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2008 DIGILAW 121 (MP)

Jepika Paints v. Union of India

2008-01-22

S.KULSHRESHTHA, S.WAGHMARE

body2008
JUDGMENT : S.K. Kulshrestha, J. 1. This appeal has been filed by the Assessee Appellants under the provisions of Section 35(g) of the Central Excise Act, 1944. The appeal has been admitted on the questions formulated in Order dated, 22nd September, 2005 which read as follows: (i) Whether in view of the Clause 4 of the Notification No. 1/93-C.E, dated, 28th February, 1993 exemption to a manufacturer for the first clearances of the duty and concessional duty on subsequent clearances as provided in the Notification can be disallowed if the specified goods bear a brand name or trade name of another person although the proprietor of the brand name or trade name has assigned the same to the manufacturer ? (ii) Whether it was permissible for the C.E.S.T.A.T. to consider a new ground raised by the Revenue which was neither taken in the Show Cause Notice nor in the Adjudication Order and before the Commissioner (Appeals) ? (iii) Whether the impugned Order of the Tribunal is vitiated on account of the fact that despite there being execution of the sale deed in favour of the Assessee, the Tribunal has proceeded on the hypothesis that sale deed had not been executed ? 2. It is not disputed that M/s Jepika Paints, Indore is a small scale industry entitled to exemption within the parameters fixed by the Notification dated, 28th February, 1993 and Shri Bharat Bhushan Gupta is the proprietor of the said manufacturing unit. 3. The unit is engaged in the manufacture of Oil Bound Distemper, Synthetic Enamel Paints etc. which the firm is selling in the name of Jepika. It is averred that this brand name was registered in the name of M/s Jepika Chemicals Industries Pvt. Ltd., Jepika House, Daulatganj, Gwalior of which Appellant No. 2, father of Shri Bharat Bhushan Gupta, was a Director. The use of the brand name was permitted by the father of Appellant No. 2 to the S.S.I.: Unit Appellant No. 1. It is alleged that insofar as the Gwalior unit is concerned, it is not manufacturing or selling the product which is being sold by the Appellants. 4. The Notification Ann. A/4 dated, 28th February, 1993 was issued to provide exemption to first clearances of the specified goods up to the value of Rs. 30,00,000 and concessional duty on subsequent clearances in the case of manufacturer having clearances not exceeding Rs. 4. The Notification Ann. A/4 dated, 28th February, 1993 was issued to provide exemption to first clearances of the specified goods up to the value of Rs. 30,00,000 and concessional duty on subsequent clearances in the case of manufacturer having clearances not exceeding Rs. Two crores in the preceding financial year. There is no dispute that the Appellant No. 1 fulfilled this condition and was granted eligibility in this behalf. The real contest of the parties, however, is on the construction of Clause 4 of the Notification whereof the relevant provision reads as under: 4. The exemption contained in this Notification shall not apply to the specified goods, bearing a brand name or trade name (registered or not) of another person: Provided that nothing contained in this paragraph shall be applicable to the specified goods which are component parts of any machinery or equipment or appliances and cleared from a factory for use as original equipment in the manufacture of the said machinery or equipment or appliances, and: (i) in a case where the clearances of such specified goods are with the first clearances upto an aggregate value not exceeding rupees thirty lacs in a financial year, the manufacturer of the specified goods gives a declaration that the specified goods shall be used as mentioned above. (ii) in any other case, the procedure set out in Chapter X of the said Rules is followed. 5. Learned Counsel for the Revenue submits that since Clause 4 prohibits sale of the specified goods bearing a brand name or trade name of another person, the sales effected by the Appellant S.S.I. unit for the period commencing from 19th April, 1995 to 29th February, 2000 were not entitled to exemption from duty. The contention of the learned Senior Counsel for the Appellants is that since the brand name was assigned by the Gwalior unit to the Appellant No. 1, the Appellant No. 1 became entitled to its use and to sell the product under the said name "Jepika". The contention of the learned Senior Counsel for the Appellants is that since the brand name was assigned by the Gwalior unit to the Appellant No. 1, the Appellant No. 1 became entitled to its use and to sell the product under the said name "Jepika". He has further contended that when the matter was remanded to the Commissioner Central Excise by the CESTAT, the Commissioner Central Excise has acted upon the provisions contained in the agreement and granted exemption in respect of the period commencing from 19th April, 1996 to 29th February, 2000 and the case of the Appellants has been omitted from consideration for the period 19th April, 1995 to 19th April, 1996 as the Tribunal did not remand the case for the said period. 6. We may record to complete the narration of facts, that the Department filed an appeal before the Tribunal which was decided by Order dated, 30th December, 2004 and the Tribunal observed that the benefit of small scale exemption Notification is not available to M/s Jepika Paints upto 18th April, 1996 and remanded the matter to the Adjudicating Authority for consideration of the period commencing from 19th April, 1996 for decision afresh. The question of imposing penalty was also left open to be decided by the Adjudicating Authority. 7. It is in view of the above Order of the Tribunal that the present appeal has been filed against refusal of the Tribunal to accept the case for exemption of the Appellants for the period 19th April, 1995 to 19th April, 1996. 