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CASE NO.:

Appeal (civil) 2348-2349 of 2000

PETITIONER:

Commissioner of Central Excise, Trichy

RESPONDENT:

M/s Grasim Industries Ltd.

DATE OF JUDGMENT: 12/04/2005

BENCH:

S. N. Variava, Dr. AR. Lakshmanan & S. H. Kapadia

JUDGMENT:

J U D G M E N T

S. N. VARIAVA, J.

These Appeals are filed against the Judgment of the Customs,

Excise and Gold (Control) Appellate Tribunal (CEGAT) dated 14th

October, 1999. The Respondents are a subsidiary of one M/s Grasim

Industries Ltd. On the bags of cement manufactured by them the

Respondents use the following words:

"Manufactured by Dharani Cements Ltd.

A Subsidiary of Grasim Industries Ltd."

The Tribunal has, following the earlier Judgments of the Tribunal in

the cases of Chemguard Coatings Pvt. Ltd. vs. Commissioner of

Central Excise, Chennai reported in 2000 (116) ELT 43 and Nippa

Chemicals (Pvt.) Ltd. vs. Collector of Central Excise, Madras

reported in 1998 (100) ELT 490, and a Judgment of this Court in the

case of Astra Pharmaceuticals (P) Ltd. vs. Collector of Central

Excise, Chandigarh reported in 1995 (75) ELT 214 (S.C.), held that

the benefit of Notification No. 5/98 CE dated 2nd June, 1998 is not lost

by the Respondents because they show on their product the name of

the holding company, namely M/s. Grasim Industries Ltd.

For a consideration of these Appeals, it is first necessary to set

out Notification 5/98 CE dated 2nd June, 1998, which reads as follows:

"Notification No. 5/98-C.E., dated 2-6-1998

Effective rate of duty for specified goods of Chapters 13 to

96

In exercise of the powers conferred by sub-section (1) of

section 5A of the Central Excise Act, 1944 (1 of 1944), the

Central Government, being satisfied that it is necessary in

the public interest so to do, hereby exempts excisable

goods of the description specified in column (3) of the

Table below or column (3) of the said Table read with the

relevant List appended hereto, as the case may be, and

falling with the Chapter, heading No. or sub-heading No. of

the Schedule to the Central Excise Tariff Act, 1985 (5 of

1986) (hereinafter referred to as the said Schedule),

specified in the corresponding entry in column (2) of the

said Table, from so much of the duty of excise leviable

thereon which is specified in the said Schedule, as is in

excess of the amount calculated at the rate specified in the

corresponding entry in column (4) of the said Table,

subject to the relevant conditions specified in the Annexure

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to this notification, and referred to in the corresponding

entry in column (5) of the said Table.

Explanation. \026 For the purposes of this notification, the

rate specified in column (4), is ad valorem rate, unless

otherwise specified.

TABLE

S.No.

Chapter

or

heading

No. or

sub-

heading

No.

Description

of goods

Rate

Conditions

(1)

(2)

(3)

(4)

(5)

1.

13

Lac

Nil

-

9.

2502.29

All goods

manufactured in.

\026

Factory using

vertical shaft

kiln, with

installed (I)

capacity certified

as not exceeding

300 tonnes per

day or 99,000

tonnes per

annum and the

total clearances

of cement

produced by the

factory, in a

financial year,

shall not exceed

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1,09,500 tonnes;

factory using

rotary kiln, with

installed capacity

(II) certified as

not exceeding

600 tonnes per

day or 1,98,000

tonnes per anum

and the total

clearances of the

cement produced

by the factory, in

a financial year,

shall not exceed

2,20,000 tonnes.

Rs. 2

per

tonne

2

Condition Conditions

No.

1. If the manufacturer of the food preparations

produces a certificate from an officer not below the

rank of a Deputy Secretary to the Government of

India or not below the rank of a Deputy Secretary to

the State Government concerned to the effect that

such food preparations have been distributed free to

the economically weaker sections of the society

under a programme duly approved by the Central

Government or the State Government concerned,

within five months from the date of clearance of such

gods or within such further period as the Assistant

Commissioner of Central Excise may allow in this

regard.

2. If the cement manufacturer produces to the

Assistant (i) Commissioner of Central Excise a

certificate issued by an officer not below the rank of

Director of Industries in the State Government

indicating the installed capacity of the factory.

The explanation under this notification shall be (ii)

applicable upto a maximum quantity of ninety-nine

thousand tones in a financial year. For computing

the quantity of ninety-nine thousand tonnes in a

financial year, the clearances of cement effected

under any other notification shall be included.

