Customs, Excise and Gold Tribunal - Delhi
Chhaganlal Sharma & C.H. Herbs vs Commissioner Of Central Excise on 25 February, 2003
Equivalent citations: 2003(87)ECC554, 2003(160)ELT489(TRI-DEL)
JUDGMENT V.K. Agrawal, Member (T)
1. In these two appeals, arising out of two different Orders; the issue involved is whether the goods manufactured by M/s. C.H. Herbs are bearing brand name of another person making them ineligible for the benefit of Small Scale exemption Notification.
2. Shri V. Valte, learned Senior Departmental Representative, mentioned that M/s. C.H. Herbs manufacture excisable goods which bear the brand name "An- herb" belonging to M/s. Anzalp Pharmaceuticals Pvt. Ltd. (ANZALP in short): that the Deputy Commissioner, under Adjudication Order No. 178/98-99 dated 10.3.1999, confirmed the demand of duty in respect of goods removed during the period from 21.9.96 to 29.8.97 and imposed penalty separately under Rule 11 AC of the Central Excise Act and Rule 173 Q of the Central Excise Rules denying the exemption under Notification No. 140/83-CE since the goods were bearing "brand name of another person; that, however, Commissioner (Appeals) under the impugned Order-in-Appeal No. 584/2001 dated 7.11.2001 allowed the benefit of the said Notification on the ground that the brand name has been sold to them by M/s. ANZALP. The learned Senior Departmental Representative submitted that the raw materials for the manufacture was purchased and supplied to C.H. Herbs by M/s. ANZALP, the brand name holder; that the price of various goods manufactured by C.H. Herbs are fixed as per the direction of one Shri Jatkar, Administrative Manager of ANZALP; that Shri Chhaganlal Sharma, Proprietor of C.H. Herbs had mentioned in his statement that ANZALP had sold the Brand name in question to them and he had not allowed anybody else to use the said Brand Name. The learned Senior Departmental Representative then mentioned that even then M/s. ANZALP continued to place orders with other manufacturers for manufacture and supply of goods with Brand Name "An-herb"; that M/s. ANZALP had also made payments for booklets and catalogues of products "An-herb"; that Shri Nitin Kamat, Sales Manager of M/s. ANZALP, in his statement dated 23.5.2000 had deposed that M/s. ANZALP were engaged in the marketing of herbal products and the manufacturers of the said products were M/s. C.H. Herbs, M/s. Lotus Herbal Ltd. and M/s. Success Marketing and the brand name of the products marketed by ANZALP was "An-herb"; that this fact had been confirmed by Shri Sanjay Jatkar also in his statement dated 23.5.2000 as well as by Shri Nikhil Patel, Managing Directors of M/s. Anzalp Pharmaceuticals Pvt. Ltd. The learned Senior Departmental Representative, therefore, contended that it is apparent that M/s. ANZALP are actual owners of Brand Name "An-herb"; that M/s. ANZALP are controlling and directing the use of brand name even after the so called sale of brand name and the document of sale was a coloured device developed by them when the Department had initiated proceedings against them. He also mentioned that M/s. C.H. Herbs were indicating on their labels "An-herb" belonging to M/s. ANZALP and they had paid Rs. 15,000 as royalty for using the right of brand name.
3. On the other hand, Shri L.P. Asthana, Learned Advocate, submitted that Shri Chhaganlal Sharma, Proprietor of M/s. C.H. Herbs, was working earlier as a Chemist with M/s. ANZALP who were manufacturing goods under brand name "An-herb"; that ANZALP stopped manufacturing these goods due to commercial reasons; that C.H. Herbs started manufacturing those goods and ANZALP agreed to sale the brand name for Rs. 51,000 to be paid in instalments; that the sale agreement was dated 22.8.1995; that C.H. Herbs also applied to the Controller, Food and Drugs Administration for a licence to manufacture ayurveda medicine under the brand name "An-herb" and submitted also a no objection Certificate from ANZALP; that a drug manufacturing licence was issued to C.H. Herbs; that Nitin Kamat, Sales Manager of ANZALP had stated in his statement that brand name "An-herb" was sold to C.H. Herbs in 1997; that Shri Sanjay Jatkar and Nikhil Patel had also confirmed the sale of brand name to M/s. C.H. Herbs; that Shri Chhaganlal Sharma had also stated in his statement that the brand name had been purchased by him from ANZALP; that the Commissioner Central Excise under the impugned Order-in-Original No. 53/2000 dated 12.2.2001 has confirmed the demand of duty for the period from 30.11.97 to 20.5.2000 and imposed a penalty of equivalent amount under Section 11 AC of the Central Excise Act, besides imposing separate penalty under Rule 173Q of the Central Excise Rules, 1944 on C.H. Herbs and on Chhaganlal Sharma and imposed penalty also on M/s. ANZALP and Shri Nikhil Patel; that the Appellate Tribunal, vide Final Order No. A/260-261/2002 NB (DB) dated 19.2.2002, has set aside the penalties imposed on M/s. ANZALP and Shri Nikhil Patel holding that they were not concerned with the brand name and had nothing to do with the goods.
