IMPORTANT POINT
Where there is evidence of the assessee trading on the reputation of another person, issuance of registration certificate under the Trade Marks Act, with retrospective effect, cannot confer the benefit of exemption Notification under the Central Excise Act to the assessee.

Headnote:(i) Central Excise Act, 1944 — Section 35L — Central Excise Tariff Act — Sub Heading 1905.11 — SSI Notification No. 1/93-CE dated 28-2-1993 as Amended by Notification No. 59/94-CE dated 1-3-1994 — Eligibility to the benefit of — Benefit of exemption not available for excisable goods bearing brand name or trade name (registered or not) of another person — Grant of registration certificate under the Trade Marks Act will not automatically provide benefit of exemption to the SSI Unit — Appellants were engaged in manufacture of biscuits classifiable under Sub-Heading 1905.11 of Central Excise Tariff — Biscuits were sold under the brand name ‘Meghraj’ which was a registered trade mark of M/s. Kay Aar Biscuits (P) Ltd. who was using the said trade mark on manufacture of biscuits themselves — Show cause notices issued stating that appellants were not eligible to the benefit of SSI Notification No. 1/93-CE dated 28-2-1993 as amended — Demand of differential duty based on an agreement under which it was declared that M/s. Kay Aar was the owner of registered trade mark ‘Meghraj’ — Appellants claimed to have started manufacture of biscuits in 1991 — On 30-6-2000, Registrar of Trade Marks issued Registration Certificate on 30-6-2000 registering the trade mark ‘Meghraj’ in favour of appellants w.e.f. 30-9-91 — Whether grant of registration certificate under the Trade Marks Act will automatically provide benefit of exemption to SSI Unit — (No) — No evidence indicating abandonment of trade mark by M/s Kay Aar Biscuits (P) Ltd. — There is no deed or assignment from M/s Kay Aar Biscuits (P) Ltd. to appellants — There is no proof of acquisition on payment or consideration by appellants to M/s Kay Aar Biscuits (P) Ltd. — Appellants are held not entitled to benefit of exemption — Trade Marks Act, 1999 — Section 28.
       Held : In the present case, as stated above M/s. Kay Aar Biscuits (P) Ltd. entered into an agreement on 22.11.89 with M/s. Rich Food Products (P) Ltd. Under that Agreement the Director of M/s. Kay Aar Biscuits (P) Ltd. declared that his company was the owner of the registered trade mark “Meghraj”. The name of that Director is Madan Verma. He is the Director of the appellants (company) also. Further there is no evidence to show as to whether M/s. Kay Aar Biscuits (P) Ltd. was an “eligible manufacturer”. This aspect is important since one of the arguments advanced by the appellants herein before the Commissioner (A) was that the trade mark belonged to M/s. Kay Aar Biscuits (P) Ltd., which was registered SSI Unit lying closed since 1.3.1993. No explanation has been given as to why Madan Verma has not been examined by the appellants. He has not been examined even on the question of alleged transfer of the trade mark in favour of the appellants. In the circumstances, we do not find any merit in this appeal. (Para 9)
       Discontinuation of business in respect of a product does not necessarily amount to abandonment. In the present case, there is no evidence from the side of the appellants indicating abandonment of the trade mark by M/s. Kay Aar Biscuits (P) Ltd. Although, Madan Verma, the Director of M/s. Kay Aar Biscuits (P) Ltd., has filed his Affidavit enclosing the registration certificate, he has nowhere stated that M/s. Kay Aar Biscuits (P) Ltd. has abandoned the trade mark. In the circumstances, the Department was right in rejecting the above contention. Abandonment of the trade mark has to be proved by the appellants in the present case. The burden is on the appellants, particularly, when the Department is relying upon the agreement dated 23.11.89 between M/s. Kay Aar Biscuits (P) Ltd. and M/s. Rich Food Products (P) Ltd. (Para 15)
       The object of the exemption Notification was neither to protect the owners of the trade mark nor the consumers from being misled. These are considerations which are relevant in disputes arising under the Trade Marks Act. The object of the exemption Notification No.1/93-CE was to grant benefits to those industries which do not have the advantage of a brand name. (Para 16)
       The effect of making the registration certificate applicable from retrospective date is based on the principle of deemed equivalence to public user of such mark. This deeming fiction cannot be extended to the Excise Law. It is confined to the provisions of the Trade Marks Act. In a given case like the present case where there is evidence with the Department of the trade mark being owned by M/s. Kay Aar Biscuits (P) Ltd. and where there is evidence of the appellants trading on the reputation of M/s. Kay Aar Biscuits (P) Ltd. which is not rebutted by the appellants (assessee), issuance of registration certificate with retrospective effect cannot confer the benefit of exemption Notification to the assessee. In the present case, issuance of registration certificate with retrospective effect from 30.9.91 will not tantamount to conferment of exemption benefit under the Excise Law once it is found that the appellants had wrongly used the trade mark of M/s. Kay Aar Biscuits (P) Ltd. (Para 18)
       Applying the principle of deemed equivalence we may clarify that if the SSI unit wrongly affixes a trade mark of another person, be it registered or not, or if it uses the trade mark of an ineligible person then such default would not be eliminated by the above principle of deemed equivalence embodied in Section 28 of the Trade Marks Act, 1999 as that principle is based on a deeming fiction which fiction is confined only to the provisions of the Trade Marks Act. (Para 20)
       In the present case, the facts are entirely different. In the present case, there is no deed or assignment from M/s. Kay Aar Biscuits (P) Ltd. to the M/s. Meghraj Biscuits Industries Ltd. (appellants herein). As stated above, there is no proof of acquisition on payment or consideration by the appellants to M/s Kay Aar Biscuits (P) Ltd. In the present case, there is no evidence of assignment or licence from M/s. Kay Aar Biscuits (P) Ltd. to the appellants. In the present case, we are concerned with the retrospective effect of the certificate issued by the Registrar of Trade Marks on 30.6.2000 with effect from 30.9.91. (Para 21)
       (ii) Trade Marks Act, 1999 — Section 28 — Principle of deemed equivalence — Issuance of Registration Certificate with retrospective effect — Effect of — Issuance of registration certificate with retrospective effect will not tantamount to conferment of exemption benefit under the Excise Law once it is found that appellants had wrongly used the trade mark of another person — Central Excise Act, 1944.
       Held : The Trade Marks Act, 1999 has been enacted to amend and consolidate the law relating to trade marks, to provide for registration and better protection of trade marks and for prevention of the use of fraudulent marks. Under Section 28 of the Trade Marks Act, 1999, registration gives to the registered proprietor of the trade mark the exclusive right to the use of the trade mark in relation to the goods in respect of which the trade mark is registered and to obtain relief in respect of infringement of the trade mark in the manner provided by the Trade Marks Act. It is correct to say that the Registrar, Trade Marks, can issue registration certificate under Section 28 of the Trade Marks Act with retrospective effect. The question before us is : what is the effect of issuance of registration certificate with retrospective effect. (Para 17)

