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Commissioner Of Central Excise, Trichy v. Grasim Industries Ltd. .
Factual and Procedural Background
The appeals were filed by the Revenue against a Customs, Excise and Gold (Control) Appellate Tribunal (CEGAT) order dated 14-10-1999 that had extended the benefit of Central Excise Notification No. 5/98-CE dated 2-6-1998 to Dharani Cements Ltd., a subsidiary of Grasim Industries Ltd. The dispute arose because the cement bags bore the legend “Manufactured by Dharani Cements Ltd., a subsidiary of Grasim Industries Ltd.”
The Commissioner of Central Excise, by order dated 19-5-1999, denied the exemption, demanded differential duty of Rs 47,74,961 and imposed a penalty of Rs 10,00,000 under Rule 173-Q of the Central Excise Rules, 1944. On appeal, CEGAT reversed the Commissioner, relying on earlier tribunal decisions and the Supreme Court judgment in Astra Pharmaceuticals (P) Ltd. v. CCE. The Revenue challenged that reversal before the Supreme Court, leading to the present judgment.
Legal Issues Presented
- Whether the presence of the words “a subsidiary of Grasim Industries Ltd.” on the cement bags amounts to the use of a “brand name or trade name of another person” within the meaning of Condition 2(iii)(b) of Notification No. 5/98-CE, thereby disqualifying the assessee from the concessional rate of duty.
- Whether the Revenue is estopped from filing the present appeal because it did not challenge similar tribunal decisions in other cases.
Arguments of the Parties
Appellants (Revenue)
- Grasim Industries Ltd. is a well-known cement manufacturer; displaying its name indicates a trade connection and therefore constitutes use of another person’s brand name or trade name.
- The tribunal decisions relied upon by the respondents mis-applied the Supreme Court ruling in Astra Pharmaceuticals and are erroneous.
Respondents (Dharani Cements Ltd.)
- The expression “Grasim Industries Ltd.” is merely the name of the holding company and not a “brand name” or “trade name.”
- Tribunal decisions following Astra Pharmaceuticals have consistently held that mere use of a company’s name does not destroy the exemption; the Revenue did not appeal those rulings and therefore should not discriminate by appealing in this instance (relying on Berger Paints India Ltd. v. CIT).
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| Astra Pharmaceuticals (P) Ltd. v. CCE, (1995) 2 SCC 84 / 75 ELT 214 | Definition of “patent or proprietary medicines” under Tariff Item 14-E. | Held inapplicable; tribunal had misconstrued it. The case concerned “patent or proprietary medicines,” not “brand name or trade name.” |
| Chemguard Coatings (P) Ltd. v. CCE, (2000) 116 ELT 43 (CEGAT) | Tribunal precedent permitting exemption despite use of another company’s name. | Expressly overruled as “patently erroneous.” |
| Nippa Chemicals (P) Ltd. v. CCE, (1998) 100 ELT 490 (CEGAT) | Similar exemption dispute under Notification No. 175/86-CE. | Overruled; tribunal’s interpretation of “brand name” found incorrect. |
| Berger Paints India Ltd. v. CIT, (2004) 12 SCC 42 / 165 ELT 488 | Revenue cannot accept a legal position for one assessee and contest it for another without just cause. | Court declined to apply; no evidence on record of Revenue’s conduct across cases. |
| Supdt. of Central Excise v. D.C.I Pharmaceuticals (P) Ltd., (2005) 4 SCC 206 (unreported at the time) | Instance where Court refused interference because Revenue had not appealed in the same assessee’s case. | Distinguished as fact-specific; not controlling here. |
| Royal Hatcheries (P) Ltd. v. State of A.P., 1994 Supp (1) SCC 429 | Interpretation of the phrase “that is to say” as qualifying preceding words. | Used to explain that “brand name or trade name” is qualified by the inclusive explanation in the notification. |
| CCE v. Christine Hoden (I) (P) Ltd., (1999) 113 ELT 591 (CEGAT) | Tribunal view that mention of a foreign company’s name does not create trade connection. | Court held this observation incorrect in principle. |
| CCE v. Sarat Electronics, (2004) 167 ELT 404 (CESTAT) | Tribunal allowed exemption despite reference to “ITL group.” | Overruled; Court held that words implying quality linkage to another company negate exemption. |
| Weigand India (P) Ltd., (1997) 94 ELT 124 (CEGAT) & Chopra Appliances, (2001) 132 ELT 95 (CEGAT) | Referenced by tribunal for analogy in Sarat Electronics. | Not specifically analysed; Court’s broader reasoning renders their approach incorrect. |
Court's Reasoning and Analysis
1. The Court compared the wording of Notification No. 5/98-CE with the language examined in Astra Pharmaceuticals. It emphasised that the present notification concerns the expressions “brand name or trade name,” which are expressly broadened by the words “that is to say” to include any name, mark, symbol, monogram, label, signature, invented word or writing used to indicate a trade connection.
