COMMISSIONER CENTRAL EXCISE, DELHIversusM/S. ACE AUTO COMP. LTD.

               [2010] 14 (ADDL.) S.C.R. 1101


        COMMISSIONER CENTRAL EXCISE, DELHI                     A
                           v.
             MIS. ACE AUTO COMP. LTD.
            (Civil Appeal No. 3051 of 2003)
                   DECEMBER 16, 2010
                                                               B
             (D.K. JAIN AND H.L. DATTU, JJ.)

        Central Excise Act, 1944 - Excise duty - Small scale
  industrial unit (SS/) exemption - Assessee using brand name
  of another person on its goods and supplying the goods to C
  the said company - Benefit of SS/ Notification No. 1193 CE
  dated 28.02.1993 and 16197 CE dated 01.04.1997 -
  Entitlement to - Held: Assessee not entitled to the benefit of
  the exemption - By using the said brand name, assessee
  intended to indicate a connection between the goods D
  manufactured by them and other company as also the quality
  of their product as that of a product of the other company -
  Notification No. 1193 - CE dated 28.02.1993 and Notification
  No. 16197- CE dated 01.04.1997.
                                                                 E
        The respondent-assessee, a small scale industrial
  unit, used another person's brand name along with their
  own brand name on the goods manufactured and
  claimed the benefit of SSI Notification Nos. 1/93-CE dated
  28.02.1993 and 16/97-CE dated 01.04.1997. After issuing
  a show cause notice to the respondent, the Adjudicating F
• Authority imposed excise duty and penalty, as mentioned
   in the notice. However, the Commissioner set aside the
  order imposing duty and the penalty. In appeal, the
  Tribunal held that the respondent was entitled to the
   benefit of Notification Nos. 1/93-CE and 16/97-CE. G.
  Therefore, the Revenue filed the instant appeal.

      Allowing the appeal, the Court

      HELD: 1.1 The Notif~~e~ion No. 1 /93 " CE dated          H .
    1102 SUPREME COURT REPORTS [201 OJ 14 (ADDL.) S.C.R.


 A 28.02.1993 as amended, grants exemption from payment
   of central excise duty to small scale industrial units. It
   contains the definition of "brand name" and provides that
   the exemption contained therein shall not be available to
   goods bearing the brand name of another person.
 B Notification No. 16197- CE dated 01.04.1997 contains the
   same. It is manifest from a bare reading of Clause 4 of
   Notification no. 1193 - CE, read with Explanation IX that it
   clearly debars an assessee from the benefit of exemption
   under the Notification, if he uses another person's brand
 c or trade name with the intention of indicating a
   connection between the assessee's goods and such
   other person. The object of the exemption Notification is
   to grant benefits only to those industries which otherwise
   do not have the advantage of brand or trade name. [Paras
.D 10 and 11] [1109-E; 1110-B-E]

       Commissioner of Central Excise, Chandigarh-I/ vs.
  BhallaEnterprises (2005) 8 SCC 308; Commissioner of
  Central Excise,Raipur vs. Hira Cement. (2006) 2 SCC 439;
  Kohinoor Elastics (P) Ltd. vs. Commissioner of Central
E Excise, Indore (2005) 7 sec 528, relied on.

        Commissioner of Central Excise, Trichy vs. Grasim
    Industries Ltd.(2005) 4 SCC 194.- referred to.

       1.2. In order to avail of the benefit of the exemption
F Notification, the assessee must establish that his product
  is not associated with some other person. If it is shown
  that the assessee has affixed the brand name of another
  person on his goods with the intention of indicating a
  connection between the assessee's goods and the
G goods of another person, using such name or mark, then
  the assessee would not be entitled to the benefit of
  exemption notification. If the assessee is able to satisfy
  the Adjudicating Authority that there was no such
  intention, or that the user of the brand name was entirely
H
 COMMISSIONER CENTRAL EXCISE, DELHI v. ACE 1103
             AUTO COMP. LTD.

fortuitous, it would be entitled to the benefit of the        A
exemption. [Para 14) [1112-F-H]

