ORDER
1. In these two writ petitions, the common prayer is for the issue of a writ of mandamus directing the respondents 1 to 3 to permit the petitioners’ Members to avail the benefit of Notification No. 175/86-C.E., dated 1-3-1986 and to clear their goods without payment of duty under the said Notification.
2. Inasmuch as no reply affidavit has been filed to the counter-affidavit filed on behalf of the respondents 1 to 3, I take it that the statements made in the counter-affidavit of respondents 1 to 3 are not disputed by the petitioners. This preface is necessary as the decision on the question depends on the facts of the cases. Now, the facts as given in the counter-affidavit of respondents 1 to 3 are :
“… M/s. BHEL Ranipet, have been manufacturing various Boiler Components falling under Chapter No. 8404. M/s. BHEL are getting certain components manufactured by the ancillary units which are situated very close to the factory. Hitherto, they have been supplying the raw material to the ancillary units and the ancillary units are turning the raw material into finished goods according to the specifications given by M/s. BHEL and the finished goods are returned to principal manufacturers viz. BHEL. M/s. BHEL have been following the above procedure under Rule 57F(2) and Notification No. 214/86-C.E., dated 2-4-1986 for movement of such goods between M/s. BHEL and its ancillary units. M/s. BHEL were paying duty when such finished products were cleared out of the factory. This practice was followed by BHEL till the end of July, 1989.
All of a sudden in the month of August, 1989 M/s. BHEL have changed their procedure that was being followed by them till the end of July, 1989. For the contract entered with ACC, Wadi M/s. BHEL have supplied the raw materials to ancillary units for manufacture of Electric static precipitator components and other fabrication work and gave directions to ancillary units to despatch the finished goods directly to ACC, Wadi. M/s. BHEL have agreed to pay the conversion charges which includes the transporting charges also. In other words, the charges for transport of the finished goods to Wadi by ancillary units are met by M/s. BHEL. In the instant case, ancillary units approached for clearing the goods under Notification No. 175/86-C.E., dated 1-3-1986, claiming exemption for the goods to be despatched to ACC, Wadi. It may not be out of place to mention here that raw materials as well as the finished goods manufactured by ancillary units belong to M/s. BHEL. The ancillary units are in no way connected with finished goods nor having any connection with ACC, Wadi. The contract for supply of the required goods is between M/s. BHEL and ACC, Wadi.
As per the contract entred into between BHEL and ancillary units, any balance raw material have to be returned to M/s. BHEL. Before despatch of finished goods to ACC-Wadi, ancillary units are required to stencil legibly on the fabricated components with project name, work order No., firm’s code No., weight etc., as may be prescribed by the BHEL inspector in terms of para 5 of the contract entered between BHEL and Ancillary Units. As the raw materials and the finished products belong to M/s. BHEL, the ancillary units were instructed to follow the procedure and clear finished products on payment of duty as per the provisions of para 7 and read with Explanation Clause VIII, of the Notification No. 175/86-C.E., dated 1-3-1986 as amended since the inscription on the finished products will attract the provisions of para 7 of the Notification, referred to above. A careful reading of Explanation VIII will reveal that any writing which is used in relation to specified goods for the purpose of indicating or so as to indicate a connection in the course of trade between such specified goods and some persons using such name or mark with or without any indication of the identity of the person will attract the provisions of para 7 of the Notification and the exemption contained therein are not available to such goods. Further, the components/fabricated items cleared from ancillary units are assembled at project site viz., ACC-Wadi by the engineers deployed by M/s. BHEL. After assembly of such components at erection site invariably name plates to the effect “farbicated and erected by M/s. BHEL” are put up by M/s. BHEL.”
3. In the context of the above backdrop of facts, the question raised before this Court regarding the applicability of Exemption Notification No. 175/86-C.E., dated 1-3-1986 to the petitioners has to be considered.
