Page 1 REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 2826 OF 2006

COMMISSIONER OF

CENTRAL EXCISE, CHENNAI-

II COMMISSIONERATE,

CHENNAI

— APPELLANT

VERSUS

M/S AUSTRALIAN FOODS

INDIA (P) LTD., CHENNAI

— RESPONDENT

J U D G M E N T

D.K. JAIN, J.

1.The short question of law which arises for consideration in

this appeal is, whether the manufacture and sale of

specified goods that do not physically bear a brand name,

from branded sale outlets, would disentitle an assessee

from the benefit of S.S.I. Notification No. 1/93-C.E., dated

28

th

February, 1993, as amended from time to time.

2.Briefly stated, the material facts giving rise to the appeal,

are as follows:

Page 2 Pursuant to an inspection by the officials of the

enforcement Commissionerate, Chennai-II at the sales outlet

of the respondent (hereinafter referred as “the assessee”),

revealed that the assessee was engaged in the manufacture

and sale of cookies from branded retail outlets of “Cookie

Man”. The assessee had acquired this brand name from M/s

Cookie Man Pvt. Ltd, Australia (which in turn acquired it from

M/s Auto- bake Pvt. Ltd., Australia). The brand name used

the words “Cookie Man” accompanied with a logo depicting

the smiling face of a mustachioed chef. The assessee was

selling some of these cookies in plastic pouches/containers

on which the brand name described above was printed. No

brand name was affixed or inscribed on the cookies. Excise

duty was duly paid, on the cookies sold in the said

pouches/containers. However, on the cookies sold loosely

from the counter of the same retail outlet, with plain plates

and tissue paper, duty was not paid.

3.The retail outlets did not receive any loose cookies nor did

they manufacture them. They received all cookies in

sealed pouches/containers. Those sold loosely were taken

out of the containers and displayed for sale separately.

Even though no separate register was maintained to

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Page 3 account for the sale of the cookies sold loosely, their

numbers were calculated from the number of empty

pouches/containers left behind at the end of day.

4. On scrutiny of the documents recovered from the said

outlet and on the basis of the statement of the Executive

Director, a notice dated 20

th

December, 2012 was issued

to the assessee by the Commissioner to show cause as to

why (i) the cookies sold by the assessee at its outlets be

not classified under Chapter sub-heading 1905.11 as

biscuits and (ii) in view of their use of brand name “Cookie

Man” on sale of cookies in plastic pouches/containers,

S.S.I. exemption should not be disallowed.

5.Upon consideration of the explanation furnished by the

assessee, the Commissioner inter-alia came to the

conclusion (relevant for the controversy at hand) that

unless the specified goods or the packaging in which

these are sold, bear the brand name or the logo,

prescribed S.S.I. exemption cannot be denied. Thus, the

Commissioner held that since there was neither any

material evidence nor averment to prove that the brand

name was embossed on the cookies, the assessee was

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Page 4 eligible to avail of the benefit of small scale exemption in

respect of cookies sold loosely from the counter of the

retail outlet. Being aggrieved by the order, both the

Department and the assessee filed cross appeals before

the Customs, Excise and Service Tax Appellate Tribunal,

South Zonal Bench at Chennai (hereinafter referred to as

“the Tribunal).

6. The decision of the Commissioner having been affirmed

by the Tribunal, the revenue is before us in this appeal

under Section 35L(b) of the Central Excise Act, 1944 (for

short “the Act”).

7.There is no dispute that the specified good is to be

classified under sub-heading 1905.11 as Biscuits,

manufactured with the aid of power. The controversy

revolves around para 4 of S.S.I. notification No. 1/93-C.E.

dated 28

th

February, 1993, which, in its erstwhile form,

read as follows: -

“4. The exemption contained in this notification

shall not apply to the specified goods where a

manufacturer affixes the specified goods with a

brand name or trade name (registered or not) of

another person who is not eligible for the grant

of exemption under this notification…”

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Page 5 8.The meaning of a “brand name” or “trade name” is

enunciated in Explanation IX of the said notification which

says: -

“Explanation IX- ‘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.”

