Judicial Analysis Court Copy Headnote Facts Arguments Court observation

2018 Supreme(SC) 135

SUPREME COURT OF INDIA
R.F. Nariman, Navin Sinha, JJ.
M/s. RDB Textiles Ltd. – Appellant
Versus
Commissioner of Central Excise and Service Tax, Kolkata-IV Commissionerate – Respondent
Civil Appeal No.8534 of 2015 With Civil Appeal No.8703 of 2015, Civil Appeal Nos.8725-8726 of 2015, Civil Appeal No.8769 of 2015, Civil Appeal No.8565 of 2015, Civil Appeal No.9153 of 2015, Civil Appeal Nos.8894-8895 of 2015, Civil Appeal Nos.8896-8897 of 2015, Civil Appeal No.13331 of 2015, Civil Appeal Nos.9242-9243 of 2015, Civil Appeal No.9087 of 2015, Civil Appeal No.9249 of 2015, Civil Appeal No.9144 of 2015, Civil Appeal Nos.8885-8886 of 2015, Civil Appeal Nos.8890-8891 of 2015, Civil Appeal No.13330 of 2015, Civil Appeal No.8706 of 2015, Civil Appeal No.8743 of 2015, Civil Appeal Nos.9146-9147 of 2015, Civil Appeal Nos.8759-8760 of 2015
Decided On : 13-02-2018

Advocates Appeared:
For the Appellant :- T.R.B. Sivakumar, Adv.
For the Respondent:- B. Krishna Prasad, Adv.

IMPORTANT POINTS
Markings on the bags showing name of the procurer agency in question such as the FCI, the State Government of Punjab and so on, the crop year, the name of the jute mill concerned, its BIS certification number and the statement that the food grains are manufactured in India as required by Jute control Order and the requisition, made by compulsion of law and not enhancing the value of the jute bags in any manner are not brand name.
Circulars issued by Ministry of Finance are binding on department of Central Excise.

Headnote:(a) Central Excise Act – Section 5A r/w Jute and Jute Textiles Control Order, 2000 – Central Excise Tariff, 63051030 and 63051040 – Brand name – Markings on the bags showing name of the procurer agency in question such as the FCI, the State Government of Punjab and so on, the crop year, the name of the jute mill concerned, its BIS certification number and the statement that the food grains are manufactured in India as required by Jute control Order and the requisition – Made by compulsion of law – Such markings not enhancing the value of the jute bags in any manner – Held, no brand name is involved – a (Para 20)
       (2015) 11 SCC 761; (2005) 8 SCC 308; (2015) 14 SCC 701 – Relied upon
       (2005) 7 SCC 528 – Distinguished
       (b) Administrative law – Circulars issued by Ministry of Finance – Binding on department of Central Excise. (Para 21)
       (2016) 8 SCC 604 – Relied upon
       Facts of the case:
       On 7.3.2011, pursuant to the amended notification of 1.3.2011, the Superintendent (Central Excise) sent a notice to the appellant that as they were selling goods which bore a brand name, excise duty, at the rate of 10%, would be imposed on the aforesaid goods.
       A typical requisition order issued by the Directorate of Supplies and Disposals required the emblem of the purchaser and excise duty payable by the purchaser to be printed on the jute bags manufactured by the appellants.
       Long after the exemption notification of 1.3.2013, by which all jute bags were exempt whether branded or not, a show cause notice was issued on 17.12.2013 for the period from 1.3.2011 to 31.7.2013 demanding a sum of Rs. 30,49,72,784/- by way of excise duty.
       The Commissioner confirmed the show cause notice, even for the period beyond 1.3.2013
       The CESTAT, by the impugned order, set aside the penalty that was imposed and stated that the longer period of limitation could not be availed in the facts of these cases. However, relying strongly upon this Court's judgment in Kohinoor Elastics (supra), it came to the conclusion that since the jute bags had a brand name, the exemption contained in the amended notification of 1.3.2011 would not apply to the appellants.
       Finding of the Court:
       There is no brand name involved.
       Circulars issued by Ministry of Finance are binding on department of Central Excise.
       Result: Appeals allowed.

JUDGMENT

R.F. Nariman, J.

The present appeals arise out of a judgment dated 30.6.2015, passed by the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), in which the CESTAT has denied exemption under excise notifications, referred to hereinafter, in respect of jute bags manufactured by the appellants and supplied to the Food Corporation of India (FCI), various State Governments and Governmental agencies for use in packing of food grains sold through the Public Distribution System (PDS). The said exemption has been denied for a period of two years by holding that affixing the name, logo and particulars of buyers like the FCI and State Governments amounts to affixing on the jute bags a "brand name".

2. In exercise of powers conferred by Section 3(1) of the Jute Packaging Materials (Compulsory Use in Packing Commodities) Act, 1987 (hereinafter referred to as the "Jute Act"), the Central Government has issued orders, from time to time, directing the minimum percentage of food grains required to be packed, from raw jute produced in India, in jute bags manufactured in India to protect the jute industry.

3. At the same time, in exercise of powers conferred by Section 3 of the Essential Commodities Act, 1955, the Central Government has made the Jute and Jute Textiles Control Order, 2000. In exercise of powers conferred by the Jute & Jute Textiles Control Order, the Jute Commissioner issues specific orders, from time to time, to jute mills requiring them to produce specified categories and stated quantities of jute bags, to sell the same to such persons as may be specified by the Director (Supplies and Disposals), who issues requisition orders, wherein the names of the persons to whom supply is to take place, prices of jute bags and other particulars are given. Such prices are exclusive of excise duty. The aforesaid requisition orders are then followed by the issuance of supply orders wherein, inter alia, further details of the prices, delivery period, terms of delivery and markings are mentioned.

4. Shri S.K. Bagaria and Shri Neeraj Kaul, learned senior counsel appearing on behalf of the appellants, referred us to the demands that have been made based, on the amended exemption notifications, and have painstakingly taken us through the record, including the Commissioner's order dated 7.3.2014 and the impugned judgment of the CESTAT. According to learned counsel, the exemption that was granted qua jute bags under the Central Excise Act, 1944 was lifted for a period of two years, from 1.3.2011 till 1.3.2013, only if goods which were manufactured bore a brand name or were sold under a brand name. If the definition of "brand name" is to be seen, according to learned counsel, it will be clear that a "brand name" is a name or a mark which is used in relation to a product for the purpose of indicating a connection in the course of trade between the product and some person using such name or mark. According to learned counsel, using the name of the buyer/procurer of food grains is obviously not a brand name that results in indicating a connection in the course of trade between the jute bag and the said buyer. They argued that the show cause notices proceeded on the footing that using the name of the manufacturer and an emblem of the manufacturer resulted in the use of a brand name, but that the CESTAT, realizing that this could not be so, founded its judgment on the basis of using the name of the buyer/procurer of food grains and that this would be beyond the show cause notices and also, therefore, the CESTAT decision should be set aside. They also argued, relying upon several judgments, that, in the present case, there is no "brand name", as defined, at all, and that, therefore, the show cause notice, the Commissioner's order as well as the CESTAT's order are all incorrect. They further relied upon a letter dated 18.3.2011 and a Minis

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2018 Supreme(SC) 135

Cases Referred (4)