Custom, Excise & Service Tax Tribunal
M/S.Elac Marketing Pvt. Ltd vs Commissioner Of Central Excise on 3 March, 2016
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL SOUTH ZONAL BENCH
CHENNAI
Appeal Nos.E/41183/2014 & E/41184/2014
[Arising out of Order-in-Original No.7/2014 dt.26.2.2014 passed by the Commissioner of Central Excise, Chennai-II]
1. M/s.Elac Marketing Pvt. Ltd.
2. Shri K.S. Ganesh, Director Appellant
Versus
Commissioner of Central Excise,
Chennai-II Respondent
Appearance:
Shri S. Murugappan, Advocate For the Appellant Shri Veerabadra Reddy JC(AR) For the Respondent CORAM :
Honble Shri R. Periasami, Technical Member Honble Shri P.K. Choudhary, Judicial Member Date of Hearing/Decision :3.3.2016 FINAL ORDER No.40455-40456/2016 Per R. Periasami Since the issue involved in both the appeals is common and arising out of same impugned order dated 26.2.2014, both the appeals are taken up together for disposal.
2. The brief facts of the case are that appellant M/s.Elac Marketing Pvt. Ltd. is registered with Central Excise for manufacture of Instant Water Heaters and Automatic Storage Water Heaters and discharging Central Excise duty after crossing the SSI exemption limit of Rs.1.5 crores as per Notification No.8/2003 dt.1.3.2003. SCN No.42/2013 dt. 11.7.2013 was issued for denying the SSI benefit on the goods viz. Automatic Storage Water Heaters manufactured and cleared by them bearing the brand name of "Elac Excel" and "Elacvarmxpress' etc. as the said goods bears the brand name "Elac" which is similar or akin to brand name of "Elac" which is registered by another company viz. M/s.K.N. Industries. As per para-4 of the notification, the exemption shall not apply to the goods bearing the brand name of other person. The Commissioner of Central Excise in the impugned order denied the SSI limit of Rs.1.5 croreson the goods cleared by appellant-company in the brand names of 'Elac Excel', 'Elacvarmxpress', ' Elac Excel Fiesta' and 'ElacVarm Slim'. and confirmed the demand of Excise Duty of Rs.83,42,016/- under proviso to Section 11A (1) of the Central Excise Act along with interest and also imposed equivalent penalty under Section 11AC. He also imposed penalty of Rs.10 lakhs under Rule 26 of the Central Excise Rules 2002 on Shri K.S. Ganesh, Director of appellant-company. Hence the present appeals.
3. Heard both sides. Ld. Advocate Shri S. Murugappan appearing for the appellant submitted a written synopsis and reiterated the same. He submits that both K.N. Industries and the appellants are manufacturing the items and are availing SSI exemption and submits that K.N. Industries manufactured water heaters by using metal stainless steel body whereas the appellant M/s.Elac Marketing Pvt. Ltd. is manufacturing water heaters through (ABS) plastic bodies and whereas M/s.K.N. Industries are using their brand name "Elac" which is a registered name and the appellants are using the name "Elac Excel" and they applied for registration of their Trade Mark 'Elac Excel' on 16.8.2012 before the Trade Mark Authority and again on 21.8.2012, they filed another application for the Elac Excel with a different background. Both their applications were under process. He submitted that they are using the brand name "Elac Excel" since 29.10.2009 which is mentioned in the trade mark application.
3.1 On limitation, Ld. advocate submits that SCN is hit by limitation. He submits that SCN was issued on 11.7.2013 and as per para-2 of the notice, the officers visited on 22.11.2012 which is factually incorrect. He submits that in their case summons were issued to the appellant as well as to M/s.K.N. Industries on 17.4.2012 which is annexed to pages 121, 122 of the paper book. They have rightly acknowledged the summons by proprietrix and requested time for filing appeal. He submits that subsequently Shri K.S.Ganesh, Director visited the Central Excise office and statements were recorded and after the verification, the officer satisfied and the records were returned. He submits that there is no copy of the statement given to them. They were also under the bonafide belief that "Elac Excel" is not the brand of M/s. K.I. Industries as they have already applied for registration of their trade mark "Elac Excel". There is no suppression as the department is well aware of the investigation from 17.4.2012 whereas SCN was issued on 11.7.2013 and hence hit by limitation. He relied the following case laws :-
(1) Orissa Bridge & Construction Corporation Ltd. Vs CCE Bhubaneswar - 2011 (264) ELT 14 (SC) (2) Uniworth Textiles Ltd. Vs CCE Raipur 2013-TIOL-13-SC-CUS (3) Tamil Nadu Housing Board Vs CCE Madras 1994 (74) ELT 9 (SC)
4. On the merits of the case, he submits that the brand name belonging to K.N. Industries is "Elac" whereas the name used by appellant is "Elac Excel". The SCN itself alleges that brand name appeared to be 'similar' and akin to the brand name Elac and not the 'same' whereas as per the SSI notification the exemption benefit is not available on goods bearing the brand name of others and they have not affixed any brand name of other person. There is difference between the words "similar" and "same". In support of this, he relied the Hon'ble High Court decision in the case of UOI Vs Pillaiyar Soda Factory 1992 (57) ELT 261 (Mad.). He further submits that in their case, they have used their registered name of M/s.Elac Marketing Pvt. Ltd. on the goods and use of the word "Elac Excel" is part of the company's name Elac itself. The water heaters manufactured by them are (ABS) plastic bodies whereas the goods manufactured and cleared by K.N. Industries are made of metal body and hence both the product category are distinct and different. He also submits that the word used "Elac Excel", "Elac varmxpress", "Elac Excel Fiesta" and 'Elac Varm Slim' are names of different models of "Elac Excel" itself and not the brand name. He drew our attention to Registration Manual of Bureau of Indian Standards (BIS) and Bureau of Energy Efficiency (BEE) at pages 52 to 55.