2. The legends printed by Dharani Cements explicitly linked the cement to Grasim Industries Ltd., an established cement producer. This satisfied the notification’s explanation because the company name was used “for the purpose of indicating a connection in the course of trade.”
3. The Tribunal’s reliance on Astra Pharmaceuticals was misplaced. That decision dealt with “patent or proprietary medicines” under Tariff Item 14-E, where registration under the Trade and Merchandise Marks Act was relevant. The present notification does not require such registration and extends to unregistered names.
4. By focusing on dictionary definitions of “write” and “writing,” the Tribunal ignored the statutory language and the controlling phrase “that is to say,” leading to an unduly narrow approach.
5. Several earlier tribunal decisions—Nippa Chemicals, Chemguard Coatings, Sarat Electronics, and observations in Christine Hoden—were declared erroneous and expressly overruled to prevent continued reliance on an incorrect legal interpretation.
6. On the estoppel argument based on Berger Paints, the Court noted the absence of affidavits demonstrating the Revenue’s conduct across cases. Because the contention was raised late and required factual verification, the Court refused to dismiss the appeals on that ground.
7. While restoring the Commissioner’s demand of duty, the Court deleted the penalty. Given that the assessee’s interpretation had found support in multiple tribunal rulings, the Court held that the respondents could reasonably have believed they were entitled to the exemption, negating the need for penal consequences.
Holding and Implications
HELD: The Supreme Court set aside the CEGAT judgment and reinstated the Commissioner of Central Excise’s demand for differential duty, but deleted the penalty of Rs 10,00,000. The appeals were disposed of with no order as to costs.
Implications: The judgment clarifies that any reference on the goods to another entity’s name—if intended to suggest a trade connection—constitutes use of that entity’s “brand name or trade name” and disqualifies the manufacturer from exemption under similar excise notifications. Multiple contrary tribunal precedents stand overruled, providing authoritative guidance for future assessments.
S.N Variava, J.— These appeals are filed against the judgment of the Customs, Excise and Gold (Control) Appellate Tribunal (CEGAT) dated 14-10-1999. The respondents are a subsidiary of one M/s Grasim Industries Ltd. On the bags of cement manufactured by them the respondents use the following words:
“Manufactured by Dharani Cements Ltd., a subsidiary of Grasim Industries Ltd.”
2. The Tribunal has, following the earlier judgments of the Tribunal in the cases of Chemguard Coatings (P) Ltd. v. CCE (2000) 116 ELT 43 (cegat) and Nippa Chemicals (P) Ltd. v. CCE (1998) 100 ELT 490 (cegat) and a judgment of this Court in the case of Astra Pharmaceuticals (P) Ltd. v. CCE (1995) 2 SCC 84, (1995) 75 ELT 214 held that the benefit of Notification No. 5/98-CE dated 2-6-1998 is not lost by the respondents because they show on their product the name of the holding company, namely, M/s Grasim Industries Ltd.
