V.K. Agrawal, Member (T)
1. In these two appeals arising out of common Order No. 60/91 dated 29-6-1991, passed by the Additional Collector, Central Excise, the issue involved is whether the benefit of Notification No. 175/86-C.E., dated 1-3-1986 is available to the Excisable goods manufactured by M/s. S.A. Industries, Appellant No. 1.
2. Shri C. Harishankar, ld. Advocate, submitted that M/s. S.A. Industries manufacture moulded articles of plastics like Textiles Bobbins, T.V. and Radio Parts, Trays and Containers etc; that they are Supplying Colour T.V. Back Covers and embossed with marking “CROMA COLOUR CC” to M/s. TV and Components Ltd., Appellant No. 2, who were using the same in manufacturing their TV Sets; that Textile Bobbins bearing brand name ‘Garden’ was supplied by them to M/s. Garden Silk Mills through M/s. Honest Sales Agency; that they also supply textile Bobbins with brand name ‘Honest’ mentioned thereon to M/s. Honest Sales Agency; that the Additional Collector confirmed the demand of Central Excise duty holding that the Appellants No. 1, were affixing the excisable goods with brand name ‘Garden’, and CROMA COLOUR CC and as such were ineligible for the benefit of the Small Scale exemption under Notification No. 175/86. The ld. Advocate submitted that CROMA Colour CC is not the brand name; that the brand name is ‘Crown’ and the words ‘CROMA COLOUR CC are embossed to indicate Colour T.V. made by Appellant No. 2 which can be considered as Model No.; that even if it is considered to be a brand name, the mischief of paragraph 7 of Notification 175/86 will not be attracted as T.V. back covers are not sold by the Appellant No. 2 as these are used by them in the manufacture of T.V. Sets; that similarly a textile Bobbins with the brand name ‘Garden’ are not sold by the brand name owner, Garden Silk Mills in the course of trade but these are used for winding of yarn thereon. He further, submitted that the issue involved in the present matters has been settled by the Larger Bench of the Appellate Tribunal in the case of Prakash Industries v. CCE, Bhubneswar, 2000 (38) RLT 953 wherein it was held that if the branded’ goods are only supplied to the Customers and not traded in the market, the use of the brand name is not in the “course of trade” and it would not amount to using brand name so as to deny the benefit of Notification 175/86. The ld. Advocate also mentioned that the decision in the case of CCE v. Wood‘s Glamour, 1991 (54) E.L.T. 153 (T) was not correct. In respect of embossed words Honest on Bobbins, the ld. Advocate submitted that the Additional Commissioner has not given any findings on this allegation in the Adjudication Order passed by him.
3. Finally he submitted that major part of the demand is hit by the time limit as specified in Section 11A of the Central Excise Act as the showcause notice was issued on 30-11-1990 for demanding the duty for the period from 1-10-1987 to 12-6-1990. He mentioned that while considering the imposition of penalty, the Additional Collector herself gave the findings that “the Notification 175/86 is not crystal clear on what has to be excluded from exemption”. He contended that once the Additional Collector gives the findings that the Notification was not Crystal clear the allegation of suppression of facts cannot be levelled against them in view of the decision of the Supreme Court in the case of Padmini Products v. CCE, 1989 (43) E.L.T. 195 (S.C); wherein it was held that mere failure or negligence on the part of the manufacture in not taking out the licence in case where there was the scope for doubt as to whether licence was required to be taken out or where there was scope for doubt whether goods were dutiable would not attract Section HA of the Act.