5. Regarding allegation of common advertisement expenses, he submits that there is no common expenditure incurred for advertisement of their product with products of M/s.K.N. Industries. He submits that the accounts are maintained separately and the records are filed separately for advertising their products which is annexed at pages 73 and page 97. He relied the following citations :-
(1) CCE Bangalore VsBrindavan Beverages (P) Ltd.
2001 (137) ELT 1382 (Tri.-Bang.) (2) CCE Bangalore VsFeatherlite Seating Systems Pvt. Ltd.
2010-TIOL-252-CESTAT-BANG.
(3) A.J. Bantex (P) Ltd. Vs CCE Bangalore 2008 (229) ELT 582 (Tri.-Bang.) (4) CCE Meerut Vs Varco Sara India (P) Ltd.
2004 (171) ELT 79 (Tri.-Del.) (5) CCE Chandigarh Vs Speedway Rubber Factory 2003 (154) ELT 207 (Tri.-Del.) (6) AGI Switches (P) Ltd. Vs CCE New Delhi 1999 (111) ELT 440 (Tribunal) (7) Commissioner Vs AGI Switches Pvt. Ltd.
2005 (183) ELT A196 (SC) (8) J. Prasad Polymers Vs CCE Meerut 2003 (155) ELT 486 (Tri.-Del.) Therefore he pleaded that they are eligible for SSI exemption benefit on their own brand "Elac Excel" and pleaded to set aside the impugned order and also submits that Shri K.S. Ganesh, Director, is not liable for any penalty.
6. On the other hand, Ld. A.R for the Revenue reiterated the SCN and the findings of the adjudication order. He submits that appellants have moved into the premises of K.N.Industries in 2003. He submits that SSI Notification 8/2003 para-4 read with Explanation to the notification which is clearly applicable to this case as the name of "Elac" is owned and registered by K.N Industries and the appellants have used the brand name of "Elac" belonging to another person.
6.1 On limitation, he submits that demand is not hit by limitation as summons were given to both Elac Marketing Pvt. Ltd. and K.N. Industries and there is no evidence of recording of any statement or verification of records and returning of records as contended by the counsel. Therefore, the transaction came to light only from the date of visit of officers to the premises of appellant on 2.11.2012 which is correctly recorded in the order. He further submits that the goods were manufactured and cleared and sold only in the name of 'Elac' water heaters. He produced copy of product literature, stickers and labels which bear the name of Elac of both the companys where the brand Elac is common. He relied the statement of Shri K.S. Ganesh at page 135 Question No.8 and where he stated that Elac is a registered brand and they have only applied for registration for Elac Excel later on. Even their packing cartons bears the name and style of Elac. Therefore Elac Excel is only a model name of Elac and not a separate name. He also submitted that advertisement were made only in the name of Elac Water Heaters. He submits in common trade parlance it is sold and bought as in the name of Elac only. He relied on following case laws. :-
(1) CCE Chandigarh Vs Bhalla Enterprises 2004 (173) ELT 225 (SC) (2) CCE Visakhapatnam Vs Mehta & Co.
2011 (264) ELT 481 (SC) (3) CCE Trichy Vs Rukmani Pakkwell Traders 2004 (165) ELT 481 (SC) (4) CCE Chandigarh Vs Mahaan Dairies 2004 (166) ELT 23 (SC) (5) Priya Bakers (P) Ltd.
2012 (282) ELT 190 (Chhattisgarh) (6) CCE Trichy Vs Grasim Industries Ltd.
2005 (183) ELT 123 (SC)
(7) CCE Madras Vs Rathna Industrials
2006 (198) ELT 101 (Tri-Chennai)
(8) CCE Bhopal Vs Quantum Instruments & Electronics
2014 (302) ELT 113 (Tri.-Del.)