3. For a consideration of these appeals, it is first necessary to set out Notification No. 5/98-CE dated 2-6-1998, which reads as follows:
“Notification No. 5/98-CE dated 2-6-1998
Effective rate of duty for specified goods of Chapters 13 to 96.—In exercise of the powers conferred by sub-section (1) of Section 5-A of the Central Excise Act, 1944 (1 of 1944), the Central Government, being satisfied that it is necessary in the public interest so to do, hereby exempts excisable goods of the description specified in column (3) of the Table below or column (3) of the said Table read with the relevant list appended hereto, as the case may be, and falling within the Chapter, Heading No. or Sub-Heading No. of the Schedule to the Central Excise Tariff Act, 1985 (5 of 1986) (hereinafter referred to as the said Schedule), specified in the corresponding entry in column (2) of the said Table, from so much of the duty of excise leviable thereon which is specified in the said Schedule, as is in excess of the amount calculated at the rate specified in the corresponding entry in column (4) of the said Table, subject to the relevant conditions specified in the annexure to this notification, and referred to in the corresponding entry in column (5) of the said Table.
Explanation.—For the purposes of this notification, the rate specified in column (4), is ad valorem rate, unless otherwise specified.
S. No. Chapter or Heading No. or Sub-Heading No. Description of goods Rate Conditions (1) (2) (3) (4) (5) 1. 13 Lac Nil - *** 9. 2502.29 All goods manufactured in, — (I) factory using vertical shaft kiln, with installed capacity certified as not exceeding 300 tonnes per day or 99,000 tonnes per annum and the total clearances of cement produced by the factory, in a financial year, shall not exceed 1,09,500 tonnes; (II) factory using rotary kiln, with installed capacity certified as not exceeding 600 tonnes per day or 1,98,000 tonnes per annum and the total clearances of the cement produced by the factory, in a financial year, shall not exceed 2,20,000 tonnes. Rs 200 per tonne 2
Condition No. Conditions 1. If the manufacturer of the food preparations produces a certificate from an officer not below the rank of a Deputy Secretary to the Government of India or not below the rank of a Deputy Secretary to the State Government concerned to the effect that such food preparations have been distributed free to the economically weaker sections of the society under a programme duly approved by the Central Government or the State Government concerned, within five months from the date of clearance of such goods or within such further period as the Assistant Commissioner of Central Excise may allow in this regard. 2. (i) If the cement manufacturer produces to the Assistant Commissioner of Central Excise a certificate issued by an officer not below the rank of Director of Industries in the State Government indicating the installed capacity of the factory. (ii) The exemption under this notification shall be applicable up to a maximum quantity of ninety-nine thousand tonnes in a financial year. For computing the quantity of ninety-nine thousand tonnes in a financial year, the clearances of cement effected under any other notification shall be included. However, the clearances of cement effected on payment of duty at the rate of Rs 350 per tonne shall not be taken into account for computing the abovementioned quantity of ninety-nine thousand tonnes. (iii) The exemption under this notification shall not be applicable to— (a) cement manufactured from such clinker which is not (a) manufactured within the same factory; and (b) cement bearing a brand name or trade name (whether registered or not) of another person;
Explanation.—For the purposes of condition (ii), ‘brand name’ or ‘trade name’ means a brand name or trade name, whether registered or not, that is to say, a name or a mark, such as a symbol, monogram, signature, or invented words or any writing which is used in relation to a product for the purpose of indicating, or so as to indicate, a connection in the course of trade between the product and some person using such name or mark with or without any indication of the identity of that person.”
(emphasis supplied)
4. The appellants contended that the respondents were using the name of M/s Grasim Industries Ltd. with the purpose of indicating a connection between the product i.e the cement manufactured by them, and M/s Grasim Industries Ltd. which is a well-known cement manufacturer. In reply, it has not been denied that M/s Grasim Industries Ltd. is a well-known cement manufacturer. It has also not been denied that the purpose of putting the name “M/s Grasim Industries Ltd.” was to show a connection between the product and M/s Grasim Industries Ltd. However, what has been contended is that the words “M/s Grasim Industries Ltd.” are neither a brand name nor a trade name. It is contended that mere use of the name of a company does not amount to using a brand name or trade name of some other company.
5. The Commissioner, by his order dated 19-5-1999, held that the respondents were not entitled to the benefit of the notification. It was held that they were liable to pay a differential duty of Rs 47,74,961 and a penalty of Rs 10,00,000 under Rule 173-Q of the Central Excise Rules, 1944. The respondents filed an appeal before CEGAT which, as stated above, has been allowed on the basis of the judgments referred to earlier.
