Judgment

Arjan Kumar Sikri, J.

1. The Respondent herein is the manufacturers of composite diagnostics or laboratory regents and pharmaceutical goods. It is registered as a small scale industrial unit (SSI unit). The Respondent was using the brand name 'Stangen' on the goods manufactured by it. It is an admitted case that this brand name 'Stangen' was affixed on the packing of the goods and even on the goods manufactured. The Respondent started availing the benefit of exemption/concessional rate of duty under Notification No. 175/86-CE dated 1.3.1986 which grants exemption or concessional rate of excise duty to the SSI units.

2. However, in the year 1997 a show cause notice was issued to the Respondent by the Appellant/Excise Department stating that the Respondent is wrongly claiming the benefit of the aforesaid Notification inasmuch as use of the brand name 'Stangen' and also the logo belonged to Dr. K. Anji Reddy, Chairman of Dr. Reddy's Laboratories (DRL). It was stated that DRL is the manufacturer of bulk drugs falling under Chapter 30 of the Central Excise Tariff Act, 1985, and the trade mark 'Stangen' and related logo are used on the printed labels foils of the P & P medicine manufactured by DRL and also appear on the classification list filed by the DRL. On this basis in the show cause notice it was mentioned that the Respondent was not entitled to the benefit of concessional rate of duty under the aforesaid Notification inasmuch as para 7 of the said Notification denied exemption in those cases where the manufacturer (SSI) affixes the specified goods with a brand name or trade name, registered or not, of another person who is not eligible for grant of exemption under this Notification. Explanation VIII to the said Notification which defines brand name reads as under:

Explanation VIII - "Brand name" or "trade name" shall mean a brand name or trade name, whether registered or not, that is to say a name or a mark, such as symbol, monogram, label, signature or invented word or writing which is used in relation to such specified goods for the purpose of indicating, or so as to indicate a connection in the course of trade between such specified goods and some person using such name or mark with or without any indication of the identity of that person.

3. The Respondent replied to the aforesaid show cause notices in which it was admitted that Dr. K. Angi Reddy is the Chairman of Dr. Reddy Group of Industries which includes the Respondent Company as well as DRL. The defence, however, was that Dr. K. Angi Reddy had not assigned the trade mark either to the Respondent firm or any other manufacturer. It was also mentioned that the Respondent as well as the DRL are Public Limited Companies having separate legal entities of their own with their own independent spheres of activities. In this behalf the contention was that DRL manufactured altogether different products than the products mentioned by the Respondent Company. A plea was also raised that Dr. K. Angi Reddy in his individual capacity was not a manufacturer within the meaning of said expression as defined in the Central Excise Act. By raising the aforesaid submissions request was made to drop the proceedings. The aforesaid argument raised by the Respondent persuaded the Adjudicating Authority who dropped the proceedings.

4. Challenging the said order, the Department filed an appeal before the Customs, Excise and Gold (Control) Appellate Tribunal (CEGAT). The contention of the Department was that dropping of the proceedings by the Commissioner only on the ground that the goods manufactured by the Respondent are different from the goods manufactured by DRL was untenable as it is not a relevant factor at all. However, this plea of the Department did not even prevail with the CEGAT which has, vide impugned judgment dated 31.12.2003, dismissed the appeal observing that the goods manufactured by the Assessee were different from the goods manufactured by DRL and as per the settled law th