Order-in-Original No. 18/97 dated 5.5.597/17.5.97 passed by Commissioner of Central Excise, Bangalore and confirm the demand in full as mentioned in the SCN and impose an appropriate amount of penalty."
4. Therefore, entire Order-in-Original is challenged and both the items viz., Citra and Bisleri Club Soda are covered in the appeal, which is evident from the Statement of Facts enclosed to the form EA-5. Regarding the amount mentioned at col 7 A (iii) of Form EA5, it is to state that by oversight the amount is shown as Rs 79,48,115/- instead of Rs 1,19,89,789/-"
We also find that the Order of the Central Board of Excise and Customs No 59 R/98 dated 2.3.98 passed under Section 35 (E) (i) directs the Commissioner of Central Excise for determination of the following points:
"M/s PEL, after assigning the brand name 'Bisleri' to M/s AMPL, on 17.11.87 executed another correction deed on 27.7.93, whereby they assigned 'trade mark' BISLERI CLUB SODA' No. 399020 in Class 32' to M/s AMPL , with retrospective effect from the date of the original deed i.e., 17.11.87. Thus, the assesses claim that the brand name is only 'BISLERI' and not 'BISLERI CLUB SODA' is incorrect in as much as, there was no need to execute the correction deed, if their claim was true. In any case, the correction deed cannot be given retrospective effect and will stand assigned to M/.s AMPL only from 27.7.93.
(ii) The Commissioner has proceeded on the premise that M/s AMPL are the owners of the brandname. This finding is erroneous. The brandname has been assigned to M/s AMPL and they are the registered users of the same. The ownership of the branname, however, still rests with M/s PEL."
From the above it is apparrant that the entire order of the Commissioner has been placed before us for determining its legality and propriety and therefore this preliminary objection of the respondents is over-ruled.
(c) We find that as regards aerated waters with the brand name "Citra" which belong to another person namely LFFL., the matter is no longer res-integra and is covered by two decisions of the Tribunal i.e. 1999(107)ELT 645 in the case of Shri Ganganagar Bottling Company and final order 1363 to 1397/2000(B) dated 13.9.2000 in the case of M/s ESSBEE Industries and others and another decision in the case of Shri Ganganagar Bottling Company 2001 (129) ELT 416(T) which have conclusively held that there was nothing in the notification for the denial of the brand name 'Citra' the benefit of Small Scale Exemption. Following the same we find no merits in the appeal being made before us as regards 'Citra'
(d) As regards the use of the name 'Bisleri Club Soda', the issue has been decided in the case of Shri Ganganagar Bottling Company (1999 (107) ELT 645) wherein the tribunal held that the owner of brand name Bisleri i.e. AMPL, was eligible for grant of exemption under the said notification. Therefore the present respondents manufacturing club soda with the brand name 'Bisleri would also be covered by the benefit of the said notification.
(e) The grounds in the appeal, stating that the registered owners of the brand name in question are not the real owners has been considered. The correctness or otherwise of the registration of Trade Mark under the Trade and Merchandise Mark Act 1958 by the Statutory Authority under the Act cannot be questioned in the proceedings before us. We rely on the decision in the case of Gavas Laboratory (P) Ltd., (2000 (94) ECR 88(T), wherein it was held that if a brand name has been assigned, with effect from a particular date Such assignment itself would be sufficient and nothing more was required to be produced to show that the owner-ship of the brand-name has passed on date of such assignment and the benefit of SSI exemption would be eligible, if the person who has been assigned brand-name was eligible. Nothing urged before us, induces us to come to a conclusion that the assignment of the brand-names in this case can be questioned.
(f) We have considered the plea of 'Piercing the Corporate Veil (sic) trade by the Revenue as the material is to indicate the Supervision & decision about the manufacture and production of the goods being 'managed' by PEL, PIL or their executives. However no decision was shown to us that such 'lifting of veils' would be permissible under the Trade & Merchandise Mark Act or for the 'assignments' once approved, (sic) the authorities under that Act could do so. Therefore we do not consider that a cause exist for us to do so.
(g) We also find that there is no such brand-name as 'Bisleri Club Soda' which has been registered by the Trade Mark Authorities. What was registered for use under the Trade Mark Act is the word 'Bisleri' for goods 'Soda' being aerated water (sic)and the words 'Bisleri for Bear and non-alcoholic beverages and syrups'. No evidence has been brought on record to indicate that the words, as used, exist, as a Trade Mark or any other Marks belonging to another person, who is not entitled to the notification. Therefore we are of the view that the notification benefit would be eligible to the respondents, they being admittedly a Small Scale Unit.
6. In view of our findings, when we find that the Small Scale Benefit has been held to be eligible in case of 'Citra' and 'Bisleri' and also 'Bisleri Club Soda' we find no reason to uphold the Revenue's Appeals. The same are therefore dismissed.
(Pronounced in open court on 4/5/2001)