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CASE NO.: Appeal (civil)  4424 of 2004

PETITIONER: Commnr. of Central Excise, Raipur

RESPONDENT: M/s. Hira Cement

DATE OF JUDGMENT: 02/02/2006

BENCH: S.B. Sinha & P.K. Balasubramanyan

JUDGMENT: J U D G M E N T

S.B. SINHA, J : .

       This appeal under Section 35L(b) of the Central Excise Act, 1944 (for  short "the Act") is directed against a final judgment and order dated  22.1.2004 passed by the Customs, Excise & Service Tax Appellate Tribunal,  New Delhi in Appeal No. 145/2004-B whereby and whereunder the appeal  preferred by the Appellant herein was dismissed.

       The basic fact of the matter is not in dispute.  The assessee is one M/s.  Hira Cement.  It carries on business of manufacture of cement in the town of  Raipur.  It is a small-scale industry (SSI) being a proprietory concern of one  Shri Suresh Agrawal. Another industry, known as M/s. Hira Industries  Limited, is also a manufacturer of cement having a factory in the town of  Jagdalpur which is situated at a distance of about 300 kms. from Raipur.   Hira Industries Limited was incorporated and registered under the  Companies Act on or about 20th October, 1983 whereas the Respondent  herein was set up in the year 1988.  Hira Industries Limited is not a SSI unit.   The unit of the Respondent was earlier known as Bajrang Bali Cement  whereas that of Hira Industries Limited was known as Jai Bajrang Cement  Ltd.  The capacity of production of the Respondent’s cement industry is  about 60 tonnes per day whereas that of Hira Industries Limited is 150  tonnes per day.

       As a SSI unit, the Respondent herein claimed exemption from  payment of excise duty in terms of a notification dated 28.2.1993.  The said  notification was issued under Section 5A of the Act;  paragraph 4 whereof  reads as under:

"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:

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 the procedure set up out in Chapter X of  the said Rules is followed:

Provided further that nothing contained in this paragraph

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shall be applicable to the specified goods where a  manufacturer affixes the specified goods with a brand  name or trade name (registered or not) of the Khadi and  Village Industries Commission or of the State Khadi and  Village Industries Board."

       "Brand name" or "trade name" has been defined in Explanation IX of  the said notification in the following terms :

"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 identify of that person."

       The Respondent herein states :

"Hira Industries Ltd. is thus a Limited company run by  Shri B.L. Agrawal and other Directors whereas Hira  Cement is a proprietorship concern owned by Shri Suresh  Agrawal.  Shri Suresh is the nephew of Shri B.L.  Agrawal and that was the main reason for which both the  units were held to be related parties.  However, there is  no other nexus or relation between Hira Industries Ltd.  and Hira Cement.  Shri B.L. Agrawal and Shri Suresh  Agrawal are not even falls within the ambit of definition  of Relatives as defined under Section 6 of the companies  Act, read with Schedule 1A of the Act.

The Hira Industries Ltd. has hired a portion of premises  of Hira Cement for maintaining its Registered Office at  Raipur and a small godown for keeping its goods.  Hira  Industries Ltd. used to purchase Cement from Hira  Cement and for catering to the needs of its Raipur  customers Hira Industries Ltd. used to keep those goods  in the said godown.  Accordingly, the Registered Office  and Telephone Numbers of Hira Industries Ltd. and  Office Address and Telephone Numbers of Hira Cement  happened to be the same.  Both the entities were  operating independently."

       The Appellant contends that  the Respondent, herein was not entitled  to claim the benefit of SSI exemption on the ground that the same would not  apply to the specified goods bearing a brand name of another person, in view  of the fact that the Respondent has been using the brand name of said Hira  Industries Limited.

       Further contention of the Appellant is that the said Hira Industries  Limited being engaged in the manufacture of cement with the brand name of  Hira Cement which demonstrates the financial interrelationship of both the  concerns as belonging to a group of industries, known as Hira Group of  Industries.   