6. Apart from the judgments relied upon by the Tribunal, some other judgments of the Tribunal, taking a similar view, have also been cited before us. It was submitted by Mr Vellapally, on behalf of the respondents, that based on the judgment of this Court in Astra Pharmaceuticals (P) Ltd. case (1995) 2 SCC 84, (1995) 75 ELT 214 the Tribunal has consistently been holding that the benefit of such notification is not lost by use of the name of a company. It was submitted that most of the judgments of the Tribunal were not appealed against by the Department. It was submitted that as no appeal had been filed against those judgments, the Department should not be allowed to discriminate by filing an appeal in this case.
7. In support of this submission reliance was placed upon the judgment of this Court in the case of Berger Paints India Ltd. v. CIT (2004) 12 SCC 42, (2004) 165 ELT 488 wherein this Court has held that if the Revenue has not challenged the correctness of the law laid down earlier and accepted it in the case of one assessee then it is not open to the Revenue to challenge the correctness in other cases without a just cause.
8. Reliance was also placed upon an unreported judgment passed in the case of Supdt. of Central Excise v. D.C.I Pharmaceuticals (P) Ltd. (2005) 4 SCC 206 However, in this case, we find that the Court refused to interfere because there was an earlier judgment which had not been challenged in the case of the assessee concerned itself.
9. We find some substance in this submission. However, Mr Dutta points out to us that no affidavit-in-reply had been filed in these appeals. He submits that no such contention had been taken in advance. He states that he is therefore not in a position to make a statement as to whether or not appeals were filed against the various judgments of the Tribunal shown to this Court. He submits that time should be given to him in order to find out whether appeals were filed or not.
10. This contention was taken up by Mr Vellapally after a full day of argument and only after finding that this Court was against him on merits. It is not just a legal submission but is based on a factual situation which would require checking. After a full hearing this Court is not going to adjourn this case. As no such contention was taken earlier by filing any affidavit-in-reply we do not propose to dismiss these appeals on this ground. Even otherwise, we find that in all judgments relied upon, the Tribunal has taken a patently erroneous view. It becomes necessary for this Court to clarify the law so that the erroneous judgments of the Tribunal do not remain binding precedents.
11. The judgments of the Tribunal appear to be based upon the judgment of this Court in Astra Pharmaceuticals Ltd. case (1995) 2 SCC 84, (1995) 75 ELT 214. Even in the impugned judgment Astra Pharmaceuticals Ltd. case (1995) 2 SCC 84, (1995) 75 ELT 214 has been relied upon. In our view, the Tribunal is misconstruing and misunderstanding the judgment of this Court in Astra Pharmaceuticals Ltd. case (1995) 2 SCC 84, (1995) 75 ELT 214.
12. In Astra Pharmaceuticals Ltd. case (1995) 2 SCC 84, (1995) 75 ELT 214 the question was whether the appellants (therein) were liable to pay duty on Dextrose injection manufactured by it under Tariff Item 14-E. The said tariff item read as follows:
“Tariff Item No. Description of goods Rate of duty Basic Special excise 14-E. Patent or proprietary medicines not containing alcohol, opium, Indian hemp or other narcotic drugs or other narcotics other than those medicines which are exclusively Ayurvedic, Unani, Siddha or homoeopathic. 12 1/2% Adv. 10% of the basic duty chargeable
Explanation I.—‘Patent or proprietary medicines’ means any drug or medicinal preparation, in whatever form, for use in the internal or external treatment of, or for the prevention of ailments in human beings or animals, which bears either on itself or on its container or both, a name which is not specified in a monograph in a pharmacopoeia, formulary or other publications notified in this behalf by the Central Government in the Official Gazette, or which is a brand name, that is, a name or a registered trade mark under the Trade and Merchandise Marks Act, 1958 (43 of 1958), or any other mark such as a symbol, monogram, label, signature or invented words or any writing which is used in relation to that medicine for the purpose of indicating or so as to indicate a connection in the course of trade between the medicine and some person, having the right either as proprietor or otherwise to use the name or mark with or without any indication of the identity of that person.