4. The learned Advocate, further, submitted that M/s. C.H. Herbs have the ownership of the brand and all rights related thereto; that the sale agreement was entered into prior to the period of demand confirmed by the Commissioner under the impugned Order dated 12.2.2001; that merely because the agreement was entered into after the search would not affect the legal position; that as regards the use of the brand name "An-herb" by other manufacturers, they had produced letters of authorization by them; that it was perhaps through oversight that Chhaganlal did not mention the permission given by him to other concerns for use of the brand name; that this fact cannot be taken as evidence to show that they were not the owner of the brand name; that M/s. ANZALP is not controlling anything and they are not the owner of the brand name. He, further mentioned that demand is barred by limitation since they had disclosed full facts in the declaration dated 19.4.99; that this issue was in the knowledge of the Department as a show cause notice dated 13.2.98 had been issued to them; that there has been, therefore, no suppression of facts and the proviso to Section 11 A of the Central Excise Act has no application. The learned Advocate also submitted that it is not permissible to impose penalties both under Section 11 AC and Rule 173Q simultaneously; that further no penalty can be imposed on the Proprietor under Rule 209 A as there is no separation of identity between the proprietor and the proprietorship concerned. Finally, the learned Advocate relied upon the following decisions:
(1) Commissioner of Central Excise & Customs, Rajkot v. West Coast Diesels Ltd. 2000 (122) ELT 103 wherein it has been held that registration of deed of assignment under Trade and Merchandise Marks Act is only a facility for protection of assignment right and not a condition precedent for availing of SSI Exemption.
(2) GAVS Laboratories (Pvt.) Ltd. v. Commissioner of Central Excise, New Delhi, 2000 (122) ELT 516(Tri) wherein it has been held that benefit of small scale notification is available to the assessee from the date of assignment of brand name and not from the date of registration.
(3) Zarafshan, Chemicals Pvt. Ltd. u. Commissioner of Central Excise, Chandigarh, 2000 (124) ELT 256 (Tri) wherein Tribunal has held that where documentary evidence is produced, it is impermissible to dismiss its evidentiary value on the basis of oral submissions to the contrary; that it is for the department to disprove the claim and establish that the deed of assignment was in fact executed after the date of seizure.
(4) Charkha Detergents and Soap Enterprises v. Commissioner of Central Excise, New Delhi, 2001 (130) ELT 333 (Tri).
(5) Tainwala Personal Care Products Pvt. Ltd. v. Commissioner of Central Excise, Surat II, 2002 (82) ECC 642 (Tri) : 2002 (52) RLT 991 (Tri).
(6) Livinder Singh v. Commissioner of Central Excise, New Delhi, 2001 (137) ELT 1329 (Tri) wherein it has been held that once there is an outright assignment of proprietary right on the trade mark, the assignee becomes owner of the trade mark and goods manufactured by them bearing trade mark are eligible to SSI exemption.
5. We have considered the submissions of both the sides. It is not in dispute that the brand name "An-herb" was owned by M/s. ANZALP Pharmaceuticals Pvt. Ltd. The issue involved in both these Appeal is whether the said brand name was at all assigned to M/s. C.H. Herbs and if the same was assigned from what date. It is the contention of the assessee that the brand name was assigned to them by M/s. ANZALP on 22.8.95 which is evident from the letter dated 1.6.95 addressed by ANZALP to the Controller, Food and Drug Administration, M.P. wherein they have mentioned that they have authorized C.H. Herbs to use their trade name which had been sold to them. On the other hand, the Revenue has claimed that the brand name was never assigned to the assessee as M/s. ANZALP was getting certain products manufactured from other job workers bearing the same brand name "An-herb". The perusal of material brought on records reveals that except the said letter dated 6.9.95 by M/s. ANZALP, there is no other material to show that the brand name was assigned to them in August 1995. On the other hand, it is revealed from the records that the sale deed of the brand name was drawn in October 1997 as the stamp paper itself was purchased only on 18.10.97. The sale deed was executed on 18.10.97 after the Central Excise officer had visited the factory premises of the assessee on 13.9.97. We also observe that Shri Sanjay Jatkar, in his statement, has clearly deposed that the brand name was sold to M/s. C.H. Herbs in 1997. Further, it is observed from the statement of Shri Chhaganlal Sharma, Proprietor, C.H. Herbs, that the raw material for manufacturing the goods are purchased through Shri Jatkar and the entire production is also sold to M/s. ANZALP only. Shri Chhaganlal Sharma has further deposed in his statement that the brand name was sold after the case was registered by the Central Excise Department and the brand name is used as per the directions of ANZALP only. We also observe that it has not been denied by Shri Nikhil Patel, Managing Director of ANZALP, that the Order had been placed by ANZALP on other manufactures to get the goods manufactured bearing the brand name "An-Herb".
