JUDGMENT
A.D. Desai, J.
1. The petitioner is a partnership firm doing business of manufacturing and selling readymade garments like shirts, bush shirts, frocks, trousers, short pants and such other varieties of garments, for home consumption. The firm used to sell its products under the brand name “MEBRO” registered under the provisions of the Trade and Merchandise Marks Act, 1958. The firm got the said registration mark on January 9, 1968. The Central Government amended the Central Excises and Salt Act, 1944 by an amendment introduced in Finance Act, No. 2 of 1971. In Chapter VI of the said Act, Section 40 provided for an insertion of Item 22D in First Schedule to the said Act of 1944, which is as under :-
“22D. Articles of ready-to-wear apparel (known commercially as readymade garments) including under garments and body-supporting garments but excluding articles of Hosiery, in or in relation to the manufacture of which any process is ordinarily carried on with the aid of power.”
2. A 10 per cent excise duty was leviable under this provision and the said provision came into force on May 29, 1971. The Government of India issued a Notification No. 94 of 1971, dated May 29,1971 granting exemption of excise duty on ready to wear apparel-readymade garments. It exempted all the readymade garments except those sold under a brand name that is a name or other trade marks registered under the Trade and Merchandise Marks Act, 1958. The petitioner filled in the form of licence in form A.L. 4 under the Central Excise Rules, 1944 and also filed form for clearance of goods and submitted them to the Superintendent of Central Excise at Navsari. There was some correspondence between the petitioner and the Superintendent of Central Excise Navsari and ultimately the petitioner filed in an application for licence as required by the said officer. The petitioner was insisting upon for the clearance of the goods and ultimately the Superintendent, Central Excise & Customs at Navsari gave an interview to the petitioner on July 1, 1971. It appears from the affidavit of respondent No. 1 that the said respondent passed an order on July 3, 1971 in respect of the point raised by the petitioner at the time when he was heard and the decision of the officer was that so long as the petitioner sold their articles falling under Items 1 to 3 of schedule mentioned in Notification No. 95 of 1971 dated May 29, 1971, the petitioner was liable to pay this excise duty irrespective of the fact whether these articles bore labels “MEBRO” or not since the petitioner had got the said trade mark “MEBRO” under the Trade and Merchandise Marks Act, 1958. The petitioner has averred in this petition that the firm of the petitioner did not wish to manufacture or sale the goods under the brand name, excepting 12 or 13 dozens of readymade gaments in a year (only to keep the registration alive) and on these goods the petitioner was ready and willing to pay duty. The petitioner averred that goods manufactured and marketed without brand name were not liable to duty in view of the exemption declared by the Notification No. 94 of 1971, dated May 29, 1971 which is at Annexure “A” to the petition. The petitioner stated that he was prepared to co-operate with the department to supply all the details and forms as is required under the law so that dutiable goods may be ascertained. The insistence of the authority that the petitioner was not entitled to any exemption unless and until the trade mark of the petitioner was cancelled is according to the petitioner not in accordance with the provisions of law. The petitioner, therefore, prayed for two reliefs; one for issuing licence to the petitioner in response to his application under Rule 176 of the Central Excise Rules, 1944, and the other to exempt and clear the goods of the petitioner firm manufactured without any brand or trade name without payment of duty.
3. Respondent No. 1 to the petitioner filed an affidavit contending that he had passed order No. V(22D)19-1/71(M), dated July 3, 1971, Annexure “A”. Under the said order it has been decided that so long as the petitioners sell their articles under Item Nos. 1 to 3 to the schedule to the Notification No. 95/71, dated May 29, 1971, they are liable to pay duty irrespective whether these articles bear their label “MEBRO” or not since the petitioner had got trade mark “MEBRO”. In the affidavit it is further stated by respondent No. 1 that the petitioner is liable to pay duty on the goods since the petitioner had got the said trade mark “MEBRO” registered for his products under the Trade and Merchandise Marks Act, 1958. In short the contention of respondent No. 1 is that so long as the petitioner has not got trade mark de-registered, goods manufactured by the petitioner are liable to duty. On November 13, 1973 another affidavit is filed by respondent No. 1 raising the contention that for the purpose of exemption it is not enough if the goods are sold under the brand name and marketing them with a brand is only one of the ways of selling them. For selling them under a brand name it is enough that at the time of sale it is made known to buyer that the goods are of the same quality as those bearing the brand and have a connection with them in the course of trade. In the present case “sold under a brand name” means sold by a manufacturer having a registered brand name.