       Indisputably, 10 show-cause notices were issued by the  Superintendent/ Assistant Commissioner concerned upon the Respondent  calling upon it to show cause as to why the SSI exemption granted to it  should not be disallowed and the duty which was not paid for the period  December, 1993 and  December, 1997 should not be recovered.  In the said  proceedings, the Respondent was held to be not entitled to such exemption.

       However, on an appeal made by the Respondent, by an order dated

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28.12.2001, the Commissioner dropped the proceedings inter alia relying on  or on the basis of a decision of the Tribunal in Emkay Investment Pvt. Ltd.  v. Commissioner [2000 (124) ELT 741 (Tribunal)], holding :   

"Thus, I hold that both firms were not using common  brand name on the packings of their products which will  disentitle the notice from benefit of exemption under  Notification 1/93-CE dtd. 28.2.93 as amended, 7/97-CE  dtd. 1.3.97 (Superseded by Notification No. 16/97-CE  dtd. 1.4.97) and 38/97-CE dtd. 27.6.97 etc. by merely  alleging that they have used the brand name of another  firm, i.e., M/s. Hira Industries Ltd., Jagdalpur.  Hence, I  find that there is no justification in demand of duty of Rs.  49,77,206/- from the noticee for the concerned period  alleged in the Show Cause Notices listed in para \026 I of  this order by disallowing the benefit of exemption  notification No. Notification 1/93-CE dtd. 28.2.93 as  amended, 7/97-CE dtd. 1.3.97 (superseded by  Notification No. 16/97-CE dtd. 1.4.97) and 37/97-CE  dtd. 27.6.97 etc. to the Noticee."

       As regard the question that the Respondent and the said Hira  Industries Limited are related persons to each other, it was held that they are  separate juristic persons.  An appeal thereagainst was preferred by the  Appellant before the Tribunal and by reason of the impugned judgment, the  same was dismissed.

       The Tribunal upon comparing the logos of both Hira Cement and Hira  Industries Limited observed:

"A perusal of the logo and brand name used by the  respondents clearly reveals that their brand name is  "BBC CEMENT", whereas the brand name of M/s. Hira  Industries Ltd. is "HIRA CEMENT".  Merely, because  the logo is similar in both the cases, it cannot be alleged  by the Revenue that the respondents are using the brand  name of another person for the purpose of attracting the  mischief of para 4 of the Notification.  In the present  matter, the Revenue has not established that the brand  name used by M/s. Hira Industries Ltd. is used by the  Respondents.  There is a substantial force in the  submissions of the learned Advocate for the respondents  that the words ’Hira Cement’ written on their bags of  cement is the name of their company and not the brand  name of M/s. Hira Industries Ltd\005"

       It is not in dispute that the Appellant in its notice dated 20th/22nd May,  1992 mentioned that a proceeding was initiated against the Respondent as  also the said Hira Industries Limited as regard valuation of the goods  wherein ultimately by an order dated 21.9.2001, the Commissioner dropped  the proceedings.  It is also not in dispute that in the appeal preferred by the  Appellant, herein before the Tribunal questioning the order dated  28.12.2001, the assessee objected to the maintainability of the appeal by  filing a cross-objection before the Tribunal.  The Commissioner in its earlier  order dated 21.9.2001 opined:

"d) On comparing the two bags submitted by the two  noticees No. 1 and 2 which was submitted by them  during the course of personal hearing on 3.9.2001, it is  clear that notice No. 1’s brand name ’BBC’ was more  prominent on their bags whereas in case of bags of  noticee No. 2 brand ’HIRA’ with a logo of diamond on  top is more prominent.  This fact may be further  corroborated with samples and drawings of HDPE/ Jute  bags submitted by noticee No. 1 to the Assistant

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Collector Central Excise & Customs, Anupam Nagar  Raipur under their letter No. HC: 91-92 dtd. 4.2.92  enclosing the photocopies of the documents.  Hence  noticee No. 1 M/s. Hira Cement (firms name) have used  only brand name ’BBC’ on their products.  They have not  used Hira Cement as their brand name which is being  alleged in the show cause notice belongs to noticee No.  2.  Noticee No. 2 sold their products with brand name  ’HIRA CEMENT’ with diamond logo/ mark on the top.   Brand name of the both the firms are different.  These are  not further substantiated during the course of  investigation and facts brought on the record.