4. Countering the arguments Shri M.P. Singh, ld. DR, submitted that the decision in the case of Prakash Industries is not applicable to the facts of the present matters for the reasons that the issue involved in Prakash Industries was whether the benefit of Notification No. 175/86 was applicable to the HDPE bags on which the brand name of the buyer of the bags was printed; that the Tribunal was considering the packaging material in Prakash Industries case whereas in the present matters, the goods involved are not packaging material but parts of TV Sets, which are used in manufacturing of T.V. Sets which are sold in the course of trade. The ld. DR also mentioned that proviso two to paragraph 7 of Notification No. 175/86 provided that nothing contained in paragraph 7 shall be applicable to the specified goods which are component parts of any machinery and equipments and cleared from a factory for use as original equipments in the manufacturing of said machinery or equipments and the procedure set out in Chapter X is followed. He contended that it is clear from this proviso that it was not necessary for the components parts of any machinery or equipments to be traded in ordinary crouse of business for attracting the mischief of paragraph 7; that as the goods were used as original equipment the decision in the case of Prakash Industries is not applicable. He further submitted that the decision in the case of Wood’s Glamour case (supra) has not been specifically overruled by the Larger Bench in Prakash Industries case, since, the Larger Bench has observed only that “it appears that the law stated by the Tribunal in the Konark TV case is not correct”; that in Wood’s Glamour case, the Tribunal has clearly held that the benefit of Notification No. 175/86 was not available to the T.V. Cabinets affixed with Brand name Konark of another manufacture. Finally he submitted that the extended period of limitation is invocable in view of the fact that the Appellate No. 1 had never disclosed the branded nature of the goods to the Department; that taking a lenient view for the purpose of imposing penalty does not mean that the fact of affixing the brand name was not suppressed by the Appellant No, 1. He relied upon the decision in the case of Sonoma Aromatics Pvt. Ltd v. CCE, Bangalore, 1995 (78) E.L.T. 285 wherein it was held that the extended period of limitation is invocable as the assessee had clearly suppressed the facts and had not informed the Department of the use of the brand name of their principal’s foreign company; that the appeal filed by the assessee has been dismissed by the Supreme Court as reported in 1997 (93) E.L.T. A70.
5. We have considered the submissions of both the sides. According to paragraph 7 of Notification No. 175/86, the benefit of Notification shall not apply to the specified goods affixed with a brand name of another person who is not eligible for the grant of exemption under the notification. Explanation VIII defines brand name or trade name. According to this Explanation, brand name means the brand name that is to say name or a mark, such as symbol monogram, label, signature or invented word or 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 the specified goods and some person using such name or mark. It is thus evident that a connection in the course of trade between the goods and the trade mark must be there for attracting the mischief contained in para 7; that the sale of goods to the owner of the brand name itself for his own use cannot be equated with the dealings in the course of trade. The Larger Bench of the Tribunal has held similar views in the case of Prakash Industries (Supra). The ratio of the decision in the case is that if the branded goods are only supplied to the Customers and not traded in the market, the use of the brand name is not in the course of trade. The goods involved is immaterial so long the goods affixed with the brand name are supplied to the owner of the brand name who does not trade them in the market. It is relevant to mention here that the Larger Bench has also relied upon the decision in the case of CCE, Bombay v. Bright Engineers Company, 1998 (28) RLT 530. In this case the Respondents manufactured MS Boxes and Covers for Chocks and affixed the brand name of Bajaj and Crompton. The Tribunal allowed the benefit of Notification 175/86. The Central Board of Excise and Customs has also clarified, under letter F. No. 345/35/87- TRU, dated 29-10-1987, that names/logos of the brand name owner printed on metal labels, crown corks, PP Caps and Collapsible Tubes are not brand name by themselves. We also observe that the Board, under Circular No. 71 /71 /94-CX dated 27-10-1994, clarified that the castings manufactured by SSI Units may be affixed with the brand name of the Customers and as these castings are not traded as such in the open market and they are made for use by specified users the benefit of SSI exemption should not be denied. The Board, further, mentioned that “when such castings are not traded but only sold to a particular manufacturer for his own use, the embossing of brand name of the Customers on the castings would not amount to using brand name so as to deny the benefit of the Notification”. We, therefore, find no substance in the submissions of the ld. DR that the decisions in the case of Prakash Industries is not applicable to the present matters. In view of these we allow both the appeals on merits and set aside the impugned Order without going into the question of demand being time barred.