Commissioner Of Central Excise, Trichy vs Grasim Industries LTD.

Judicial Analysis Court Copy Headnote Facts Arguments Court observation

2005 Supreme(SC) 626

2005(3) Supreme 555
Supreme Court of India
(From Central Excise, Customs and Gold (Control) Appellate Tribunal, Chennai)
S.N. Variava, Dr. AR. Lakshmanan & S.H. Kapadia, JJ.
Commissioner of Central Excise, Trichy —Appellant
versus
M/s. Grasim Industries Ltd. —Respondent
Civil Appeal Nos. 2348-2349 of 2000
Decided on 12-4-2005
Counsel for the Parties :
For the Appellant : Rajiv Dutta, Sr. Advocate, Hemant Sharma, S. Beno Beneigar, P. Parmeswaran, B. Krishna Prasad, Advocates.
For the Respondent : Joseph Vellapally, Sr. Advocate, Muthuvenkatraman, S. Nanda Kumar, Anuj Chauhan, V. Vijayan, V.N. Raghupathy, P.N. Ramalingam, Advocate (NP)/Advocates.

Headnote:Central Excise Act, 1944—Section 5A(1)—Central Excise & Tariff Act, 1985—Tariff Item 14E—Notification No. 5/98 CE dated 2.6.1998—Claim of benefit of the Notification by the assessee-respondent—Respondents are a subsidiary of one M/s Grasim Industries Ltd.—On the bag of cement manufactured by them respondents use the name of M/s Grasim Industries also—Respondents use the words ‘manufactured by Dharani Cements Ltd., a subsidiary of Grasim Industries Ltd.’—Respondents alleged that the words ‘M/s Grasim Industries Ltd.’ are neither a brand name nor a trade name—Respondent 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—Whether Commissioner was justified in holding that respondents were not entitled to the benefit of the Notification—(Yes)—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.
       Held : In this case there is no denial that M/s. Grasim Industries Ltd. were manufacturer 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. (Para 13)
       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. (Para 15)
       In this view of the matter, we set aside the impugned Judgment and restore the Order passed by the Commissioner of Central Excise dated 19th May, 1999. (Para 19)
       However, by this Order, the Commissioner has also imposed penalty in a sum of Rs. 10,00,000/- under Rule 173Q 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. (Para 20)

Judgment

S.N. Variava, J.—These Appeals are filed against the Judgment of the Customs, Excise and Gold (Control) Appellate Tribunal (CEGAT) dated 14th October, 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 Pvt. Ltd. vs. Commissioner of Central Excise, Chennai, reported in 2000 (116) ELT 43 and Nippa Chemicals (Pvt.) Ltd. vs. Collector of Central Excise, Madras reported in 1998 (100) ELT 490, and a Judgment of this Court in the case of Astra Pharmaceuticals (P) Ltd. vs. Collector of Central Excise, Chandigarh reported in 1995 (75) ELT 214 (S.C.), held that the benefit of Notification No. 5/98 CE dated 2nd June, 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 5/98 CE dated 2nd June, 1998, which reads as follows :

“Notification No. 5/98-C.E., 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 5A 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 with 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.

TABLE

S.No. Chapter or Description of goods Rate Conditions heading No. or sub- heading No.

(1) (2) (3) (4) (5)

1. 13 Lac Nil –

9. 2502.29 All goods manufactured in.- Rs. 2 per tonne 2

Factory using vertical shaft kiln, with installed (I) 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; factory using rotary kiln, with installed capacity (II) 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.

Condition

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2005 Supreme(SC) 626

Cases Referred (6)