7. We have carefully considered the submissions and examined the records. The short issue in this case relates to whether appellant assessee had rightly availed the benefit of SSI Notification No.8/2003 and whether they have used the brand name of other person and whether the demand is hit by limitation and, consequently, penalty is imposable or not. There is no dispute on the fact that appellant is a private limited company functioning in the name and style of "Elac Marketing Private Limited" as evident from certificate of Incorporation No.18-45257 of 2000 dt. 26.6.2000 issued by the Registrar of Companies, Tamil Nadu. On perusal of OIO, SCN as per para -5 of the SCN, it was only alleged that appellants are using in the name of Elac Excel which was similar and akin to the registered brand name of Elac of M/s.K.N. Industries. This confirms that appellant were not using the brand name of other person i.e. Elac but it is only similar or akin to the brand name but not the same. Further, it was not disputed by the Revenue that the product manufactured by the appellant is automatic storage water heaters which is made up of ABS (Plastic) body and the appellants are importing the parts and manufacturing the finished goods in the said premises and clearing in their name Elac Excel whereas the goods manufactured by K.N. Industries for water heaters on metal body (powder coated stainless steel) and cleared under the registered brand name of Elac. Therefore it is evident that the products cleared by appellant's brand name is Elac Excel which is made of ABS body (plastic body) and the product manufactured and sold by K.N. Industries is water heaters Stainless Steel body under their brand name of Elac and both the goods are not one and the same. On perusal of the catalogues product literature, we find that appellants have used only the name Elac Excel.
8. We also find that appellants have filed application dated 16.8.12 and 21.8.12 before the Trade Mark Authority, Chennai under the Trade Marks Act for registering their brand name and the copy is reproduced as under :-
FORMTM 1 Attorney Code: 5926 THE TRADE MARKS ACT 1999.
Application for registration of a Trademark for goods and services (other than a collective mark or a certification trade mark) in the Register.
Section 18(1} Rule 2S(2} Application is hereby made for registration in the register of the accompanying Trademark in class 11, in respect of Apparatus for heating, steam generating, cooking, drying ventilating, in the name of Elac Marketing (P) Limited, at 328A, Arcot Road, Chennai 600 024, Tamil Nadu State, Indian National, who claims to be the proprietor thereof and by whom the trademark is used since 29.10.2009 in respect of the above said goods.
It is evident from the above that they have applied for registration of their brand Elac Excel and the said Brand name is being issued since 29.10.2009.
9. In this regard, we rely the Honble Madras High Court Judgement in the case of UOI Vs Pillayar Soda Factory where the Honble High Court discussed the distinction between the words similar and same. The relevant para-13 is reproduced as under :-
13. A bare reading of the explanation unmistakably shows that the expression common trade mark aerated waters implies aerated waters which are sold under the same trade mark or under the same brand name in more than one factory, whether belonging to one or more manufacturers. Thus, the sale must be with the same trade mark or brand name in order to attract the categorisation of common trade mark aerated waters, for the purpose of the notification. Can the use of a similar or deceptively similar or deceptively identical trade mark used by a manufacturer be said to be the manufacture and sale with the same trade mark or brand name ? Notification No. 148/82-CE has used the expression that common trade mark aerated waters would mean aerated waters which are manufactured with the same trade mark or brand name in more than one factory. The notification does not use the word similar or identical but same. The intention of the authorities in issuing the notification is, therefore, quite clear and unambiguous. The concept of similar or deceptively similar, or more or less identical, is a concept borrowed from the Trade and Merchandise Act or the Copyright Act, which is not of exactitude but of latitude. That concept has relevance to an action in passing off etc. It is aimed for the protection of innocent or unwary customers. In our opinion, it would not be proper to import that concept while interpreting a notification issued under the Central Excise Rules, as it would have the effect of enlarging or restricting the scope of the notification. Fiscal laws, it is trite, must be strictly construed. The notification issued under the fiscal laws have equally to be strictly construed. The words used in the notification must be understood according to their plain phraseology. Nothing should be presumed. Nothing should be implied. The true test must always be the language used. The authorities used the expression same" in the Explanation to explain as to when manufacture can be said to be under a common trade mark. The authorities did not use the word either similar or identical. The word same has an absolutely different meaning than the word similar or identical. For example, if it were said that A and B live in the same house, it would imply that they were living in one house, while if it were said that A and B live in similar" houses or in identical houses, obviously, the implication would be that A and B live separately. Therefore, the word same cannot be construed to be synonymous with similar or identical, or even deceptively similar and deceptively identical. Since the language used in the notification is clear, it is not permissible to interpret the meaning of the word occurring therein by taking recourse to modes other than the plain language. The expression same has to be understood in the context of the intention of the authorities issuing the notification. The authorities intended to deny the benefit of individual exemptions only where one or more manufacturers sell the product under the same trade mark or brand name. It is a fundamental rule for the construction of statutes, that where the language is plain and clear, the words must be held to have been used, according to the plain and ordinary meaning of the term to determine their connotation or meaning. Therefore, using the well settled rule of interpretation, the conclusion is irresistible that the Collector fell in error in construing same as similar or even deceptively similar to deny the benefit of individual exemption to the writ petitioners under the notification.