    1.3. In the instant case, the brand name "TATA" did
not belong to the assessee. By using the said brand
name, the assessee not only intended to indicate a
                                                              B
connection between the goods manufactured by them
and a Tata Company, but also the quality of their product
as that of a product of Tata Company, as they were
supplying their goods to the said company. Thus, the bar
created in Clause 4 read with Explanation IX of the           C
Notification is clearly attracted in the instant case,
disentitling the assessee from the benefit of the
exemption Notifications under consideration. The
decision of the tribunal is clearly erroneous. The
impugned order is set aside and the order passed by the
Adjudicating Authority is restored. [Paras 15 and 16)         D
[1113-A-D]

     Commissioner of Central Excise, Calcutta vs. Emkay
Investments (P) Ltd. & Anr. (2005) 1 SCC 526;
Commissioner of Central Excise, Chandigarh-I vs. Mahaan       E
Dairies (2004) 11 SCC 798; Commissioner of Trade Tax,
UP. and Anr. vs. Kajaria Ceramics Ltd. (2005) 11 SCC 149;
Pappu Sweets and Biscuits· and Anr. vs. Commissioner of
Trade Tax, UP. (1998) 7 SCC 228; Nirlex Spares (P) Ltd. vs.
Commissioner of Central Excise (2008) 2 SCC 628;              F
Commissioner of Central Excise, Jamshedpur vs. Superex
Industries, Bihar (2005) 4 SCC 207; Commissioner of
Customs, Mumbai. vs. Toyo Engineering India Ltd. (2006) 7
SCC 592; Commissioner of Central Excise, Nagpur vs.
Ballarpur Industries Ltd. (2007) 8 SCC 89, referred to.
                                                              G
                    Case Law Reference:
    (2005) 1 sec 526          Referred to.        Para 8
    (2004) 11 sec 798          Referred to.       Para 8
                                                              H
    1104 SUPREME COURT REPORTS [2010] 14 (ADDL.) S.C.R..


A       (2005) 11 sec 149           Referred to.         Para 9
        (1998) 1 sec 228            Referred to.         Para 9
        (2008) 2 sec 628            Referred to.         Para 9
        (2005) 4 sec 201            Referred to.         Para 9
B
        (2006) 1 sec 592            Referred to.         Para 9
        (2007) 8 sec 89             Referred to.         Para 9
        (2005) 8 sec 308            Relied on.           Para 11
c
        (2006) 2 sec 439            Relied on.           Para 11
        (2005) 1 sec 528            Relied on.           Para 12
        (2005) 4 sec 194            Referred to.         Para 13
D       CIVIL APPELLATE JURISDICTION : Civil Appeal No.
    3051 of 2003.

       From the Judgment & Order dated 10.10.2002 of the
    CEGAT, New Delhi in Appeal No. E/1405/2002-B.
E
        B. Bhattacharya, ASG, Shipra Ghose, Arijit Prasad, B.K.
    Prasad for the Appellant.

        S.K. Bagaria, Nitya Bagaria for the Respondent.

F       The Judgment of the Court was delivered by

       O.K. JAIN, J. 1. The present civil appeal, filed under
  Section 35(L)(b) of the Central Excise Act, 1944 (for short "the
  Act") by the Revenue, is directed against order dated 1oth
  October, 2002 passed by the Customs, Excise & Gold (Control)
G Appellate Tribunal (for short "the Tribunal") wherein it has been
  held that the respondent was entitled to the benefit of
  Notifications Nos. 1/93-CE and 16/97-CE.