However, the clearances of cement effected on

payment of duty at the rate of Rs. 350 per tonne

shall not be taken into account for computing the

above mentioned quantity of ninety-nine thousand

tonnes.

The exemption under this notification shall not be

(iii) applicable to, cement manufactured from such

clinker which is not (a) manufactured within the

same factory and

(b) cement bearing a brand name or trade name

(whether registered or not) of another person;

Explanation. \026 For the purpose of condition (ii),

"brand name" or "trade name" means a brand name

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or trade name, whether registered or not, that is to

say, a name or a mark, such as a symbol,

monogram, signature, or invented words or any

writing which is used in relation to a product for the

purpose of indicating, or so as to indicate, a

connection in the course of trade between the

product and some person using such name or mark

with or without any indication of the identity of that

person."

The Appellants contended that the Respondents were using the

name of M/s. Grasim Industries Ltd. with the purpose of indicating a

connection between the product i.e. the cement manufactured by

them, and M/s Grasim Industries Ltd. which is a well known cement

manufacturer. In reply, it has not been denied that M/s. Grasim

Industries Ltd. is a well known cement manufacturer. It has also not

been denied that the purpose of putting the name "M/s. Grasim

Industries Ltd." was to show a connection between the product and

M/s. Grasim Industries Ltd. However, what has been contended is

that the words "M/s. Grasim Industries Ltd." are neither a brand name

nor a trade name. It is contended that mere use of the name of a

company does not amount to using a brand name or trade name of

some other company.

The Commissioner, by his Order dated 19th May, 1999, held that

the Respondents were not entitled to the benefit of the Notification. It

was held that they were liable to pay a differential duty of Rs.

47,74,961/- and a penalty of Rs. 10,00,000/- under Rule 173Q of the

Central Excise Rule, 1944. The Respondents filed an Appeal before the

CEGAT which, as stated above, has been allowed on the basis of

Judgments referred to earlier.

Apart from the Judgments relied upon by the Tribunal, some

other Judgments of the Tribunal, taking a similar view, have also been

cited before us. It was submitted by Mr. Vellapally, on behalf of the

Respondents, that based on the Judgment of this Court in Astra

Pharmaceuticals (P) Ltd.'s case (supra) the Tribunal has

consistently been holding that the benefit of such Notification is not

lost by use of the name of a company. It was submitted that most of

the Judgments of the Tribunal were not appealed against by the

Department. It was submitted that as no Appeal had been filed

against those Judgments, the Department should not be allowed to

discriminate by filing an Appeal in this case.

In support of this submission reliance was placed upon the

Judgment of this Court in the case of Berger Paints India Ltd. vs.

Commissioner of Income Tax, Calcutta reported in 2004 (165) ELT

488 (S.C.), wherein this Court has held that if the Revenue has not

challenged the correctness of the law laid down earlier and accepted it

in the case of one assessee then it is not open to the Revenue to

challenge the correctness in other cases without a just cause.

Reliance was also placed upon an unreported Judgment passed

in the case of Suptd. Of Central Excise vs. D.C.I. Pharmaceuticals

Pvt. Ltd. in Civil Appeal No. 6862 of 1999 dated 22nd February, 2005.

However, in this case, we find that the Court refused to interfere

because there was an earlier Judgment which had not been challenged

in the case of concerned assessee itself.

We find some substance in this submission. However, Mr. Dutta

points out to us that no Affidavit in Reply had been filed in these

Appeals. He submits that no such contention had been taken in

advance. He states that he is therefore not in a position to make a

statement as to whether or not Appeals were filed against the various

Judgments of the Tribunal shown to this Court. He submits that time

should be given to him in order to find out whether Appeals were filed

or not.

This contention was taken up by Mr. Vellapally after a full day of

argument and only after finding that this Court was against him on

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merits. It is not just a legal submission but is based on a factual

situation which would require checking. After a full hearing this Court

is not going to adjourn this case. As no such contention was taken

earlier by filing any Affidavit in Reply we do not propose to dismiss

these Appeals on this ground. Even otherwise, we find that in all

Judgments, relied upon, the Tribunal has taken a patently erroneous

view. It becomes necessary for this Court to clarify the law so that the

erroneous Judgments of the Tribunal do not remain binding

precedents.

The Judgments of the Tribunal appear to be based upon the

Judgment of this Court in Astra Pharmaceuticals Ltd.' case (supra).

Even in the impugned Judgment Astra Pharmaceuticals Ltd.'s case

has been relied upon. In our view, the Tribunal is misconstruing and

misunderstanding the Judgment of this Court in Astra

Pharmaceuticals Ltd.'s case.