e) Thus, I hold that both the noticees were not using  common brand name on the packings of their product  which will disentitle the noticee No. (1) from benefit of  exemption under notification No. 175/86 by merely  alleging that they have used the brand name of noticee  No. 2.  Hence, I find that there is no justification in  demand of duty of Rs. 326357.75 from noticee No. 1 for  the period 21.6.91 to December, 91 by way of  disallowing the benefit of exemption notification No.  175/86 CE to noticee No. 1"

       However, in the said proceedings, penalties of Rs. 50,000/- and Rs.  25,000/- were imposed against the Respondent and the said Hira Industries  Limited, respectively.

       An appeal thereagainst was preferred by the Respondent to the extent  of demand confirmed on the ground of alleged related person under Section  4 of the Act.  The said appeal was dismissed.  An appeal preferred  thereagainst by the Respondent before this Court was also dismissed.  The  contention of the Respondent in the aforementioned situation is that the said  order dated 21.9.2001 attained finality and, thus, having been accepted by  the Appellant, the present appeal was not maintainable.

       Mr. G.E. Vahanavati, learned Solicitor General appearing on behalf of  the Appellant would, at the outset, draw our attention to the fact that the  decision of the Tribunal in Emkay Investment (supra) has expressly been  reversed by a 3-Judge Bench of this Court in Commissioner of Central  Excise, Calcutta v. Emkay Investments (P) Ltd. and Another [(2005) 1 SCC  526] stating:

"15. We have gone through the common order passed by  the Tribunal. In our view, the Tribunal has erred in not  appreciating that to attract provision of clause 7 of  Notification No. 175/86-CE, it is sufficient that the  product contained a trade mark/logo of another ineligible  person which was fully satisfied in the instant case and  whether the product also contained the brand name/trade  name/logo of the manufacturer would not and cannot  alter such position. Likewise, the interpretation of  Explanation VIII as advanced by the Tribunal does not  appear to be correct in law and in fact. It was imperative  that by using the registered logo "MERINO" belonging  to M/s Merinoply and Chemicals Ltd. on their own  product M/s Emkay Investments Ltd. fulfilled the  purpose of indicating a relation between the said products  and the logo owner so as to influence the trade and  therefore, the provisions of Explanation VIII were fully  satisfied so far as the case on hand was concerned. The  finding of the Tribunal to the contrary, in our opinion, is  wrong and liable to be set aside."

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       It was submitted that in that view of the matter the impugned  judgment of the Tribunal and the order of the Commissioner cannot be  sustained.  As regard the cross-objection filed by the Respondent, it was  urged that the order of the Commissioner dated 21.9.2001 having a limited  effect, the same will not debar the Appellant from maintaining an appeal.  In  any event, the law having been declared by this Court, the decision of the  Commissioner must give way to the decision of this Court.

       Mr. R. Santhanan, learned counsel appearing on behalf of the  Respondent, on the other hand, would submit that once the said order dated  21.9.2001 attained finality, the Appellant did not have any locus standi to  maintain an appeal before the Tribunal and consequently this appeal.  It was  further contended that a finding of fact has been arrived at by the  Commissioner as also the Tribunal to the effect that it is not the assessee  who had been using the brand name of the said Hira Industries Limited and  as if Hira Industries Limited was using the brand name of Hira Cement  belonging to the Respondent herein, the assessee cannot be blamed therfor,  the impugned judgments should not be interfered with.  Drawing our  attention to various distinctive features in the respective logos of the  Respondent as also the said Hira Industries Limited, the learned counsel  urged that the question must be adverted to keeping in view of the fact that  the dispute does not relate to trade mark and in that view of the matter if the  said Hira Industries Limited had been using the premises belonging to the  Respondent as also the telephones which are installed therein or had been  selling cement from it, the same by itself cannot be a ground for holding that  the Respondent had been using the brand name of the said Hira Industries  Limited.  It was submitted that in fact the said Hira Industries Limited had  been purchasing  cement from the Respondent.   