9.Para 4 of the said notification that deals with exemption

for certain goods “affixed” with a brand name was

amended vide notification No. 59/94-C.E. dated 1

st

March,

1994, to read:-

“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…”

10.Part (iii) of para J of the Budget Changes-1994-95 dealt

with “Changes in the SSI schemes” explains the purpose

of the amendment in the following words:

“(iii) Brand name provision has been amended

so as to provide that SSI concession shall not

apply to the goods bearing the brand name or

trade name of another person. The effect of this

amendment is that if an SSI unit manufactures

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Page 6 the branded goods for another person

irrespective of whether the brand name owner

himself is SSI unit or not, such goods shall not

be eligible for the concession. Another

implication of this amendment is that the

requirement of affixation or brand name by the

SSI unit has been changed and now the only

condition is that the goods cleared by SSI unit

bearing a brand name of another person shall

not be eligible for the concession irrespective of

the fact whether the brand name was affixed by

the SSI unit or that, the input material used by

the SSI unit was already affixed with brand

name.”

11. Mr. N.Venkataraman, learned senior counsel appearing

on behalf of the assessee argued that a combined reading

of Para 4 and Explanation IX of the notification, along with

Para J of the Budget Changes, would lead to the

conclusion that only specified goods bearing an affixed

brand name, or in other words, those goods that

physically display the brand name, are not covered by the

exemption. Learned counsel relied on the decision of this

Court in the case of Commissioner of Central Excise,

Jamshedpur Vs. Superex Industries, Bihar

1

for the

proposition that a physical manifestation of a brand name

on a good is a necessary requirement for disqualification

from the exemption granted by the concerned notification.

Learned counsel also relied on the same decision to urge

1

(2005) 4 SCC 207

6

Page 7 that this Court cannot look into the surrounding

circumstances of a good, especially the specific outlet

from which it is sold, to construe if it is branded or not;

scrutiny, in his opinion, must be limited to the specified

good itself. The relevant paragraph of the order on which

emphasis was laid, reads as follows:

“3. CEGAT has held that the benefit of the

notification would be lost only if the

manufacturer affixes the specified goods with a

brand name or trade name of the another who

is not eligible to the exemption under the

notification. It could not be denied that the

name Kirloskar is not affixed to the generating

sets. CEGAT has held that merely because, in

the invoices, the set is passed off as a Kirloskar

generating set, the benefit of the notification

would not be lost. We see no infirmity in this

reasoning. We, therefore, see no reason to

interfere.”

12.We are unable to appreciate as to how a compulsory

requirement of physical manifestation of a brand name on

the specified good, for it to be construed as a branded

good, can be derived from the above passage. The

decision in the above case simply recognizes that the

benefit would be lost only if a manufacturer affixes the

specified goods with a brand or trade name of another

who is not eligible for the exemption under the

notification. It does not state that the specified good must

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Page 8 itself bear or be physically affixed with the brand or trade

name. Such an interpretation would lead to absurd results

in case of goods, which are incapable of physically bearing

brand names. For instance, the goods, which, due to their

very nature and structure, are incapable of bearing brand

names, would always be deemed unbranded. Liquids, soft

drinks, milk, dairy products, powders, edible products,

salt, pepper, sweets, gaseous products, perfumes,

deodorants etc., to name a few, are either liquids, gases

or amorphous/brittle solids, making it impossible for the

good to be affixed with a brand name. In some situations,

such an affixation may be impossible, in which case, it

would be permissible for the specified good to continue

being a branded good, as long as its environment conveys

that it is branded. By environment we mean packaging

and wrapping of the good, accessories it is served with,

uniform of vendors, invoices, menu cards, hoardings and

display boards of outlet, furniture and props used, the

specific outlet itself in its entirety and other such factors,

all of which together or individually or in parts, may

convey that a good is a branded one, notwithstanding that

there is no physical inscription of the brand or trade name

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Page 9 on the good itself. Further, a specific, dedicated and

exclusive outlet from which a good is sold is often the

most crucial and conclusive factor to hold a good as

branded. The decision referred to above only made a

limited point that invoices alone cannot be the sole basis

of construing whether a good is a branded good or not; it

does not hold that a specified good itself must be stamped

with a brand name. It is therefore, permissible to look

into the environment of the good. However, like in the

case of Kirloskar generators [ Superex Industries

(supra)], invoices bearing brand name could not be the

sole basis of construing whether goods are branded or

not. That decision would depend on the facts and

circumstances of the case. There can be no precise

formula for such a determination; in some cases certain

factors may carry more weight than in other situations.