In Astra Pharmaceuticals Ltd.'s case the question was

whether the Appellants (therein) were liable to pay duty on Dextrose

Injection manufactured by it under Tariff Item 14E. The said Tariff

Item read as follows:

"

Tariff

Item

No.

Description of Goods

Rate of duty

Basic

Special

Excise

14E

Patent or Proprietary

Medicines not containing

alcohol, opium, Indian

Hemp or other narcotic

drugs or other narcotics

other than those

medicines which are

exclusively ayurvedic,

unani, sidha or

homoeopathic.

12-1/2%

Adv.

10% of

the basic

duty

chargeable

Explanation : I

"Patent or proprietary medicines" means any drug or medicinal

preparation, in whatever form, for use in the internal or external

treatment of, or for the prevention of ailments in human beings

or animals, which bears either on itself or on its container or

both, a name which is not specified in a monograph in a

Pharmacopoeia Formulary or other publications notified in this

behalf by the Central Government in the Official Gazette, or

which is a brand name, that is a name or a registered trade

mark under the Trade and Merchandise Marks Act, 1958 (43 of

1958) or any other mark such as a symbol, monogram, label,

signature or invented words or any writing which is used in

relation to that medicine for the purpose of indicating or so as to

indicate a connection in the course of trade between the

medicine and some person, having the right either as proprietor

or otherwise to use the name or mark with or without any

indication of the identity of that person.

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Explanation : II.

'Alcohol', 'Opium', "Indian Hemp", "Narcotic Drugs" and

'Narcotics' have the meanings respectively assigned to them in

Section 2 of the Medicinal and Toilet Preparations (Excise Duties)

Act, 1955 (16 of 1955)."

To be immediately noted that in Astra Pharmaceuticals Ltd.'s case

this Court was considering the phrase "Patent or proprietary

medicines". In our case and the other cases earlier dealt with by the

Tribunal the phrase under consideration is "brand name or a trade

name". The subject matter of Tariff Item 14E and the Notifications

being considered are completely different. Whilst interpreting the

phrases "brand name or trade name" an interpretation given in respect

of "Patent or proprietary medicines" can be of no assistance. Even

otherwise, there is a considerable difference between the Explanation

to Tariff Item 14E and the Explanation in the concerned Notification.

The explanation to Tariff Item 14E provides that the patent or

proprietary medicine must, amongst other things, be a brand name

i.e. a name or a registered trade mark under the Trade and

Merchandise Marks Act. In the Explanation under consideration the

"brand name or a trade name" may be registered or unregistered. The

registration need not be only under the Trade and Merchandise Marks

Act. Undoubtedly, the words "any other mark such as a symbol,

monogram, label, signature or invented words or any writing which is

used in relation to that medicine for the purpose of indicating or so as

to indicate a connection in the course of trade between the medicine

and some person" are almost identical. But in the Explanation to Tariff

Item 14E they are used in the context of a "Patent and proprietary

medicine" which must be a name or a registered trade mark under the

Trade and Merchandise Marks Act. In the Explanation to the

concerned Notifications these words are used in the context of a

"Brand name or a trade name". These words, when used in the

context of a "Patent or a proprietary medicine" assume a completely

different context from that when they are used in the context of a

"Brand name or a trade name" which may be registered or not.

Further, the Explanation to Tariff Item 14E nowhere uses the words

"trade name". As is commonly known, a trade name can be a name in

which or by which a person or body carries on their trade. It would, if

the context so permits, include the name of a company. In the

context of a "trade name" the words "a name" and "or any writing"

would cover the name of a company so long as it is used in relation to

the product and is used for the purpose of indicating a connection in

the course of a trade between the product and other person.

As has been set out hereinabove, in this case there is no denial

that M/s. Grasim Industries Ltd. were manufacturer of cement. There

is also no denial that the purpose of using the words:

"Manufactured by Dharani Cements Ltd.

A Subsidiary of Grasim Industries Ltd."

was with an intention of indicating a connection between the product

i.e. the cement and M/s Grasim Industries Ltd. In such cases, clearly

the Respondents were using a trade name of some other company

with the purpose of indicating a connection in the course of trade

between the product and that person. The Respondents were

therefore clearly not entitled to the benefit of the Notification. The

decision of the Tribunal is therefore clearly erroneous and requires to

be set aside.

Reference was made to certain decisions of the Tribunal which

are now required to be taken note of.