        2. Shorn of unnecessary details, the facts material for the
H
 COMMISSIONER CENTRAL EXCISE, DELHI v. ACE 1105
       AUTO COMP. LTD. [D.K. JAIN, J.]

adjudication of the present appeal may be stated as under:                 A

    The respondent (hereinafter referred to as "the assessee"),
a small scale industrial unit (for short "SSI"), is engaged in the
manufacture of clutch plates, clutch cover assemblies and
pressure plates, falling under sub-heading No. 8708.00 of the              8
Schedule to the Central Excise Tariff Act, 1985. Admittedly, the
assessee prefixed the symbol and logo "TATA" along with their
own brand name "ACE" on cover assembly manufactured for
TATA 310 vehicle. The assessee filed declaration Nos. 545/
96 w.e.f 4th November 1996; 104/97 w.e.f. 25th March, 1997;
105/97 and 106/97 w.e.f. 1st April 1997, claiming the benefit              C
of SSI Notification Nos. 1/93 and 16/97.

     3. A raid was conducted at the premises of the assessee,
which resulted in issuance of a show cause notice dated 13th
May, 1998 to the assessee asking them to explain as to why                 D
duty amounting to '1,46,151/-; and penalty under Rules 9(2),
173Q and 226 of the Central Excise Rules, 1944 (for short "the
Rules") together with penalty under Section 11 AC of the Act
may not be levied on them, for clearing branded goods of
another person.                                                            E

    4. The Additional Commissioner of Central Excise (for
short "the Adjudicating Authority"), vide Order-in-Original No.06
dated 3rd June, 1999, while confirming the duty and penalty as
contained in the show cause notice, observed that:
                                                                           F
     "Any person who buys the product, it is the TATA brand
     name which will strike the eyes of the buyer first as it is a
     well known and established brand name rather than the
     other logo ACE. As such going by the Tribunal decision
     cited by the party the case has to be decided against                 G
     them ............................................................ .

     14. The other point raised by the party is that since they
     do not sell the product to TATA's, the owner of the brand
     name TATA, there is no connection between the branded
                                                                           H
    1106 SUPREME COURT REPORTS [2010] 14 (ADDL.) S.C.R.

A      prqduct and the brand name owner. I fail to see the logic
       in this contention. The explanation IX to notification no. 1/
       93 dated 28.2.1993 merely means that by looking at a
       particular brand name or trade name an association
       between the brand name owner and the product should
B      get established. In fact this is the very purpose of using a
       brand name. In the instant case any person buying the
       product will naturally assume the product to have the
       quality, specification etc. associated with products of TATA
       group. It is not necessary to actually sell the product to
c      TATA companies to establish any connection between the
       product and the brand name owner.

       15. Thus once it is held that the cover assembly was
  branded with the TATA logo which did not belong to the party,
  and no evidence was produced that the TATA group of
D companies was themselves eligible for the excise exemption,
  benefit of notification 1/93 and 16/97 cannot be extended to
  these products manufactured by the party but carrying the TATA
  brand name or logo."·

E       5. Being aggrieved, the assessee preferred an appeal
    before the Commissioner of Central Excise (Appeals). The
    Commissioner (Appeals), vide order dated 10th February,
    2002, allowed the appeal, observing thus:

        "5.4 Thus, we find that the appellate bodies are treating
F       any slight variation in the brand names as different entities
        as in "Mahaan" and "Mahaan Tastemaker" or "AGI" and
        "AGI Switches". Here, the two conflicting brand names are
        "TATA" and "TATA ACE" and the sole reason for this
        usage of the name "TATA" is that it stands earmarked for
G       a particular vehicle. They are also manufacturing auto parts
        for use in the other vehicles of different manufacti.:rers for
        which they do not use this logo.

        5.5. In the light of the above decisions of the Hon'ble
H       CEGAT, I have no alternative but to follow the judicial
COMMISSIONER CENTRAL EXCISE, DELHI v. ACE 1107
       AUTO COMP. LTD. [D.K. JAIN, J.]

      precedent. I thus hold that 'TATA ACE' brand name is            A
      different from the popular brand name "TATA"."