Explanation II.—‘Alcohol’, ‘opium’, ‘Indian hemp’, ‘narcotic drugs’ and ‘narcotics’ have the meanings respectively assigned to them in Section 2 of the Medicinal and Toilet Preparations (Excise Duties) Act, 1955 (16 of 1955).”
To be immediately noted that in Astra Pharmaceuticals Ltd. case (1995) 2 SCC 84, (1995) 75 ELT 214 this Court was considering the phrase “patent or proprietary medicines”. In our case and the other cases earlier dealt with by the Tribunal the phrase under consideration is “brand name or a trade name”. The subject-matter of Tariff Item 14-E and the notifications being considered are completely different. Whilst interpreting the phrase “brand name or trade name” an interpretation given in respect of “patent or proprietary medicines” can be of no assistance. Even otherwise, there is a considerable difference between the Explanation to Tariff Item 14-E and the Explanation in the notification concerned. The Explanation to Tariff Item 14-E provides that the patent or proprietary medicine must, amongst other things, be a brand name i.e a name or a registered trade mark under the Trade and Merchandise Marks Act. In the Explanation under consideration the “brand name or a trade name” may be registered or unregistered. The registration need not be only under the Trade and Merchandise Marks Act. Undoubtedly, the words
“any other mark such as a symbol, monogram, label, signature or invented words or any writing which is used in relation to that medicine for the purpose of indicating or so as to indicate a connection in the course of trade between the medicine and some person”
are almost identical. But in the Explanation to Tariff Item 14-E they are used in the context of a “patent and proprietary medicine” which must be a name or a registered trade mark under the Trade and Merchandise Marks Act. In the Explanation to the notifications concerned these words are used in the context of a “brand name or a trade name”. These words, when used in the context of a “patent or a proprietary medicine” assume a completely different context from that when they are used in the context of a “brand name or a trade name” which may be registered or not. Further, the Explanation to Tariff Item 14-E nowhere uses the words “trade name”. As is commonly known, a trade name can be a name in which or by which a person or body carries on their trade. It would, if the context so permits, include the name of a company. In the context of a “trade name” the words “a name” and “or any writing” would cover the name of a company so long as it is used in relation to the product and is used for the purpose of indicating a connection in the course of a trade between the product and other person.
13. As has been set out hereinabove, in this case there is no denial that M/s Grasim Industries Ltd. were manufacturers of cement. There is also no denial that the purpose of using the words:
“Manufactured by Dharani Cements Ltd., a subsidiary of Grasim Industries Ltd.”
was with an intention of indicating a connection between the product i.e the cement and M/s Grasim Industries Ltd. In such cases, clearly the respondents were using a trade name of some other company with the purpose of indicating a connection in the course of trade between the product and that person. The respondents were therefore clearly not entitled to the benefit of the notification. The decision of the Tribunal is therefore clearly erroneous and requires to be set aside.
14. Reference was made to certain decisions of the Tribunal which are now required to be taken note of.
15. In the case of Nippa Chemicals (P) Ltd. (1998) 100 ELT 490 (cegat) the question was whether the appellants (therein) were entitled to the benefit of Notification No. 175/86-CE dated 1-3-1986. That notification also contained an Explanation (being Explanation VIII) which in terms is identical to the Explanation under consideration by us. The appellants therein used the following words: (ELT p. 491, para 2)
“Manufactured in India by Nippa Chemicals Ltd.,
In Collaboration with Nihon Parkerizing Co. Ltd., Japan.
46, Garuda Buildings,
Cathedral Road, Chennai-600 086.
Marketed in India by
Goodlass Nerolac Paints Ltd.,
Ganpatrao Kadam Marg,
Lower Parel, Mumbai-400 013.”