8. Learned Counsel for the Appellants has submitted that although assignments under the erstwhile Trade and Merchandise Marks Act, 1958 require registration, the Supreme Court in Collector of Central Excise Ahmedabad v. Vikshara Trading & Invest. P. Ltd. has observed that when as a matter of fact it is held, that there was an assignment of trade mark in favour of the party and that fact was not in serious dispute, the mere fact that the agreement was not registered could not alter the position. It was stated that it was permissible in law to have same brand name for different classes of goods owned by different persons. Paragraph 3 of the said report reads as under: 3. It was stated that it was permissible in law to have same brand name for different classes of goods owned by different persons. Paragraph 3 of the said report reads as under: 3. The contention put forth before the Tribunal as well as before us is that no document has been shown that the subsequent assignment in favour of M/s. Vikshara Trading & Invest. P. Ltd. was registered as contemplated under the Trade and Merchandise Marks Act, 1958. This aspect was taken note of by the Tribunal that the trade mark need not necessarily be in respect of all goods unless registration has been so acquired and it is, therefore, permissible in law to have same brand name for different classes of goods owned by different person, and in that background found in favour of the Respondent and held, that the Notification No. 223/87-C.E., dated, 22nd September, 1987 was applicable. When as a matter of fact it is held, that there was an assignment in favour of the first Respondent and that fact was not in serious dispute the mere fact that the assignment was not registered could not alter the position. Therefore, we decline to interfere with the Order made by the Tribunal and to that extent the appeal is dismissed in respect of Respondent No. 1. 9. Learned Senior Counsel for the Appellants further invited attention to the decision in Reckitt & Colman of India Ltd. v. Collector of Central Excise in support of his contention that without there being a case of the Revenue the Tribunal erred in segregating the period from 19th April, 1995 to 19th April, 1996 in considering the availability of exemption under the Notification. 10. The short question that arises for determination in this case is as to whether in the wake of the decision of the Commissioner of Appeals for the period subsequent to 19th April, 1996 on the basis of the claim made by the Appellants that they had been duly assigned the trade mark and were, therefore, entitled to its exclusive use insofar as their product was concerned, the exemption could have been declined for the period anterior thereto, i.e., 19th April, 1995 to 19th April, 1996 although the agreement on the basis whereof the exemption was executed as back as on 11th January, 1994. 11. 11. Before we proceed to consider the above question, we may briefly refer to the contention raised by the learned Counsel for the Revenue. Learned Counsel has urged that under the erstwhile Trade and Merchandise Marks Act, 1958 Section 2(a) defines assignment of trade mark to mean "an assignment in writing by act of the parties concerned." Section 37 of the said Act lays down assignability and transmissibility of registered trade mark. 37. Assignability and transmissibility of registered trade marks.- Notwithstanding anything in any other law to the contrary, a registered trade mark shall, subject to the provisions of this Chapter, be assignable and transmissible, whether with or without the goodwill of the business concerned and in respect either of all the goods in respect of which the trade mark is registered or of some only of those goods. 12. According to this provision the registered trade mark is assignable and transmissible, whether with or without the sale of the business concerned and in respect of either or all the goods in respect of which trade mark is registered or of some of these goods. It has not been disputed before us that the goods manufactured by the Appellants to whom the trade mark has been assigned are not the same as the merchandise of the proprietor. Attention was also invited by learned Solicitor General to Section 44 with regard to necessity of registration of such assignments. Section 44 of the Trade and Merchandise Marks Act, 1958 makes provision as under: 44. Registration of assignments and transmissions.- (1) where a person becomes entitled by assignment or transmission to a registered trade mark, he shall apply in the prescribed manner to the Registrar to register his title, and the Registrar shall on receipt of the application and on proof of title to his satisfaction, register him as the proprietor of the trade mark in respect of the goods in respect of which the assignment or transmission has effect and shall cause particulars of the assignment or transmission to be entered on the register: Provided that where the validity of an assignment or transmission is in dispute between the parties, the Registrar may refuse to register the assignment or transmission until the rights of the parties have been determined by a competent Court. (2) Except for the purpose of an application before the Registrar under Sub-section (1) or an appeal from an Order thereon, or an application under Section 56 or an appeal from an Order thereon, a document or instrument in respect of which no entry has been made in the register in accordance with Sub-section (1), shall not be admitted in evidence by the Registrar or any Court in proof of title to the trade mark by assignment or transmission unless the Registrar or the Court, as the case may be, otherwise directs. 13. It is in the context of this requirement that the learned Senior Counsel for the Appellants had referred to the decision in Collector of Central Excise, Ahmedabad v. Vikshara Trading & Invest. P. Ltd. (supra). This requirement having not been found necessary by the Supreme Court in the above decision and the Revenue having acted upon the agreement in question for the period subsequent to 19th April, 1996, we are of the considered view that the Department cannot take the stance contrary to its own action and conclusion. 14. Another contention which was raised by the learned Assistant Solicitor General is that in the statement recorded by the Excise Department, the proprietor of the firm did not point out that the said mark was assigned to them by the proprietor. In the Notification itself, Explanation-IX mentions that brand name or trade shall mean a brand name or trade name whether registered or not. Thus, reference to brand name or trade name in Clause 4 of the Notification is not to the registered trade name or brand name. Under these circumstances, and in view of the specific provisions contained in the exemption Notification, we are of the considered view that the Tribunal erred in holding that the Appellants were not entitled to be considered for grant of registration for exemption for period commencing from 19th April, 1995 and ending on 18th April, 1996. 15. In view of the discussion above, the question formulated are answered in favour of the Appellants only to the extent that the Tribunal shall now consider the case of the Appellants with regard to the period commencing from 19th April, 1995 to 19th April, 1996 in the light of the provisions made in the exemption Notification and the discussion contained hereinabove. 16. 16. With the above direction to the Tribunal, this appeal is disposed of with no Order as to costs.