4. Before considering the question, it is necessary to set out the relevant portion of the Notification for proper appreciation. The relevant portion reads as follows :
“The exemption contained in this notification shall not apply to the specified goods where a manufacturer affixes the specified goods with a brand name or trade name (registered or not) of another person who is not eligible for the grant of exemption under the Notification :
Provided that nothing contained in this paragraph shall be applicable to the specified goods which are component parts of any machinery or equipment or appliances and cleared from a factory for use as original equipment in the manufacture of the said machinery or equipment or appliances and the procedure set out in Chapter X of the said Rules is followed :
Provided further that nothing contained in this paragraph shall be applicable to the specified goods where a manufacturer affixes the specified goods with a brand name or trade name (Registered or not) of the Khadi and Village Industries Commission of the State Khadi and Village Industries Board.
(Explanation I to VII are omitted)
Explanation VIII. – “Brand name” or “Trade name” shall mean a brand name or trade name, whether registered or not, that is to say a name or a mark, such as symbol, monogram, label, signature or invented word or writing which is used in relation to such specified goods for the purpose of indicating, or so as to indicate a connection in the course of trade between such specified goods and some person using such name or mark with or without any indication of the identity of that person. (Explanation IX omitted)….”
5. The contention of Mr. Sriram Panchu, learned counsel appearing for the petitioners is that as per the judgments of this Court and of the Supreme Court in P.M. Abdul Latif v. Assistant Collector of Central Excise, Tiruchirapalli reported in 1985 (22) ELT 758 (Madras) and Ujagar Prints v. Union of India and Ors. reported in (1989) 74 STC 401 to the members of the petitioners’ Associations must be deemed to be manufacturers on their account even though they are doing job works for BHEL. If that be so, the exemption under the Notification above-mentioned cannot be denied to the members of the petitioners’ association. Learned counsel also cited a decision of the Supreme Court in Sumat Prasad Jain v. Sheojanan Prasad reported in A.I.R. 1973 S.C. 2488 : 1972 Crl. L.J. 1707, to understand the expression “trade mark”.
6. Mr. C. Natarajan, learned counsel appearing for the 4th respondent supported the arguments of the learned counsel for the petitioners.
7. Mr. Somasundaram, learned Additional Central Government Standing Counsel, placing heavy reliance on Explanation VIII to the said Notification contended that in the light of the facts narrated above, the members of the petitioners’ Associations are not entitled to the Exemption. He also submitted that the decision of the Supreme Court explaining the ‘trade mark’ will not apply to the facts of this case as the Notification itself explains what is meant by “brand name” and “trade name”. He also submitted that assuming that the members of the petitioners’ Associations are manufacturers and not doing job works, Explanation VIII disentitles them from claiming the Exemption.
8. I have considered the rival submissions. It is no doubt true that as per the decisions reported in 1985 (22) ELT 758 and (1989) 74 STC 401, for the purpose of Central Excise Act the members of the petitioners’ Associations must be treated as manufacturers, and not as persons doing job works for BHEL. But, in the light of the facts given by the respondents 1 to 3 in the counter-affidavit, Explanation VIII to the Notification stands in the way of the members of the petitioners’ Associations getting the benefit of the exemption. We have noticed above that the members of the petitioners’ Associations are obliged to stencil on the components the particulars such as quantity, weight, work order number, product number, ancillary unit firm Code Number as given by BHEL. From the above particulars, the persons at the receiving end of the components namely, ACC-Wadi will definitely know that the components are sent to them in terms of the contract entered into between BHEL and ACC-Wadi. The details stencilled as stated above by the members of the petitioners’ associations on the components will amount to use of brand name or trade name within the meaning of Explanation VIII to Clause 7 of the Notification extracted above. It is relevant to note here that till the end of July 1989, the 4th respondent was paying the excise duty on the components manufactured by the members of the petitioners’ Associations. Only from the beginning of August, 1989, the 4th respondent has changed the mode of getting the components. The effect of totality of all the facts noted above, in my view is that the members of the petitioners’ Associations are not entitled to claim exemption under Notification 175/86-C.E., dated 1-3-1986. I accept the contention advanced by the learned Additional Central Government Standing Counsel.
9. In the result, the writ petitions fail and they are dismissed. However, there will be no order as to costs.
