Important point
To attract provision of clause 7 of small scale exemption Notification No. 175/86-CE dated 1-3-1986 issued under the Central Excise Act, it is sufficient that product contained a trade mark/logo of another ineligible person and whether the product also contained the brand name/trade name/logo of the manufacturer would not and cannot alter such position.

Headnote:Central Excise and Salt Act, 1944 —Section 4—Central Excise Rules, 1944—Rules 9(1), 52A, 173B, 173C, 173F, 173G(2) and 226—Central Excise Tariff Act, 1985—Sub Heading 4408.90 of the Schedule—Using registered logo ‘MERINO’ belonging to another factory on their own brand name ‘Pelican’ on the plywood being manufactured by respondents—Owner of the brand ‘MERINO’ is a large scale manufacturer of plywood—Respondents were held not entitled to the benefit of small scale exemption Notification—Commissioner of Central Excise denied the benefit to respondent firm and confiscated the seized plywood—Whether respondents who are manufacturers of plywood under their own brand name ‘Pelican’ have made themselves disentitled to the benefit of small scale exemption Notification No. 175/86-CE by using logo ‘MERINO’ on their products along with their brand name—(Yes)—Finding of the Tribunal to the contrary is wrong and liable to be set aside.
Held : The impugned goods admittedly contained a registered logo “MERINO” belonging to and owned by M/s Merinoply and Chemicals Ltd. Thus it was a clear case where the impugned goods were admittedly affixed with registered logo/trade mark of other person not eligible to S.S.I. exemption. (Para 13)
In our view, the Tribunal has erred in not appreciating that to attract provision of clause 7 of Notification No.175/86-CE, it is sufficient that product contained a trade mark/logo of another ineligible person which was fully satisfied in the instant case and whether the product also contained the brand name/trade name/logo of the manufacturer would not and cannot alter such position. Likewise, the interpretation of Explanation VIII as advanced by the Tribunal does not appear to be correct in law and in fact. It was imperative that by using the registered logo “MERINO” belonging to M/s Merinoply and Chemicals Ltd. on their own product M/s Emkay Investment Ltd. fulfilled the purpose of indicating a relation between the said products and the logo owner so as to influence the trade and therefore, the provision of Explanation VIII were fully satisfied so far as the case on hand was concerned. The finding of the Tribunal to the contrary, in our opinion, is wrong and liable to be set aside. The first respondent M/s Emkay Investment Pvt. Ltd., a manufacturer of plywood in the brand name of “MERINO” classifiable under sub-Heading 4408.90 of the Schedule to the Central Excise Tariff Act, 1985 (5 of 1985) have contravened the provisions of Rules 9(1), 173B, 173C read with Section 4 of the Central Excise and Salt Act, 1944 and Rules 173F, 173G(2) read with Rules 52A and 226 of the Central Excise Rules, 1944, by way of suppressing the material fact of use of “MERINO” brand/logo on their said goods which is actually owned by M/s Merinoply and Chemicals Ltd., a large scale manufacturer of plywood, having annual clearance value of more than Rs. 2 crores and thereby becoming ineligible for the benefit of exemption granted under Government of India, Notification No. 175/86-CE dated 1.8.1986, as could be seen from the notice of show cause issued to the respondents on 4.9.1991. We, therefore, hold that M/s Merinoply and Chemicals Ltd., owns the said “MERINO” brand/logo and, therefore, the plywood containing the imprint of such registered “MERINO” brand/logo were not eligible for grant of benefit as per terms and conditions of the said Notification No. 175/86-CE dated 1.3.1986 during the material period. The said Company never disputed the fact that “MERINO” brand/logo belonged to the said M/s Merinoply and Chemicals Ltd., a large scale manufacturer of plywood who are not entitled to the grant of exemption benefit as per the above Notification. In reply to the show cause notice and at the time of personal hearing, the respondents never disputed the fact of using the word “MERINO” on their said goods in addition to other particulars. They contended that the same was used only to indicate that the quality was similar to a particular type of plywood. (Paras 14 and 15)

Judgment

Dr. AR. Lakshmanan, J.—Both the above appeals are filed against the common judgment passed by the Central Excise & Gold (Control) Appellate Tribunal, Calcutta in Appeal Nos. E-246/92, E-279/92 and Order No. A-593-594 CAL/98 dated 9.6.1998 reported in 2000(124) E.L.T. 741. Both the appeals are against the same and common impugned judgment. Both the above appeals are being disposed of by this common judgment.

2. Briefly stated, the facts of the case are as under:

The respondents-M/s Emkay Investments Private Limited and M/s Plyking who are engaged in the manufacture of plywood classifiable under sub-Heading 4408.90 of the Schedule Act, 1985. The said factory was visited by the Central Excise Officers who found that the respondents are also using the brand/logo- “MERINO”- along with the brand name - “Pelican”- on the plywood being manufactured by them and the officers of the Department entertained a view that as the logo of “MERINO” is also being shown on the plywood being manufactured by them, apart from their own logo of “Pelican” and as the owner of the brand “MERINO” i.e. M/s. Merinoply and Chemicals Ltd., is a large scale manufacturer of plywood not entitled to the benefit of small scale exemption Notification No. 175/86-CE dated 1.3.1986, as amended, the respondents were also not entitled to the benefit of the said exemption Notification in view of clause 7 of the same. The second respondent - M/s. Plyking is one of the traders from whose premises plywood was seized by the officers of the Central Excise.

3. On adjudication, the Commissioner of Central Excise, Calcutta vide his impugned order held that the logo indicating “MERINO” in a specific manner was the brand name used by M/s. Merinoply and Chemicals Ltd. Who were not eligible for the grant of benefit of Notification No. 175/86-CE and as such denied the benefit to the first respondent firm and accordingly confiscated the seized plywood. The officers also confiscated 223 pieces of plywood from the business premises of M/s Plyking - the second respondent herein. The respondents as appellants contended before the authorities that though the word “MERINO” is written in the same style as written on the plywood manufactured by M/s Merinoply and Chemicals Ltd., nevertheless the same will not imply any relation of goods by the respondents under the brand name of “MERINO”. They also submitted that the brand name of M/s Merinoply and Chemicals Ltd. is “TUFFPLY” and “MERINO”.

4. The Departmental representatives countered the arguments of the respondents by arguing that “MERINO” is the brand name and logo registered and owned by M/s Merinoply and the affixation of the same on the product would disentitle the respondents firm from the benefit of Notification in terms of clause 7 read with Explanation VIII as M/s Merinoply and Chemicals Ltd. being a large scale unit, are not entitled to the exemption Notification No. 175/86-CE, clause 7 would be attracted and the respondents firms would become ineligible for exemption.

5. The Commissioner of Central Excise by his order dated 31.3.1992 ordered confiscation of seized goods. The respondents herein filed appeals before the CEGAT against the order of the Commissioner. The CEGAT, by the impugned order, allowed the appeal filed by the respondents herein. Aggrieved by the said order, the appellants preferred these two appeals.

6. We heard Mr. G.E. Vahanvati, learned Solicitor General, appearing for the appellant and Mr. C. Hari Shankar, learned counsel, appearing for respondent No.1. Respondent No.2 did not engage a lawyer to represent their case. They sent their counter affidavit by post.

7. The dispute, in the instant case, is as to whether the respondents who are manufacturers of plywood under their own brand name “Pelicon” have made themselves disentitled to the benefit of small scale exemption Notification No. 175/86-CE by using a logo indicating “MERINO” on their products along with their brand name. The next question which arises i

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2004 Supreme(SC) 1546

Cases Referred (5)