2008 Supreme(SC) 15

2008(1) Supreme 279
Supreme Court of india
Tarun Chatterjee & Dalveer Bhandari, JJ.
Nirlex Spares Pvt. Ltd. — Appellant
versus
Commissioner of Central Excise — Respondent
Appeal (civil) 5204 of 2001
Decided on 04.01.2008

Important point
If a brand name was not owned by any particular person, the use thereof shall not deprive a unit of the benefit of the small scale exemption scheme.
Result : Appeal allowed.

Headnote:Central Excise Tariff Act, 1985 – Section 35 - Appellant Nirlex Spares Pvt. Ltd. was engaged in business of manufacture and sale of Riderless Steel Healds and Flat Steel Healds – Said goods were manufactured and sold by company under its own brand names/trade names viz. Intatex and Intaco which were affixed/ printed on its corrugated boxes - Since appellant was a company registered as a Small Scale Industrial Unit, it was availing benefit of exemption from payment of central excise duty under notification, which granted such exemption to Small Scale Industrial Units - Appellant, however, from 1st of April, 1990 started printing a hexagonal artistic design (alleged monogram) along with its brand names/trade names Intatex and Intaco on its corrugated boxes - Investigating officers held that appellant was making use of a monogram of a related person, namely, L.M.S. Marketing Company as a brand name for goods manufactured and cleared by it and hence appellant was not entitled to exemption in view of paragraph 7 read with Explanation VIII of notification for period from 1st of April, 1988 and 30th of September, 1992 - Show cause notice was issued raising demands - Commissioner of Central Excise, by his order confirmed entire demand for duty and value difference to be paid, as was arrived at by investigating officers – On Appeal ,CEGAT also confirmed decision of Commissioner of Central Excise – Appeal there against - Nothing on record to show that said hexagonal shape/design belonged to or was owned by Marketing Company and thus they had permitted appellant to use same on their corrugated boxes - That apart, there was no agreement or letters showing that said hexagonal shape/design belonged to or was owned by Marketing Company or that it had permitted appellant to use same - Printing of said design on visiting cards of executives of Marketing Company and a drawing of same company not, conferred any right or ownership of Marketing Company over said hexagonal shape/design - In view of admitted position that Marketing Company never came forward to say that hexagonal design in fact belonged to them and they had permitted appellant to use same on their corrugated boxes, findings arrived at by Tribunal held unacceptable - Accordingly, held that hexagonal design cannot be said to be descriptive enough to serve as an indicator of nexus between goods of appellant and Marketing Company – Hence held that alleged monogram could not be said to be brand name or trade name of Marketing Company and such being position held that benefit of exemption provided by notification was available to the appellant - Order of CEGAT and that of Commissioner set aside - Appellant held permitted to get exemption under notification No. 175/86-CE dated 1st of March, 1986 - Appeal allowed. (Paras 12, 13, 15, 19, 20)

       (2003) 3 SCC 599, (2005) 8 SCC 308, (2005) 4 SCC 194, 2006 (198) ELT 323 — Relied upon.

       2005 (183) E.L.T. 123 (S.C.)], 2004(174) E.L.T. 298 (S.C ), 2004(166) E.L.T. 23 (S.C.)] — Distinguished.

       Facts of the case:-

       1.Appellant Nirlex Spares Pvt. Ltd. herein in the instant case was engaged in business of manufacture and sale of Riderless Steel Healds and Flat Steel Healds. Said goods were manufactured and sold by company under its own brand names/trade names viz. Intatex and Intaco which were affixed/ printed on its corrugated boxes. However, since it was a company registered as a Small Scale Industrial Unit, it was availing benefit of exemption from payment of central excise duty under notification, which granted such exemption to Small Scale Industrial Units. Appellant, , from 1st of April, 1990 started printing a hexagonal artistic design (alleged monogram) along with its brand names/trade names Intatex and Intaco on its corrugated boxes. Investigating officers held that appellant was making use of a monogram of a related person, namely, L.M.S. Marketing Company as a brand name for the goods manufactured and cleared by it and hence appellant was not entitled to exemption in view of paragraph 7 read with Explanation VIII of notification for period from 1st of April, 1988 and 30th of September, 1992. Show cause notice was issued raising demands. Commissioner of Central Excise, however, by his order confirmed entire demand for duty and value difference to be paid, as was arrived at by investigating officers. On Appeal, CEGAT also confirmed decision of Commissioner of Central Excise.

       2.Present appeal has been filed against said order of CEGAT.

       Findings of the Court :-

       The Court held that there was nothing on record to show that said hexagonal shape/design belonged to or was owned by Marketing Company and thus they had permitted appellant to use same on their corrugated boxes. That apart, there was no agreement or letters showing that said hexagonal shape/design belonged to or was owned by Marketing Company or that it had permitted appellant to use same. Printing of said design on visiting cards of executives of Marketing Company and a drawing of same company not, conferred any right or ownership of Marketing Company over said hexagonal shape/design. In view of admitted position that Marketing Company never came forward to say that hexagonal design in fact belonged to them and they had permitted appellant to use same on their corrugated boxes, findings arrived at by Tribunal held unacceptable. Accordingly, held that hexagonal design could not be said to be descriptive enough to serve as an indicator of nexus between goods of appellant and Marketing Company . Hence held that alleged monogram could not be said to be brand name or trade name of Marketing Company and such being position, held that benefit of exemption provided by notification was available to the appellant. Order of CEGAT and that of Commissioner set aside. Appellant held permitted to get exemption under notification No. 175/86-CE dated 1st of March, 1986. Appeal was allowed.