     6. Aggrieved, the revenue took the matter further in appeal
to the Tribunal. As stated above, vide the impugned order, the
Tribunal has dismissed the appeal. The Tribunal has come to
                                                                      B
the conclusion that:

      "According to the Notification, exemption shall not apply if
      the specified goods are bearing the brand name of another
      person. It is not the case of the Revenue that 'Tata Ace' is
      the brand name of another person. The very fact that there      C
      is no material to prove that the brand name, which the
      excisable goods manufactured by the respondents bear,
      belongs to another person, the mischief of Para 4 of the
      Notification No. 1/93 will not be attracted.
                                                                      D
      We also find substance in the finding of the Commissioner
      (Appeals) that the usage of the name 'Tata' in the brand
      name is with a view to indicate that the part is for a
      particular vehicle manufactured by Tata."
                                                                      E
      7. Hence, the present civil appeal.

     8. Mr. B. Bhattacharya, learned Additional Solicitor
General appearing on behalf of the Revenue, while assailing
the impugned order, urged that in light of the decisions of this      F
Court in Commissioner of Central Excise, Calcutta Vs. Emkay
Investments (P) Ltd. & Anr1• and Commissioner of Central
Excise, Chandigarh-I Vs. Mahaan Dairies2 , it is settled that
whenever the assessee affixes the brand name of another
person on its goods with the intention to indicate some               G
connection between the goods and the said brand name, the
assessee is barred from availing the benefit of the Notifications.
It was asserted that in view of the fact that indubitably the brand
1.   (2005) 1 sec 526.
2.   (2004) 11 sec 798.                                               H
    1108 SUPREME COURT REPORTS (2010) 14 (ADDL.) S.C.R.


A name "TATA", which did not belong to the assessee but to
  another identified company, had been affixed by the assessee
  on their product, although in conjunction with the word "ACE"
  the Tribunal's conclusion that there was no material to prove
  that the brand name "TATA ACE" belonged to another person,
B is clearly a misconstruction of para 4 of the notifications in
  question and therefore, its decision deserves to be set aside.

         9. Mr. S.K. Bagaria, learned senior counsel, appearing as
    Amicus Curiae, submitted that the Tribunal has rightly
    concluded that there was no evidence to prove that the brand
C   name 'TATA ACE" belonged to another person, and the said
    finding of fact deserves to be affirmed as it has not been
    specifically challenged by the Revenue. Learned counsel
    argued that in the present case the pre-requisite for invoking
    paragraph 4 of Notification No. 1/93 is not satisfied in as much
D   as the Revenue has not been able to establish that the brand
    name 'TATA ACE" belongs to another person. In support of the
    submission that the burden to prove that the brand name
    belongs to another person is on the Revenue, learned counsel
    placed reliance upon the decision of this Court in
E   Commissioner of Trade Tax, U.P. & Anr. Vs. Kajaria
    Ceramics Ltd. 3 . Commending us to the decision of this Court
    in Pappu Sweets and Biscuits & Anr. Vs. Commissioner of
    Trade Tax, UP., Lucknow\ learned counsel argued that
    paragraph 4 of Notification No.1/93 being an extlusionary
F   clause, the same has to be strictly construed. Learned counsel
    contended that since both the Tribunal as also the
    Commissioner (Appeals) have concluded that the use of the
    word "TATA" was merely to denote that the product was meant
    for use in a particular vehicle, the affixation of 'TATA" was
G   merely descriptive of the assessee's product and not as if the
    goods had been marketed with another brand name. Relying
    on the decisions of this Court in Nirlex Spares (P) Ltd. Vs.

    3.   (2oos) 11 sec 149.
    4.   (1998) 1 sec 228.
H
COMMISSIONER CENTRAL EXCISE, DELHI v. ACE 1109
      AUTO COMP. LTD. [D.K. JAIN, J.]

Commissioner of Central Excise 5 ; Commissioner of Central             A
Excise, Jamshedpur Vs. Superex Industries, Bihar6 and
Emkay Investments (P) Ltd. (supra), learned counsel submitted
that mere use of the word "TATA" should not disentitle the
assessee from the benefit of the two Notifications. Learned
counsel further urged that the Revenue's argument that the use         B
of the word "TATA" would create an impression in the minds
of the consumer that the said product was manufactured by one
of the Tata companies was misplaced in as much as no such
test was envisaged under the Notifications. Moreover, the
Revenue had not made any such allegation in the show cause             c
notice, and in light of the decisions of this Court in
 Commissioner of Customs, Mumbai Vs. Toyo Engineering
 India Ltd. 7 and Commissioner of Central Excise, Nagpur Vs.
Ballarpur Industries Ltd. 8 , it is trite that the foundation of the
Revenue's case is laid in the show cause notice, and the same
                                                                       D
must be confined to the allegations contained therein.