In the case of Nippa Chemicals (Pvt.) Ltd.'s case (supra) the

question was whether the Appellants (therein) were entitled to the

benefit of Notification No. 175/86-C.E. dated 1st March, 1986. That

Notification also contained an explanation (being Explanation VIII)

which in terms is identical to the Explanation under consideration by

us. The Appellants therein used the following words:

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"MANUFACTURED IN INDIA BY

NIPA CHEMICALS LTD.,

In Collaboration with

Nihon Parkerizing Co. Ltd., Japan.

46, Garuda Buildings,

Cathedral Road, Chennai-600086.

MARKETED IN INDIA BY

Goodlass Nerolac Paints Ltd.,

GANPATRAO KADAM MARG,

LOWER PAREL, MUMBAI\026400013."

The Tribunal held that the use of these words did not preclude the

Appellants (therein) from availing of the benefit of the Notification. To

be immediately noted that in that case it was neither admitted nor

proved that the words were used to indicate a connection between the

product and Nihon Parkerizing Co. Ltd. The Tribunal so notes. Had

the Tribunal based its decision on this aspect no fault could have been

found. However, the Tribunal then goes on to hold as under:

"9. It is further mentioned in the above said

explanation by stating that the name or a mark means a

symbol, monogram, label, signature or invented word or

writing which is used in relation to such specified goods for

the purpose of indicating the above said connection. The

writings in the above said case, in our opinion cannot come

within the purview of symbol. It cannot also be a

monogram. The same cannot be a label or a signature. It

cannot be an invented word in view of the fact that these

are names of the company but are comprised of two/three

words.

10. The learned JDR stated that this will come

within purview of "name". But in order to come within the

purview of 'name', we have to again look into the definition

of "brand name" and the elaboration given therein. The

elaboration given therein is 'symbol, monogram, label,

signature or invented word or a writing'. We have already

ruled out that it does not come within the purview of a

mark or a symbol or a monogram or label or any invented

word in view of the reasons furnished above.

11. The next question is whether it comes within

the purview of a writing which is used in relation to such

specified goods for the purpose of indicating a connection

in the course of the trade. In this connection, we have to

look into the definition of "WRITE" & "WRITING" in the

OXFORD DICTIONERY. The same are defined as follows:-

Write (r-) v. (past t. Wrote, past part,

Wri'tten). Form symbols representing letter(s) or

word(s) esp. on paper, parchment, etc., with pen,

pencil, brush, etc., form (such symbols), set (words

etc.) down in writing, express in writing; chronicle,

make record or account of; convey (message,

information, etc.) by letter; engage in writing or

authorship; produce writing; ~ down, set down in

writing; write in disparagement or depreciation of;

reduce (total, assets, etc.) to lower amount; ~ off,

record cancelling of (bad debt, depreciated stock,

etc.); reckon as lost or worthless; ~- off (n.)

something that must be regarded as total loss or

wreck, failure; ~ out, make written copy of;

transcribe in full or detail; ~ up, write full account or

record of; give full or elaborate description of;

commend by appreciative writing, praise in writing;

~-up (n.) review or report.

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Writing (r-) n. (esp.) Written document;

(piece of) literary work; personal script, handwriting;

put in ~, write down; the Writings, =

HAGIOGRAPHA; ~- case, case holding writing

materials; ~-desk, desk; ~-master, instructor in

penmanship; the yellow-hammer (from marks like

scribbling on eggs); ~-paper, paper for writing on

with ink, esp. note-paper; ~-table, desk.

12. It is therefore seen that these are certain

words enumerated to project the name of the two

particular companies and they do not come within the

purview of "Writing" or "name". These are mere printed

words indicating the names of two companies. Therefore,

in our view, these will never come within the purview of

"brand name" in view of the fact that they do not come

within the meaning of "name" or "mark" which is

elaborated in the explanation to "brand name" and this

being the position, the arguments of the learned DR

cannot be accepted. .........."

In our view, the Tribunal has completely misdirected itself. The term

"brand name or trade name" is qualified by the words "that is to say".

Thus, even though under normal circumstances a brand name or a

trade name may have the meaning as suggested by the Tribunal, for

the purposes of such a Notification the terms "brand name or trade

name" get qualified by the words which follow. The words which

follow are "a name or a mark". Thus even an ordinary name or an

ordinary mark is sufficient. It is then elaborated that the "name or

mark" such as a "symbol" or a "monogram" or a "label" or even a

"signature of invented word" is a brand name or trade name.