However, in most circumstances, an exclusive branded

outlet from which the good is sold, would be a crucial

factor in determining the question.

13. Learned counsel strongly relied on another decision of

this Court in Kohinoor Elastics (P) Ltd. Vs.

Commissioner of Central Excise, Indore

2

, for the

2

(2005) 7 SCC 528

9

Page 10 proposition that only the “specified good” in question

must be scrutinized and the expression cannot be

expanded to mean “specified outlets” or other

surrounding circumstances. To bring home his point,

reliance was placed on the following paragraphs from the

said decision:

“5. Clause 4 of the notification is unambiguous

and clear. It specifically states that the exemption

contained in the notification shall not apply to

specific goods which bear a brand name or trade

name (registered or not) of another person. It is

settled law that to claim exemption under a

notification one must strictly comply with the

terms of the notification. It is not permissible to

imply words into the notification which the

legislature has purposely not used. The framers

were aware that use of a brand/trade name is

generally to show to a consumer a connection

between the goods and a person. The framers

were aware that goods may be manufactured on

order for captive consumption by that customer

and bear the brand/trade name of that customer.

The framers were aware that such goods may not

reach the market in the form in which they were

supplied to the customer. The framers were aware

that the customer may merely use such goods as

an input for the goods manufactured by him. Yet

clause 4 provides in categoric terms that the

exemption is lost if the goods bear the brand/trade

name of another. Clause 4 does not state that the

exemption is lost only in respect of such goods as

reach the market. It does not carve out an

exception for goods manufactured for captive

consumption. The framers meant what they

provided. The exemption was to be available only

to goods which did not bear a brand/trade name of

another. The reason for this is obvious. If use of

brand/trade names were to be permitted on goods

1

Page 11 manufactured as per the orders of customers or

which are to be captively consumed then

manufacturers, who are otherwise not entitled to

exemption, would get their goods or some inputs

manufactured on job-work basis or through some

small party, freely use their brand/trade name on

the goods and avail of the exemption. It is to

foreclose such a thing that clause 4 provides, in

unambiguous terms, that the exemption is lost if

the “goods” bear a brand/trade name of another.”

xxxxx xxxxx xxxxx

“7. ….Now in this case there is no dispute on

facts. The “course of trade” of the appellants is

making elastics for specified customers. It is an

admitted position that the appellants are affixing

the brand/trade name of their customers on the

elastics. They are being so affixed because the

appellants and/or the customer wants to indicate

that the “goods (elastic)” have a connection with

that customer. This is clear from the fact that the

elastics on which brand/trade name of ‘A’ is

affixed will not and cannot be used by any person

other than the person using that brand/trade

name. As set out hereinabove once a brand/trade

name is used in the course of trade of the

manufacturer, who is indicating a connection

between the “goods” manufactured by him and

the person using the brand/trade name, the

exemption is lost. In any case it cannot be

forgotten that the customer wants his brand/trade

name affixed on the product not for his own

knowledge or interest. The elastic supplied by the

appellants is becoming part and parcel of the

undergarment. The customer is getting the

brand/trade name affixed because he wants the

ultimate customer to know that there is a

connection between the product and him…”

14.We feel that to hold from the above passages that

every good must be physically stamped with a brand or

1

Page 12 trade name to be considered a branded good in terms of

the notification, and that, one is forbidden to look beyond

the specified good into the surrounding environment of

the good in construing if it is a branded good or not, would

be a complete misunderstanding of the above judgment

and a distortion of the concept of a brand or trade name.

The above judgment makes no such observation and was

delivered on a completely different set of facts and

circumstances. It involved a case of undergarments

manufactured by a producer P2, which used branded

elastics produced by P1, and retained the brand name of

P1 in the final product. P2 was denied exemption under

the same notification involved in the present case

because of the appearance of brand name of another i.e.

