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CASE NO.: Appeal (civil)  8563 of 2001

PETITIONER: Commissioner of Central Excise, Jaipur

RESPONDENT: M/s Sri Ganganagar Bottling Co

DATE OF JUDGMENT: 31/08/2007

BENCH: Dr. ARIJIT PASAYAT & S.H. KAPADIA

JUDGMENT: J U D G M E N T

CIVIL APPEAL NO. 8563 of 2001

Dr. ARIJIT PASAYAT, J.

1.      Appellant calls in question legality of the judgment  rendered by the Customs, Excise and Gold (Control) Appellate  Tribunal, New Delhi  (in short the ’Tribunal’) holding that the  respondent  which is a small scale industrial unit (in short the  ’SSI Unit’) is eligible for exemption in terms of Notification  No.1/93-CE dated 28.2.1993.  

2.      Background facts in a nutshell are as follows:          The respondents are manufacturers of aerated water.  They are SSI units. They manufactured aerated water and  cleared the same after affixing the brand name "Citra" during  the period 1993-94. The brand name belonged to another  person namely M/s Limca Flavours and Fragrances Ltd. (in  short ’M/s Limca’) which was eligible for exemption (as SSI  unit) under Notification No.1/93-CE dated 28.2.1993. These  facts are not in dispute. The Department by show cause notice  (in short ’SCN’) proposed to recover Central Excise Duty on the  clearances of the aforesaid branded goods effected by the  appellants in 1993-94, alleging that the exemption under the  Notification was not available to such goods inasmuch as  identical goods were not manufactured by the brand name  owners. The party contested the notice. The dispute was  adjudicated by the jurisdictional Assistant Commissioner,   who accepted the assessees’ defence and dropped the  proceedings. The defence was that it was sufficient for  purposes of para 4 of Notification No.1/93 that the brand  name owner should also be eligible for exemption under the  Notification and it was not necessary that they should actually  manufacture identical goods and market the same affixed with  the brand name. This contention was accepted by the Asst.  Commissioner. The order of the Assistant Commissioner was  reviewed and accordingly, an appeal was preferred by the  Department to the Commissioner (Appeals). The lower  appellate authority allowed the Department’s appeal.  Assessees preferred appeals before the Tribunal. As noted  above, Tribunal allowed the appeals.

3.      In support of the appeal, learned counsel for the  appellant submitted that the real purpose of paragraph 4 of  the Notification has been lost sight of.

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4.      In response, learned counsel for the respondent  submitted that the Tribunal’s view is unexceptionable and the  appeal is sans merit.  

5.      We notice that in the instant case the brand name owner  M/s Limca which is SSI unit had eligibility for availing the  exemption under the Notification No.1/93-CE in respect of the  products. Therefore, the question whether there is brand name  of owner for exemption under the Notification did not arise.  

6.      In the instant case, the brand name owner was also a  unit eligible for exemption under the Notification and was the  manufacture of specified goods. That being so, the view taken  by the Tribunal has to be accepted.  

7.      In the case of Namtech Systems Ltd. v. Commissioner of  Central Excise, New Delhi (2000 (115) E.L.T./ 238 (Tribunal),  the larger Bench of CEGAT has held that affixation of specified  good with a brand name of ineligible Indian manufacturer will  entail disqualification from exemption. It was further held that  the benefit of small scale exemption under Notification No.  175/86-CE as amended, is not available to the specified goods  if they are affixed with the brand name or trade name of a  trader who is not a manufacturer. The judgment of the larger  Bench in Namtech Systems Ltd.’s case (supra) has not been  considered by the CEGAT in present case.  

8.      Notification No.175/86-C.E. dated 1.3.1986 reads as follows:

"EXEMPTION TO SMALL SCALE UNITS In the exercise  of the powers conferred by  sub rule (1) of rule 8 of the Central Excise  Rules, 1944 and in supersession of the  notification of the Government of India, in the  Ministry of  Finance (Department of Revenue)  No. 85/85-Central Excises dated the 17th  March, 1985 the Central Government hereby  exempts the excisable goods of the description  specified in annexure below and falling under  the Schedule to the Central Excise  Tariff  Act,  1985 (5 of 1986) (hereinafter referred to as the  "specified goods’), and cleared for home  consumption on or after the 1st day of April in  any financial year, by a manufacturer from  one or more factories.\027

xxx                              xxx                            xxx ANNEXURE xxx                             xxx                             xxx  4. All other goods specified in the said  Schedule other than the following, namely :-

(i) all goods failing under Chapters 9, 24, 31,  51, 52, 53. .54, 55, 56, 57, 58, 59, 60, 61, 62,  71, 73 and 74;

(ii) all goods falling under heading Nos. 21.06,  25.04, 36.03, 40.11, 40:12, 40.13, 87.01,  87.02, 87.03, 81.04, 81.05, 87.06, 87.11,  91.01, 91.02 and 96.13;

(iii) all goods fallings under sub-heading Nos.  2101.10, 2101.20, 3304.00, 3305.90,  3307.00, 4005.00, 4006.10, 4008.21 and

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9505.10 and

(iv) Sandalwood oil strips of plastic intended  for weaving of fabric or sacks, polyurethane  foam and articles of polyurethane loam  broadcast television receiver sets refrigerating  and air-conditioning appliances and  machinery, and parts and accessories thereof.

9.      The said Notification was amended by Notification  No.223/87-C.E. dated 22.9.1987.  The amendment reads as  follows:

"In exercise of the powers conferred by  sub-rule (1) of Rule 8 of the Central Excise  Rules, 1944, the Central Government hereby  makes the following further amendments in  the Notification of the Government of India in  the Ministry of Finance (Department of  Revenue) No. 175/86- Central Excise, dated  the 1st March, 1986, namely: In the said notification, \027  (I) after paragraph, 6, the following paragraph  shall be inserted, namely:-

"7. The exemption contained in this  notification shall not apply to the  specified goods with a brand name  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:

Provided that nothing contained in  this paragraph shall be applicable in  respect of the specified goods cleared for  home consumption before the 1st day of  October, 1987".

(ii) after Explanation VII, the following  Explanation shall be inserted, namely :-

"Explanation VIII - "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 o the identity  of that person."

10.     Clause 7 of the Notification after amendment deals with  exemption of specified goods and circumstances where the  exemption is not available.  The notification is ’goods specific’.  What is required is that a person, who may be a  manufacturer, must be eligible for exemption under the  notification in respect of the specified goods.  Any other  interpretation would render the purpose for which the

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notification has been issued redundant.   

11.     As noted above, the notification is ’goods specific’. The  emphasis is on ’specified goods’.  

12.     The intention is crystal clear that at the relevant time,  the unit should be eligible for exemption under the  Notification in respect of the ’specified goods’.     

13.     The position was discussed at length by this Court in  Commissioner of Central Excise, Chandigarh v. M/s Khanna  Industries & Ors. (2006 (9) Supp. SCR 725).

14.     Above being the position, the appeal is without merit and  deserves dismissal which we direct. There will be no order as  to costs.