M/s. C.H. Herbs themselves have mentioned in their Appeal memorandum that the payment was made to M/s. ANZALP Pharmaceuticals as the first instalment only in July 1997. All these material go to show that there was no sale or assignment of brand name "An-herb" in favour of M/s. C.H. Herbs in 1995 at all. Further, the sale deed executed in October 1997 is nothing but a device to evade the payment of Central Excise duty inasmuch as the assessee is manufacturing the goods out of the raw material procured by Shri Jatkar of ANZALP and are using the brand name as per the direction of ANZALP and moreover selling the entire production to M/s. ANZALP. In addition M/s. ANZALP is also getting the goods bearing the brand name being manufactured from other manufacturers. If the brand name has been assigned to the assessee the question of M/s. ANZALP getting the goods bearing the same brand name manufactured from other job workers does not arise. Nothing has been brought on record to show that M/s. C.H. Herbs has taken any action against M/s. ANZALP for getting the goods manufactured bearing the brand name "An-herb" from others. The learned Advocate for C.H. Herbs has relied upon the various decisions of this Tribunal. In view of the facts and circumstances of the present case, all these decisions are not applicable to the facts of the present matter. The decision in the case of Zarafshan Chemicals is not applicable as the Revenue has clearly established in the present matter that the brand name was not assigned to M/s. C.H. Herbs in view of the facts noted by us above. We also note that even as per the Memorandum of Appeal, M/s. C.H. Herbs have made payment of Rs. 15000 only to M/s. ANZALP Pharmaceuticals as the first instalment vide cheque dated 1.7.97. There is no other mention of any other payment whereas in the sale deed it is mentioned that M/s. ANZALP had received the entire money for the sale of the brand name. On a query from the Bench, learned Advocate for M/s. C.H. Herbs did not answer as to whether any other payment has since been made to M/s. ANZALP Pharmaceuticals. The learned Advocate has also relied upon the Tribunal's Final Order Nos. A/260-261/2002-NB dated 19.2.2002 by which the penalties imposed on ANZALP Pharmaceuticals Pvt. Ltd. and Shri Nikhil Patel were set aside on the ground that during the material period the brand name was assigned to M/s. C.H. Herbs and ANZALP Pharmaceuticals were in no way concerned with the brand name. The fact which has been brought on record in the present matter indicated differently to the fact that brand name was not assigned to M/s. C.H. Herbs even during the relevant period. It has been held by the Supreme Court in the case of Karan Singh v. State of Madhya Pradesh, AIR 1965 SC 1037 that "each case has to be decided on the evidence lead in it and this is irrespective of any view of the same act that might have been taken on different evidence lead in another case." In this case the Supreme Court observed that in spite of the acquittal of a person in one case it is open to the Court in another case to proceed on the basis that the acquitted person was guilty of the offence of which he had been tried in the other case and to find in the later case that the person tried in it was guilty of an offence. We, therefore, hold that the benefit of SSI Notification will not be available to the excisable goods manufactured by M/s. C.H. Herbs bearing the brand name "An-herb". Thus the Appeal No. E/449/2002-C filed by the Revenue is allowed. However, we are of view that penalty imposed is on the higher side and the interest of justice will be satisfied if they are directed to pay a penalty of Rs. 50.000 only. We order accordingly.
6. In Appeal No. E/1070/2001 filed by M/s. C.H. Herbs the period involved is 30.11.97 to 20.5.2000. The show cause notice has been issued on 2.6.2000. We agree with the learned Advocate that the extended period of limitation is not invocable in view of the fact that the Department had already initiated the proceedings against them after visiting the factory premises on 30.9.97. The department, therefore, was aware of the fact that M/s. C.H. Herbs were manufacturing excisable goods bearing the brand name "An-herb". Accordingly the demand will be enforceable for the period of six months preceding the show cause notice. For the same reason penalty imposed under Section 11AC is set aside. However, penalty under Section 173Q of Central Excise Rules, 1944 is imposable which is left open to the Adjudicating Authority after redetermining the duty demandable from M/s. C.H. Herbs. We also uphold the confiscation of seized goods as the same was cleared without payment of duty. However, we reduce the redemption fine to Rs. one lakh from Rs. four Lakhs.
7. The Appeal No. E/1070/2001 is remanded to the Adjudicating Authority for redetermining the amount of duty for the past six months period and for considering the imposition of penalty on C.H. Herbs under Rule 173 Q of Central Excise Rules, if any. Both the appeals are disposed of in the above terms.