P1, not covered by the same notice. P2 argued that the

presence of P1’s brand name should not be taken as a

basis for disqualification from the benefits of the

exemption since the customer buying the good would

continue to associate the good with P2 and not P1, thus

making it a branded good of only P2. This Court rejected

the contention and held that P1 is providing a stamped

input for captive consumption to P2 “because he wants

1

Page 13 the ultimate customer to know that there is a connection

between the product and him”. The Court further

observed that the term “specified goods” is used without

any caveats and hence rejected the contention that some

consideration should be given to the fact that P1 was used

only as an input in the making of the final product of P2.

It is in this background that this Court observed that the

requirement of the notifications must be adhered to

strictly and cannot be diluted by substituting the term

“specified goods” with the nature of goods or the manner

of disposal. In case the specified good clearly exhibits a

brand name of another not covered by the notification, it

would squarely fall within the confines of Para 4 of the

notification; looking beyond the specified good to consider

whether it is an input or not is not necessary in case of a

conspicuous brand name. However, to apply this principle

to the scenario of a specified good that does not contain a

brand name at all would be equivalent to fitting a square

peg in a round hole. If a final product is marked or

stamped with a brand name, it is clearly a branded good;

to stretch this principle to imply that one not marked by

any brand is an unbranded good, is untenable. In case a

1

Page 14 scrutiny of the good itself fails to reveal a brand name

then the search must not end there; one ought to look

into the surrounding circumstances of the good to

decipher, if it is in fact branded or not.

15.We are of the opinion that such an approach is

necessary to maintain the essence of the concept of a

brand name. A brand/ trade name must not be reduced to

a label or sticker that is affixed on a good. The test of

whether the good is branded or unbranded, must not be

the physical presence of the brand name on the good, but

whether it, as Explanation IX reads, “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

the person.” Therefore, whether the brand name appears

in entirety or in parts or does not appear at all cannot be

the chief criterion; primary focus has to be on whether an

indication of a connection is conveyed in the course of

trade between such specified goods and some person

using the mark. Highlighting this principle, this Court in

1

Page 15 Commissioner of Central Excise, Trichy Vs. Rukmani

Pakkwell Traders

3

observed thus: -

“6. The Tribunal had also held that under the

notification the use must be of “such brand

name”. The Tribunal has held that the words “such

brand name” show that the very same brand

name or trade name must be used. The Tribunal

has held that if there are any differences then the

exemption would not be lost. We are afraid that in

coming to this conclusion the Tribunal has ignored

Explanation IX. Explanation IX makes it clear that

the 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, code number,

design number, drawing number, symbol,

monogram, label, signature or invented word or

writing. This makes it very clear that even a use of

part of a brand name or trade name, so long as it

indicates a connection in the course of trade would

be sufficient to disentitle the person from getting

exemption under the notification. In this case,

admittedly, the brand name or trade name is the

word “ARR” with the photograph of the founder of

the group. Merely because the registered trade

mark is not entirely reproduced does not take the

respondents out of clause 4 and make them

eligible to the benefit of the notification.”

16.Similarly, in Commissioner of Central Excise,

Chandigarh-I, Vs. Mahaan Dairies

4

, it was noted as

follows:

“6. We have today delivered a judgment

in CCE v. Rukmani Pakkwell Traders , (2004) 11

SCC 801 wherein we have held in respect of

another notification containing identical words that

it makes no difference whether the goods on

3

(2004) 11 SCC 801

4

(2004) 11 SCC 798

1

Page 16 which the trade name or mark is used are the

same in respect of which the trade mark is

registered. Even if the goods are different, so long

as the trade name or brand name of some other

company is used the benefit of the notification

would not be available. Further, in our view, once

a trade name or brand name is used then mere

use of additional words would not enable the party

to claim the benefit of the notification.”

“8. It is settled law that in order to claim benefit of

a notification, a party must strictly comply with the

terms of the notification. If on wording of the

notification the benefit is not available then by

stretching the words of the notification or by

adding words to the notification benefit cannot be

conferred. The Tribunal has based its decision on a

decision delivered by it in Rukmani Pakkwell

Traders v. CCE (1999) 109 ELT 204 (CEGAT). We

have already overruled the decision in that case.