       The purport and object of grant of exemption to  a SSI unit is clear  and unambiguous.  It can be availed of, provided that they satisfy the  conditions precedent therefor.  The criteria for determining the eligibility of  an entrepreneur for becoming entitled to have the benefit of exemption  notification, it is well-settled, must be construed strictly.  [See Tata Iron and  Steel Co. Ltd.  v. State of Jharkhand and Others, (2005) 4 SCC 272 and  Government of India & Ors. v. Indian Tobacco Association, 2005 (6)  SCALE 683].

       In Commissioner of C. Ex., Trichy v. Rukmani Pakkwell Traders  [2004 (165) ELT 481 : (2004) 11 SCC 801], the expression "such brand  name" was considered holding: "7. 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" shows 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 words "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."

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       In Commissioner of Central Excise, Chandigarh-I v. Mahaan Dairies  [2004 (166) ELT 23], the same view was reiterated.  The views expressed  therein have also been reiterated in Commissioner of Central Excise,  Calcutta v. Emkay Investments (P) Ltd. and Another (supra).

The ratio of the decisions referred to hereinbefore shortly stated is that  if the manufacturer uses some brand of its own, it would be entitled to, but it  would not be, for one reason or the other, it had been using the brand of  another.        The learned Commissioner or the learned Tribunal, as noticed  supra, did not have the occasion to consider the question in the light of the  aforementioned decisions of this Court.   

       Emkay Investment (supra) which was the basis for the decision of the  Commissioner has expressly been overruled by this Court.  The cross- objections filed by the Respondent, herein before the Tribunal also had not  specifically been adverted to as the matter relating to maintainability of the  appeal preferred by the Appellant, herein before the Tribunal does not  appear to have been discussed nor any reference thereto has been made in  the concluding paragraph of the judgment.

       Before us, the parties have placed the entire facts.  We may also place  on record that it has been conceded before us by the learned counsel  appearing on behalf of the Respondent that the earlier order dated 26.9.2001  shall not operate as a res-judicata but, as noticed hereinbefore, the only  contention raised was that once the Revenue accepts a judgment, it cannot  raise the said question once again.

       Although some decisions to this effect have been cited by Mr.  Santhanan, we are of the opinion that the matter should be considered afresh  by the Tribunal upon considering all aspects of the matter.  We refrain  ourselves from going into the said question.  We may, however, notice that a  Bench of this Court in Government of W.B. v. Tarun K. Roy and Others,  [(2004) 1 SCC 347] stated:

"\005Non-filing of an appeal, in any event, would not be a  ground for refusing to consider a matter on its own  merits. (See State of Maharashtra v. Digambar.)  In State of Bihar v. Ramdeo Yadav wherein this  Court noticed Debdas Kumar1 by holding:  "4. Shri B.B. Singh, the learned counsel for the  appellants, contended that though an appeal  against the earlier order of the High Court has not  been filed, since larger public interest is involved  in the interpretation given by the High Court  following its earlier judgment, the matter requires  consideration by this Court. We find force in this  contention. In the similar circumstances, this Court  in State of Maharashtra v. Digambar and in State  of W.B. v. Debdas Kumar had held that though an  appeal was not filed against an earlier order, when  public interest is involved in interpretation of law,  the Court is entitled to go into the question.""

       As we intend to remit the matter back to the Tribunal, we should not   make any observation at this juncture which would affect the merit of the  matter one way or the other.  We  may also be misunderstood.  Suffice it to  say that having regard to the definition of the brand name as contained in  Explanation IX to the notification dated 28.2.1993, the matter requires fresh  consideration by the Tribunal upon taking into consideration the fact of the  matter.  If, however, the Tribunal comes to the conclusion or is of the  opinion that further investigation in facts may be necessary, it may pass such  order or orders as it may think fit and proper.   

       This appeal is allowed and the impugned judgment is set aside and the  matter is remitted to the Tribunal for consideration of the matter afresh in the

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light of the observations made hereinbefore.  No costs.