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High Court of Judicature at Madras
THE HONOURABLE MR. JUSTICE RAJU
Kali Aerated Water Works - Appellant
Versus
Union of India - Respondents
Writ Petition No. 8825-8832 & 9864 to 9868 of 1994
Decided On : 16 December 1994
CENTRAL EXCISE - EXEMPTION - SSI UNITS - BRAND NAME - NOTIFICATION NO. 59/94-C.E., DATED 1-3-1994 - PARAGRAPH 4 - VALIDITY - CHALLENGE - HELD, THE PROVISION CONTAINED IN PARAGRAPH 4 OF THE NOTIFICATION IN QUESTION DENYING THE BENEFIT OF EXEMPTION TO THE CATEGORY OF MANUFACTURERS WHO USE THE BRAND OR TRADE NAME BELONGING TO OTHERS FOR HIS OWN PRODUCT CANNOT BE SAID TO BE PABLY ARBITRARY OR DEMONSTRABLY UNREASONABLE SO AS TO RENDER THE SAID PROVISION UNCONSTITUTIONAL.
Fact of the Case:
The petitioners are manufacturers of aerated waters and other non-alcoholic drinks, fruit juices falling under Chapter 22 of the Central Excise (Tariff) Act, 1983. They have been availing of the exemption to a limit of Rs. 30 lakhs upto which they need not pay excise duty in view of Notification No. 175/86 C.E., which came to be amended periodically by Notification No. 223/87, dated 22-9-1987 and 1/93 dated 1-3-1993. Then came the amendment in Notification No. 59/94 C.E., dated 1-3-1994 with effect from 1-4-1994 incorporating amendments which included the addition of paragraph 4, stipulating that if a person manufacture excisable goods bearing brand names of another person, then even if it is a small scale industry it will not be entitled to claim the minimum exemption and duty has to be paid from its first and every production.
Finding of the Court:
The Court held that the provision contained in paragraph 4 of the Notification in question denying the benefit of exemption to the category of manufacturers who use the brand or trade name belonging to others for his own product cannot be said to be palpably arbitrary or demonstrably unreasonable so as to render the said provision unconstitutional.
Issues: Whether the provision contained in paragraph 4 of the Notification in question denying the benefit of exemption to the category of manufacturers who use the brand or trade name belonging to others for his own product is valid.
Ratio Decidendi: The Court held that the impugned para 4 does not have the effecting of varying or altering the character of the levy from Excise Duty into any other levy nor within the competence of the State, either pursuant to a legislation or subordinate legislation. Thus, on a careful consideration of the various submissions noticed supra, I am of the view that the petitioners have not made out any sufficient cause or substantiated any patent legal infirmity in the provision contained in paragraph 4 of the Notification in question so as to justify interference by this Court with the said provision.
Final Decision: The writ petitions were dismissed.
These writ petitions involve for consideration identical issue on similar factual circumstances apart from concerning the same subject matter and learned counsel appearing on either side also made submissions in common. Hence dealt with together for consideration.
2.So far as the Writ Petition in W.P. No. 8825 of 1994 is concerned, the factual claims and legal contentions raised in the affidavit filed in support thereof may be set out in some detail. The above Writ Petition has been filed for the issuance of a writ ofcertiorarified mandamusto call for and quash the noti- fication of the first respondent in No. 59/94-C.E., dated 1-3-1994 particularly paragraph 4 thereof and consequently direct the respondents to grant exemption to the petitioner under Notification No. 175/86-C.E. as amended to-day. The petitioner claims that he is carrying on business in the manufacture and sale of aerated waters and other non-alcoholic drinks, fruit juices falling under Chapter 22 of the Central Excise (Tariff) Act, 1983 since 1-4-1977 in the name and style of M/s. Kali Aerated Works at Virudhunagar Trading and Marketing the products manufactured in and around the entire district of Kamarajar District, part of Madurai District and part of Ramanathapuram District.
3.The petitioner states that originally the business was founded by the petitioner's paternal grandfather late P.V.S.K. Palaniappa Nadar in the year 1916, under the trade name M/s. Kali Aerated Water Works with Headquarters at Virudhunagar and branches at various places like Madras, Trichy Tirunelveli, Madurai, Karaikudi, Salem, Kumbakonam and Erode. The business was said to have been started as Joint-Family business consisting of P.V.S.K. Palaniappa Nadar, his three sons, K.P. Rajendran, K. P. Dharmarajan, father of the petitioner in this Writ Petition, K. P. Ganesan and Mrs. Damayanthi Ammal, the only daughter. It is also stated that the said business was run as Joint Family Partnership Firm and the Partnership firm was strictly restricted to only the family members of the Founder. With passage of time, it is claimed the sons of the first two sons were also said to have been inducted into the partnership since the third son had no sons and the son of the daughter referred to supra was also likewise inducted as partner. The products of the business, it is stated, at all places were being marketed under the brand name of 'KALI MARK' and as the volume of business and the name as well as reputation increased branches at Madurai, Madras, Trichy, Kumbakonam and Salem were said to have been opened. The said business was said to have been continued by K.P. Rajendran even after the death of the Founder, as thekarthaafter due reconstitution of the Firm, in the same trade name. In the reconstituted firm, the family members of the above referred to sons and daughter were said to have been included, maintaining the identity of the business as Joint Family business.
4.As the volume of the business at the various branches and centres also increased, it is claimed that, the partners resolved to dissolve the Joint Family nature of it and make the various units themselves independent. Consequently, it is stated that the dissolution was effected on 31-3-1977 and on and from 1-4-1977 all the then existing branches at various centres were made independent with its own financial investment, machineries and other infrastructural facilities for carrying on such business. It is stated that thereafter all the members of the Joint Family became independent and continued the business in the same name M/s.Kali Aerated Water Workswith respective places in brackets viz., Kali Aerated Water Works (Virudhunagar) in order to distinguish them from one unit to another unit each one of such units with their factory earmarked and exclusively allotted a specific marketing area into which the other members shall have no right to market their products in view of the same and identical brand marks as well as the na
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