In this case also we hold that the decision of the

Tribunal is unsustainable. It is accordingly set

aside.”

17.As aforesaid, once it is established that a specified good

is a branded good, whether it is sold without any trade

name on it, or by another manufacturer, it does not cease

to be a branded good of the first manufacturer. Therefore,

soft drinks of a certain company do not cease to be

manufactured branded goods of that company simply

because they are served in plain glasses, without any

indication of the company, in a private restaurant. The

good will continue to be a branded good of the company

that manufactured it. The same principle would apply in

1

Page 17 the case of potato chips, chocolates, biscuits, wafers,

powders and other such goods often sold from various

locations.

18.In case of goods sold from exclusive single brand retail

outlets or restaurants or stores, the fact that a good is

sold from such a store ought to be a relevant fact in

construing if the good is its branded good or not. In the

case of such goods, perhaps a rebuttable presumption

arises in favour of such goods being branded goods of the

specified store. Such a presumption can be rebutted if it is

shown that the specified good being sold is in fact a

branded good of another manufacturer. Thus, branded

potato chips, soft drinks, chocolates etc. though sold from

such outlets, will not be considered to be goods of such

outlets. However, all other goods, sold without any

appearance of a brand or trade name on them, would not

be deemed unbranded goods; to the contrary, they may

be deemed to be branded goods of that outlet unless a

different brand or trade name appears.

19.Hence, we hold that it is not necessary for goods to be

stamped with a trade or brand name to be considered as

branded goods under the SSI notification, discussed

1

Page 18 above. A scrutiny of the surrounding circumstances is not

only permissible, but necessary to decipher the same; the

most important of these factors being the specific outlet

from which the good is sold. However, such factors would

carry different hues in different scenarios. There can be

no single formula to determine if a good is branded or not;

such determination would vary from case to case. Also,

our observations must be limited to this notification and

not supplanted to other laws with similar subject matter

pertaining to trade names and brand names.

20.Applying the said principles on the facts at hand, we fail

to see how the same branded cookies, sold in containers,

can transform to become unbranded ones, when sold from

the same counter, or even from an adjoining counter,

without packaging carrying the brand name. Admittedly,

on the same cookies, physically bearing brand “Cookie

Man” sold in containers carrying brand name duty is paid.

It is interesting to note that learned counsel appearing on

behalf of the assessee first argued that to determine if the

cookies sold from the counter are branded or not, scrutiny

must be limited to the case of the cookies themselves

without looking at the surrounding circumstances; yet

1

Page 19 went on to argue that the tissues and plates they were

served on did not bear the brand of the specified good.

Either the environment of the goods can be looked into, or

cannot be taken into consideration at all. Once it is

established, as in the instant case, that the environment

of the goods can be gone into to construe if it is branded

or not, we do not see why the environment of the goods

should be limited to the plates and tissues, on which they

are served. As aforesaid, in the instant case, the cookies

were sold from a dedicated outlet of “Cookie Man” where

no other products but those of the assessee were sold.

The invoices carry the name of the company and the

cookies were sold from a counter of the store. In our

opinion, the store’s decision to sell some cookies without

containers that are stamped with its brand or trade name

does not change the brand of the cookies. We are

convinced that the cookies sold even without inscription of

the brand name, indicate a clear connection with the

brand name, in the course of assessee’s business of

manufacture and sale of cookies under the brand name

“Cookie Man”. They continue to be branded cookies of

1

Page 20 “Cookie Man” and hence cannot claim exemption under

the SSI Notification.

21.In view of the aforegoing discussion, we are of the

opinion that the impugned decision of the Tribunal is

erroneous and unsustainable. Consequently, the appeal is

allowed and the impugned order is set aside, leaving the

parties to bear their own costs.

……..………………………………….

(D.K. JAIN, J.)

……..………………………………….

(JAGDISH SINGH KHEHAR,

J.)

NEW DELHI,

JANUARY 14, 2013

RS

2