The Tribunal held that the use of these words did not preclude the appellants (therein) from availing of the benefit of the notification. To be immediately noted that in that case it was neither admitted nor proved that the words were used to indicate a connection between the product and Nihon Parkerizing Co. Ltd. The Tribunal so notes. Had the Tribunal based its decision on this aspect no fault could have been found. However, the Tribunal then goes on to hold as under: (ELT pp. 493-94, paras 9-12)
“9. It is further mentioned in the abovesaid explanation by stating that the name or a mark means a symbol, monogram, label, signature or invented word or writing which is used in relation to such specified goods for the purpose of indicating the abovesaid connection. The writings in the abovesaid case, in our opinion cannot come within the purview of symbol. It cannot also be a monogram. The same cannot be a label or a signature. It cannot be an invented word in view of the fact that these are names of the company but are comprised of two/three words.
10. The learned JDR stated that this will come within purview of ‘name’. But in order to come within the purview of ‘name’, we have to again look into the definition of ‘brand name’ and the elaboration given therein. The elaboration given therein is ‘symbol, monogram, label, signature or invented word or a writing’. We have already ruled out that it does not come within the purview of a mark or a symbol or a monogram or label or any invented word in view of the reasons furnished above.
11. The next question is whether it comes within the purview of a writing which is used in relation to such specified goods for the purpose of indicating a connection in the course of the trade. In this connection, we have to look into the definition of ‘WRITE’ and ‘WRITING’ in the Oxford Dictionary. The same are defined as follows:
‘write (r-) v. (past t. wrte, past part. wri'tten). Form symbols representing letter(s) or word(s) esp. on paper, parchment, etc., with pen, pencil, brush, etc., form (such symbols), set (words etc.) down in writing, express in writing; chronicle, make record or account of; convey (message, information, etc.) by letter; engage in writing or authorship; produce writing; ∼ down, set down in writing; write in disparagement or depreciation of; reduce (total, assets, etc.) to lower amount; ∼ off, record cancelling of (bad debt, depreciated stock, etc.); reckon as lost or worthless; ∼ - off (n.) something that must be regarded as total loss or wreck, failure; ∼ out, make written copy of; transcribe in full or detail; ∼ up, write full account or record of; give full or elaborate description of; commend by appreciative writing, praise in writing; ∼-up (n.) review or report.
Writing (r-) n. (esp.) Written document; (piece of) literary work; personal script, handwriting; put in ∼, write down; the Writings, = HAGIOGRAPHA; ∼- case, case holding writing materials; ∼-desk, desk; ∼-master, instructor in penmanship; the yellow-hammer (from marks like scribbling on eggs); ∼-paper, paper for writing on with ink, esp. notepaper; ∼-table, desk.’
12. It is therefore seen that these are certain words enumerated to project the name of the two particular companies and they do not come within the purview of ‘writing’ or ‘name’. These are mere printed words indicating the names of two companies. Therefore, in our view, these will never come within the purview of ‘brand name’ in view of the fact that they do not come within the meaning of ‘name’ or ‘mark’ which is elaborated in the explanation to ‘brand name’ and this being the position, the arguments of the learned DR cannot be accepted.”
In our view, the Tribunal has completely misdirected itself. The term “brand name or trade name” is qualified by the words “that is to say”. Thus, even though under normal circumstances a brand name or a trade name may have the meaning as suggested by the Tribunal, for the purposes of such a notification the term “brand name or trade name” gets qualified by the words which follow. The words which follow are “a name or a mark”. Thus even an ordinary name or an ordinary mark is sufficient. It is then elaborated that the “name or mark” such as a “symbol” or a “monogram” or a “label” or even a “signature of invented word” is a brand name or trade name. However, the contention is that they must be used in relation to the product and for the purposes of indicating a connection with the other person. This is further made clear by the words “any writing”. These words are wide enough to include the name of a company. The reasoning given by the Tribunal based on a dictionary meaning of the words “write” and “writing” is clearly erroneous. Even the name of some other company, if it is used for the purposes of indicating a connection between the product and that company, would be sufficient. It is not necessary that the name or the writing must always be a brand name or a trade name in the sense that it is normally understood. The exemption is only to such parties who do not associate their products with some other person. Of course this being a notification under the Excise Act, the connection must be of such a nature that it reflects on the aspect of manufacture and deal with quality of the products. No hard-and-fast rule can be laid down however it is possible that words which merely indicate the party who is marketing the product may not be sufficient. As we are not dealing with such a case we do not express any opinion on this aspect.
