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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.