4. The question which arises is one of interpretation of Entry 22D and the notification Annexture “A”. The material part of the notification Annexure “A” is as follows :-
“In exercise of the powers conferred by sub-rule (1) of Rule 8 of the Central Excise Rules, 1944, the Central Government hereby exempts articles of ready-to-wear apparel falling under Item No. 22D of the First Schedule to the Central Excises & Salt Act, 1944 (1 of 1944), from the whole of the duty of excise leviable thereon :
Provided that no such exemption shall extend to any article of ready-to-wear apparel which is sold under a brand name, that is to say, a name or other trade mark registered under the Trade and Merchandise Marks Act, 1958 (43 of 1958)”.
5. Now the duty was levied under Item 22D, the notification Annexure “A” articles of ready-to-wear apparel falling under Item 22D were exempted but there is a proviso attached to it. Under the proviso the exemption granted by the main part of the notification is not extended to any article of ready-to-wear apparel which is sold under the brand name. Now there is no dispute that duty is on the manufacture of the goods. Under the main part of the notification articles of ready-to-wear apparel falling under Item 22D of the First Schedule were exempted from payment of duty. Under the proviso articles of ready-to-wear apparel which are sold under the brand name have to pay the duty. Reading the notification as a whole it means that the article of ready-to-wear apparel falling under Item 22D of the First Schedule were exempted from payment of duty but the articles which are sold under the brand name that is, to say name or other trade mark registered under the Trade and Merchandise Marks Act, 1958 were subjected to payment of duty. The effect of this notification is that the articles, i.e. ready-to-wear apparel, which bear no brand or trade name are not subject to payment of duty. The articles mentioned in Item 22D which do not bear the brand or trade name are exempted from the duty. What the petitioner claims is that the goods manufactured and marketed without brand name are not liable to duty under the exemption declared by the notification and this contention of the petitioner is justified in view of the provisions of the said notification. Mr. Vidyarthi contended that the phrase used in the proviso “sold under the brand name” means sold by a manufacturer having a registered brand name. Now the said phrase refers to the articles and that being so the same has to be construed as meaning any article of ready-to-wear apparel which is sold under a brand name. It has no reference to the manufacturer. The contention which has been taken in the affidavit of respondent No. 1 and which is pressed at the hearing by Mr. Vidyarthi is that as long as the petitioner possesses the registered trade mark and so long he does not get it de-registered, the goods manufactured by the petitioner without any brand and marketed them are liable to duty. It is difficult to accept this contention. As aforesaid the goods manufactured and marketed without brand name are not liable to duty because of the exemption declared by the notification.
6. At the time of admission of this Special Civil Application an application for injunction was filed by the petitioner praying that the respondents should be restrained by a suitable order of injunction from preventing clearance of the goods of the petitioner on the petitioner making a deposit of a suitable amount towards the claim of excise duty and the Court passed the following order :
“No order on Mr. J. R. Nanavati on behalf of the Respondent agreeing that the clearance of the readymade garments not bearing the mark MEBRO would be allowed on the petitioner depositing with the Excise authorities the payment of duty claimed and such amount should be refunded to the petitioner in case the petitioner succeeds in the petition and such refund shall be made within 4 weeks from the date when the petition is decided by this Court”.
7. In view of what we have said herein before, the petitioner is entitled to clear the goods manufactured and which are not marked under a brand name that is a name or other trade mark registered under the Trade and Merchandise Marks Act, 1958. We may make it clear that the stand taken by the respondents that so long as the article falling under Item Nos. 1, 2 and 3, notification Annexure “A” are sold irrespective of the facts whether they are affixed with label “MEBRO” or are not, are liable to pay duty since the petitioner has not got trade mark de-registered cannot be accepted. It is not necessary for the petitioner that he should get the trade mark de-registered in order to claim exemption in respect of the goods which it manufactures and which it markets not under a brand name. Mr. Daru stated that he has obtained licence and, therefore, he is not pressing that relief claimed in the petition.
8. For the aforesaid reasons rule issued on the petition is made absolute. Respondent No. 2 to pay the costs of the petition to the petitioner.