16. This Court has, in the case of Royal Hatcheries (P) Ltd. v. State of A.P 1994 Supp (1) SCC 429 already held that words to the effect “that is to say” qualify the words which precede them. In this case also the words “that is to say” qualify the words “brand name or trade name” by indicating that these terms must therefore be understood in the context of the words which follow. The words which follow are of wide amplitude and include any word, mark, symbol, monogram or label. Even a signature of an invented word or any writing would be sufficient if it is used in relation to the product for purpose of indicating a connection between the product and the other person/company. It is thus clear that the Tribunal's decision in Nippa Chemicals (P) Ltd. case (1998) 100 ELT 490 (cegat) is clearly erroneous and will stand overruled.
17. In the case of CCE v. Christine Hoden (I) (P) Ltd. (1999) 113 ELT 591 (cegat) the question was whether the use of the word “Comfit” with the name “Christine Hoden London, Rome Stockholm” would disentitle the respondents therein from the benefit of the notification. It was however found, as a matter of fact, that the word “Comfit” was owned by the respondent. It was on that basis held that the respondents therein were entitled to the benefit of notification. To this extent the Tribunal was right. However, the Tribunal has unnecessarily also gone on to comment as follows: (ELT p. 591, para 4.1)
“Mere indication of the foreign company's name does not create any association in the course of trade between the goods and the foreign company, ….”
There would be no purpose in indicating the foreign company's name in relation to the product except to indicate a connection between the product and the foreign company. Therefore, to this extent, the Tribunal is not correct.
18. In the case of CCE v. Sarat Electronics (2004) 167 ELT 404 (cestat) the question was whether the respondents (therein) were entitled to benefit of Notification No. 1/93-CE, which notification was identical to the one under consideration by us. The respondents therein used the words “sarat” in bold letters following which the words “A quality product from ITL group” and “Technical licensee of ITL” were also printed. The Tribunal, following its earlier decisions, held as follows: (ELT p. 406, para 6)
“6. In the facts of the present case, we are of the view that the expression ‘ITL’ was used to convey the name of the company and not as a trade mark. It showed that the technical know-how was obtained from Instrument Techniques Pvt. Ltd. The expression ‘A quality product from ITL group’ also would not mean that the product was manufactured by Instrument Techniques Pvt. Ltd. According to us, the facts of the case are more akin to the facts in Weigand India (P) Ltd. (1997) 94 ELT 124 (cegat) and Chemguard Coatings (P) Ltd. (2000) 116 ELT 43 (cegat) rather than Chopra Appliances (2001) 132 ELT 95 (cegat).”
In our view, the Tribunal was clearly erroneous. As indicated above, the Explanation makes it clear that it need not be a trade name or brand name as commonly understood. Any name or mark or writing, even the name of a company is sufficient so long as it is used for the purpose of indicating a connection between the product and that company. The use of the words “A quality product from ITL group” clearly showed an intention to show a connection between the product and the ITL group. These words indicated that the quality of the product was the same as that of a product of ITL group. If use of such words did not disentitle a party from the benefit of the notification, we fail to understand what sort of words would disentitle a party. The decision of the Tribunal in this case is clearly erroneous and will stand overruled.
19. In this view of the matter, we set aside the impugned judgment and restore the order passed by the Commissioner of Central Excise dated 19-5-1999.
20. However, by this order, the Commissioner has also imposed penalty in a sum of Rs 10,00,000 under Rule 173-Q of the Central Excise Rules. While the conclusions of the Commissioner that the respondents were not entitled to the benefit of the notification are correct, the fact still remains that the Tribunal has in a number of matters given an interpretation as understood by the respondent. It therefore cannot be said that the respondents could not have taken the view they did. It cannot be said that they could never have concluded that they were entitled to the benefit of the notification. We therefore feel that this is a case where penalty should not be imposed. We therefore delete the imposition of penalty on the respondents.
21. The appeals stand disposed of accordingly. There will be no order as to costs.
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