JUDGMENT

Kapadia, J. — Aggrieved by the decision of Customs, Excise and Gold Control Appellate Tribunal (CEGAT) dated 11.4.2000, the appellants (assessee) have come by way of civil appeals under Section 35L of the Central Excise Act, 1944.

2. Appellants were engaged in the manufacture of biscuits classifiable under Sub-Heading 1905.11 of the Central Excise Tariff. The biscuits were sold under the brand name “Meghraj”. Under show cause notices it was alleged that the appellants herein (assessee) have sold the biscuits under the brand name “Meghraj”, which was a registered trade mark of Kay Aar Biscuits (P) Ltd. who was using the said trade mark on manufacture of biscuits themselves, and, therefore, the appellants were not eligible to the benefit of SSI Notification No.1/93-CE dated 28.2.1993 as amended by Notification No.59/94-CE dated 1.3.1994. The above show cause notices were issued by the Department demanding differential duty for the period April 1994 to June 1994 amounting to Rs.3,74,948/- plus short paid duty for the period April 1995 to May 1995 amounting to Rs.92,992. The said demand was based on an agreement detected by the Department. That Agreement was between Madan Verma, Director of a company known as M/s. Kay Aar Biscuits (P) Ltd., Ghaziabad, and M/s. Rich Food Products (P) Ltd., Noida. Under the said Agreement M/s. Kay Aar Biscuits (P) Ltd. was Party No.1. Under the Agreement it was declared that M/s. Kay Aar Biscuits (P) Ltd. was the owner of the registered trade mark “Meghraj”. Under the Agreement it was stated that M/s. Kay Aar Biscuits (P) Ltd. was using the aforestated trade mark “Meghraj” for the manufacture of biscuits. Under the Agreement there was a recital under which it was stated that M/s. Rich Food Products (P) Ltd. had put up a Unit for manufacture of wafers in Noida which it sought to manufacture under the brand name “Meghraj”. Under the said Agreement M/s. Kay Aar Biscuits (P) Ltd. gave permission to M/s. Rich Food Products Pvt. Ltd. to use its trade mark for the manufacture of wafers alone. The said agreement was valid for three years commencing from 22.11.1989. At this stage, it may be noted that the appellants herein claim to have started manufacture of biscuits in 1991. The biscuits were sold in wrapper mentioning the name of the appellants, “M/s. Meghraj Biscuits Industries Ltd.” or “Meghraj”. The Appellants claimed that it has been using the wrapper since beginning and since 1991 the use of the trade name or brand name “Meghraj” has never been challenged. The Assistant Commissioner, Ghaziabad, examined the printed wrappers. He came to the conclusion vide his orders that the trade name “Meghraj” was in the form of a logo printed on the wrapper of the biscuits and, therefore, the appellants were not entitled to the benefit of Notification No.1/93-CE dated 28.2.93 as amended by Notification No.59/94 dated 1.3.94. Consequently, the Adjudicating Authority called upon the appellants to pay differential duty for the period April 1994 to June 1994 amounting to Rs.3,74,948 plus short paid duty for the period April 1995 to May 1995 amounting to Rs.92,992.

3. Aggrieved by the decision of the Adjudicating Authority, the assessee preferred appeals to the Commissioner (A). The said appeals were rejected on the ground that the appellants were using the brand name “Meghraj” of another manufacturer M/s. Kay Aar Biscuits (P) Ltd. on their products (biscuits) and, therefore, they were not entitled to the benefit of exemption under Notification No.1/93-CE, as amended. It was held that the word “Meghraj” was printed on all the printed wrappers and, therefore, it was wrong to say that the appellants were not using the brand name “Meghraj” on its products. In this connection, reliance was placed by the Commissioner (A) on the said Agreement dated 22.11.89. Before the Commissioner (A) the appellants herein contended that they had used the name “M/s. Meghraj Biscuits Industries Ltd.” on the wrapper a

Click Here to Read the rest of this document

Judicial Analysis

SupremeToday

2007 Supreme(SC) 350

IMPORTANT POINT Where there is evidence of the assessee trading on the reputation of another person, issuance of registration certificate under the Trade Marks Act, with retrospective effect, cannot confer the benefit of exemption Notification under the Central Excise Act to the assessee.

Cases Referred (1)

Judicial Analysis

IMPORTANT POINT
Where there is evidence of the assessee trading on the reputation of another person, issuance of registration certificate under the Trade Marks Act, with retrospective effect, cannot confer the benefit of exemption Notification under the Central Excise Act to the assessee.