The ratio of the above judgement is squarely applicable to the present case wherein the Hon'ble High Court has clearly held that concept of similar etc. cannot be used to interpret the meaning of the word occurring in the notification by taking recourse to modes other than plain language. We find that para-4 of the notification stipulates that notification shall not apply to the goods bearing a brand name or trade name of another person. In the present case, appellants have not used the brand name of Elac of another person but cleared under their own brand name Elac Excel.
10. Further, it is pertinent to state that as already dealt the issue in the preceding paragraphs, the Appellants name of the company itself is M/s.Elac Marketing Pvt.Ltd. The company name itself has the word Elac which is part of the companys name and the appellants cleared the goods indicating their company name Elac" followed with Excel. Therefore, it cannot be construed that they have affixed brand name of other person. In this regard, we rely the Honble Supreme Court's decision in the case of Commissioner of Central Excise Chandigarh Vs Mahaan Dairies (supra). The relevant paragraphs are reproduced as under :-
4. All the authorities below have held that when the Respondents sell pickle in pouches using only the name of their own company they would not be disentitled from claiming the benefit of the Notification. We see no reason to take a different view on this aspect.
5. However the respondents also sell pickle with the name Mahaan written in exactly the same style as a registered trade mark of other Company. The question would be whether by adding the words Taste Maker the Respondents could get the benefit of the Notification.
The Honble Supreme Court in the above judgement has clearly held that when the appellant is using the name of their company should not disentitle them from claiming the benefit which was accepted by the adjudicating authority. Whereas in the present case, the appellants have clearly used their own company name i.e. Elac representing Elac Marketing Pvt. Ltd. Further in the case of AGI Switches (P) Ltd.Vs CCE New Delhi (supra) the Tribunal clearly held that the brand "AGI switches" and "AGI LT Control Switches" are two different and distinct names and also held that it cannot be compared with use of other's brand name. The above Tribunals judgment was upheld by the Honble Supreme Court as reported in CCE Vs AGI Switches Pvt. Ltd.(supra) where the Honble apex court by relying their own judgment in the case of CCE Vs Bhella Enterprises 2004 (173) ELT 225, held thatthere is no reason to interfere with the reason of Tribunal. We also find that Tribunal in the case of A.J. Bantex (P) Ltd. Vs CCE Bangalore (supra) on an identical issue, allowed SSI benefit. In A.J. Bantex case the Tribunal clearly held that the company registered under the Companys Act has every right to use the companys name on its product. The Tribunal in the above case relied Tribunal's decision in CCE Vs Varco Sara India (P) Ltd. (supra). The Tribunal also referred to apex Court's decision Commissioner Vs Rukmani Pakkwell Traders (supra) in A.J. Bantex case. The ratio of the above decisions is squarely applicable to the present case as there is no dispute on the fact that appellant is a private limited company registered under the Companies Act. Therefore, they have rightly used their name of company in their own brand name Elac Excel. Revenues contention pertaining to another brand name is not justified as it is not a case that appellant manufactured the goods on behalf of other person by using their brand name. As both the companies are independent and brand name of Elac registered name of K.N.Industries is distinctly different and the Appellants brand name Elac Excel. As already discussed above, the SCN and in the impugned order itself have clearly brought out that appellant have not used the same brand name of K.N.Industries but it is similar/akin to the brand name of Elac. Revenue relying on the decision of Bhalla Enterprises (supra) and Rukmani Pakkwell Traders (supra), Mahaan Dairies (supra) in fact supports the appellants case as already discussed in the above paragraphs wherein they have not used the brand name of other person. By respectfully following the apex court and Tribunals decisions (supra) we hold that the brand name of Elac Excel used by the appellant on Automatic Storage Water Heaters is not a brand name / trade name of any other person and not hit by para (4) of SSI Notification and they are eligible for the SSI exemption limit of Rs.1.5 crores under the said notification.
11. In view of the foregoing discussions we hold that the demand confirmed by the adjudicating authority is liable to be set aside. Consequently, penalty imposed is also set aside. Since demand is set aside on merits, we do not go into the issue of limitation.The penalty imposed on the co-appellant Shri K.S. Ganesh, Director of appellant-company is set aside.
In this result, the impugned order is set aside and both the appeals are allowed.
(Dictated and pronounced in open court)
(P.K. CHOUDHARY) (R. PERIASAMI)
JUDICIAL MEMBER TECHNICAL MEMBER
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