However, the contention is that they must be used in relation to the

product and for the purposes of indicating a connection with the other

person. This is further made clear by the words "any writing". These

words are wide enough to include the name of a company. The

reasoning given by the Tribunal based on a dictionary meaning of the

words "write" and "Writing" is clearly erroneous. Even the name of

some other company, if it is used for the purposes of indicating a

connection between the product and that company, would be

sufficient. It is not necessary that the name or the writing must

always be a brand name or a trade name in the sense that it is

normally understood. The exemption is only to such parties who do

not associate their products with some other person. Of course this

being a Notification under the Excise Act, the connection must be of

such a nature that it reflects on the aspect of manufacture and deal

with quality of the products. No hard and fast rule can be laid down

however it is possible that words which merely indicate the party who

is marketing the product may not be sufficient. As we are not dealing

with such a case we do not express any opinion on this aspect.

This Court has, in the case of Royal Hatcheries Pvt. Ltd. vs.

State of A. P. reported in 1994 Supp (1) SCC 429, already held that

words to the effect "that is to say" qualify the words which precede

them. In this case also the words "that is to say" qualify the words

"brand name or trade name" by indicating that these terms must

therefore be understood in the context of the words which follow. The

words which follow are of wide amplitude and include any word, mark,

symbol, monogram or label. Even a signature of an invented word or

any writing would be sufficient if it is used in relation to the product for

purpose of indicating a connection between the product and the other

person/company. It is thus clear that the Tribunal's decision in Nippa

Chemicals (Pvt.) Ltd.'s case is clearly erroneous and will stand

overruled.

In the case of Collector of Central Excise, Goa vs. Christine

Hoden (I) Pvt. Ltd. reported in 1999 (113) ELT 591 the question was

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whether the use of the word "comfit" with the name "Christine Hoden

London, Rome Stockholm" would disentitle the Respondents therein

from the benefit of the Notification. It was however found, as a matter

of fact, that the word "comfit" was owned by the Respondent. It was

on that basis held that the Respondents therein were entitled to the

benefit of Notification. To this extent the Tribunal was right.

However, the Tribunal has unnecessarily also gone on to comment as

follows:

"Mere indication of the foreign company's name does not

create any association in the course of trade between the

goods and the foreign company."

There would be no purpose in indicating the foreign company's name

in relation to the product except to indicate a connection between the

product and the foreign company. Therefore, to this extent, the

Tribunal is not correct.

In the case of Commissioner of Central Excise, Hyderabad

vs. Sarat Electronics reported in 2004 (167) ELT 404 the question

was whether the Respondents (therein) were entitled to benefit of

Notification No. 1/93-C.E., which Notification was identical to the one

under consideration by us. The Respondents therein used the words

"SARAT" in bold letters following which the words "A quality product

from ITL group" and "Technical licencee of ITL" were also printed. The

Tribunal, following its earlier decisions, held as follows:

"6. In the facts of the present case, we are of the

view that the expression "ITL" was used to convey the

name of the company and not as a trade mark. It showed

that the technical know-how was obtained from Instrument

Techniques Pvt. Ltd. The expression "A quality product

from ITL group" also would not mean that the product was

manufactured by Instrument Techniques Pvt. Ltd.

According to us, the facts of the case are more akin to the

facts in Weigand India (P) Ltd. and Chemguard Coatings

Pvt. Ltd. rather than Chopra Appliances."

In our view, the Tribunal was clearly erroneous. As indicated above,

the Explanation makes it clear that it need not be a trade name or

brand name as commonly understood. Any name or mark or writing,

even the name of a company is sufficient so long as it is used for the

purpose of indicating a connection between the product and that

Company. The use of the words "A quality product from ITL group"

clearly showed an intention to show a connection between the product

and the ITL group. These words indicated that the quality of the

product was the same as that of a product of ITL group. If use of

such words did not disentitle a party from the benefit of the

Notification, we fail to understand what sort of words would disentitle a

party. The decision of the Tribunal in this case is clearly erroneous

and will stand overruled.

In this view of the matter, we set aside the impugned Judgment

and restore the Order passed by the Commissioner of Central Excise

dated 19th May, 1999.

However, by this Order, the Commissioner has also imposed

penalty in a sum of Rs. 10,00,000/- under Rule 173Q of the Central

Excise Rules. While the conclusions of the Commissioner that the

Respondents were not entitled to the benefit of the Notification are

correct, the fact still remains that the Tribunal has in a number of

matters given an interpretation as understood by the Respondent. It

therefore cannot be said that the Respondents could not have taken

the view they did. It cannot be said that they could never have

concluded that they were entitled to the benefit of the Notification.

We therefore feel that this is a case where penalty should not be

imposed. We therefore delete the imposition of penalty on the

Respondents.

The Appeals stand disposed of accordingly. There will be no

order as to costs.