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2010 (8) Supreme 513
SUPREME COURT OF INDIA
D.K. Jain and H.L. Dattu, JJ.
Commissioner Central Excise, Delhi — Appellant
versus
M/s. Ace Auto Comp. Ltd. — Respondent
Civil Appeal No. 3051 of 2003
Decided on : 16-12-2010
(2005) 8 SCC 308; (2006) 2 SCC 439; (2008) 2 SCC 628; (2006) 2 SCC 439; (2005) 7 SCC 528; (2005) 4 SCC 194 – Relied upon
(2005) 11 SCC 149; (1998) 7 SCC 228; (2008) 2 SCC 628; (2005) 4 SCC 207; (2006) 7 SCC 592; (2007) 8 SCC 89 – Distinguished impliedly
(b) Exemption Notification no. 16/97- CE – The brand name “TATA” did not belong to the assessee – By using TATA brand name, the assessee intended to indicate a connection between the goods manufactured by them and a Tata Company – It also intended to indicate that the quality of their product was that of a product of Tata Company, as they were supplying their goods to the said company – The bar created in Clause 4 read with Explanation IX of the Notification is clearly attracted disentitling the assessee from the benefit of the exemption notifications under consideration. (Para 15)
Facts of the case:
1. The respondent, a small scale industrial unit, is engaged in the manufacture of clutch plates, clutch cover assemblies and pressure plates, falling under sub-heading No. 8708.00 of the Schedule to the Central Excise Tariff Act, 1985.
2. Admittedly, the assessee prefixed the symbol and logo “TATA” along with their own brand name “ACE” on cover assembly manufactured for TATA 310 vehicle.
3. A raid was conducted at the premises of the assessee, which resulted in issuance of a show cause notice dated 13th May, 1998 to the assessee asking them to explain as to why duty amounting to ‘1,46,151/-; and penalty under Rules 9(2), 173Q and 226 of the Central Excise Rules, 1944 together with penalty under Section 11 AC of the Act may not be levied on them, for clearing branded goods of another person.
4. Assessee’s appeal was allowed by Commissioner (Appeals) and affirmed by the Tribunal.
Finding of the Court:
In order to avail of the benefit of the exemption notification, the assessee must establish that his product is not associated with some other person.
Result : Appeal allowed.
JUDGMENT
D.K. Jain, J. —
1. The present civil appeal, filed under Section 35(L)(b) of the Central Excise Act, 1944 (for short “the Act”) by the Revenue, is directed against order dated 10th October, 2002 passed by the Customs, Excise & Gold (Control) Appellate Tribunal (for short “the Tribunal”) wherein it has been held that the respondent was entitled to the benefit of Notifications Nos. 1/93-CE and 16/97-CE.
2. Shorn of unnecessary details, the facts material for the adjudication of the present appeal may be stated as under:
The respondent (hereinafter referred to as “the assessee”), a small scale industrial unit (for short “SSI”), is engaged in the manufacture of clutch plates, clutch cover assemblies and pressure plates, falling under sub- heading No. 8708.00 of the Schedule to the Central Excise Tariff Act, 1985. Admittedly, the assessee prefixed the symbol and logo “TATA” along with their own brand name “ACE” on cover assembly manufactured for TATA 310 vehicle. The assessee filed declaration Nos. 545/96 w.e.f 4th November 1996; 104/97 w.e.f. 25th March, 1997; 105/97 and 106/97 w.e.f. 1st April 1997, claiming the benefit of SSI Notification Nos. 1/93 and 16/97.
3. A raid was conducted at the premises of the assessee, which resulted in issuance of a show cause notice dated 13th May, 1998 to the assessee asking them to explain as to why duty amounting to ‘1,46,151/-; and penalty under Rules 9(2), 173Q and 226 of the Central Excise Rules, 1944 (for short “the Rules”) together with penalty under Section 11 AC of the Act may not be levied on them, for clearing branded goods of another person.
4. The Additional Commissioner of Central Excise (for short “the Adjudicating Authority”), vide Order-in-Original No.06 dated 3rd June, 1999, while confirming the duty and penalty as contained in the show cause notice, observed that:
“Any person who buys the product, it is the TATA brand name which will strike the eyes of the buyer first as it is a well known and established brand name rather than the other logo ACE. As such going by the Tribunal decision cited by the party the case has to be decided against them....................................... ......................
14. The other point raised by the party is that since they do not sell the product to TATA’s, the owner of the brand name TATA, there is no connection between the branded product and the brand name owner. I fail to see the logic in this contention. The explanation IX to notification no. 1/93 dated 28.2.1993 merely means that by looking at a particular brand name or trade name an association between the brand name owner and the product should get established. In fact this is the very purpose of using a brand name. In the instant case any person buying the product will naturally assume the product to have the quality, specification etc. associated with products of TATA group. It is not necessary to actually sell the product to TATA companies to establish any connection between the product and the brand name owner.
15. Thus once it is held that the cover assembly was branded with the TATA logo which did not belong to the party, and no evidence was produced that the TATA group of companies was themselves eligible for the excise exemption, benefit of notification 1/93 and 16/97 cannot be extended to these products manufactured by the party but carrying the TATA brand name or logo.”
5. Being aggrieved, the assessee preferred an appeal before the Commissioner of Central Excise (Appeals). The Commissioner (Appeals), vide order dated 10th February, 2002, allowed the appeal, observing thus:
“5.4 Thus, we find that the appellate bodies are treating any slight variation in the brand names as different entities as in “Mahaan” and “Mahaan Tastemaker” or “AGI” and “AGI Switches”. Here, the two conflicting brand names are “TATA” and “TATA ACE” and the sole reason for this usage of the name “TATA” is that it stands earmarked for a particular vehicle. They are also manufacturing auto parts f
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