    10. Before adverting to the rival submissions, it would be
useful to extract relevant portions of Notification No. 1/93-CE
dated 28th February, 1993 as amended, which grants
exemption from payment of Central Excise duty to small scale           F·
industrial units. It read as:

      "4. The exemption contained in this notification shall not
      apply to the specified goods, bearing brand name or trade
      name (registered or not) of aRother person:                      F .



      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,                 G

5.   (2008) 2 sec 628.
6.   (2005) 4 sec 207.
7.   (2006) 7 sec 592.
8.   (2007) a sec 89.                                                  H
    1110 SUPREME COURT REPORTS [2010] 14 (ADDL.) S.C.R.


A         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
B         indication of the identity of that person."

  Notification No. 16/97- CE dated 1st April, 1997 contains the
  same definition of "brand name" as Notification No. 1/93-CE,
  and also provides that the exemption contained therein shall
C not be available to goods bearing the brand name of another
  person.

       11. It is manifest from a bare reading of Clause 4 of the
  Notification, read with Explanation IX that it clearly debars an
  assessee from the benefit of exemption under the notification,
D if he uses another person's brand or trade name with the
  intention of indicating a connection between the assessee's
  goods and such other person. It is evident that the object of the
  exemption notification is to grant benefits only to those
  industries which otherwise do not have the advantage of brand
E or trade name. (See: Commissioner of Central Excise,
  Chandigarh-I/ Vs. Bhalla Enterprises; 9 Nirlex Spares (P) Ltd.
  (supra); Commissioner of Central Excise, Raipur Vs. Hira
  Cement. 10)

          12. In Kohinoor Elastics (P) Ltd. Vs. Commissioner of
F   Central Excise, Indore, 11 while construing an identical
    notification (No.1of1993-CE), dated 28th February 1993, this
    Court had observed that:

          "Clause 4 of the notification is unambiguous and clear. It
G         specifically states that the exemption contained in the
          notification shall not apply to specific goods which bear a

    9.   (2005) 8 sec 308.
    10. (2006) 2 sec 439.
H 11. (2005) 7 sec 528.
COMMISSIONER CENTRAL EXCISE, DELHI v. ACE 1111
      AUTO COMP. LTD. [D.K. JAIN, J.l

    brand name or trade name (registered. or not) of another A
    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 B
    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 c
    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 . D
    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 manufactured as per the orders of
    customers or which are to be captively consumed then
    manufacturers, who are otherwise not entitled to F
    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 G ·.
    exemption is lost if the "goods" bear a brand/trade name
    of another."

     We are in respectful agreement with the reasoning in the
afore-extracted paragraph.                                      H
    1112 SUPREME COURT REPORTS (2010] 14 (ADDL.) S.C.R.


A       13. In Commissioner of Central Excise, Trichy Vs. Grasim
    Industries Ltd. 12 , a Bench of three judges of this Court, while
    construing Notification No. 5/98-CE, dated 2nd June 1998,
    which was similar to the one under consideration by us, had
    observed that:
B
        " .... 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
c       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
D       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."
E
                                        (Emphasis supplied by us)

        14. Therefore, in order to avail of the benefit of the
  exemption notification, the assessee must establish that his
  product is not associated with some other person. To put it
F differently, if it is shown that the assessee has affixed the brand
  name of another person on his goods with the intention of
  indicating a connection between the assessee's goods and the
  goods of another person, using such name or mark, then the
  assessee would not be entitled to the benefit of exemption
G notification. We may hasten to clarify that if the assessee is able
  to satisfy the Adjudicating Authority that there was no such
  intention, or that the user of the brand name was entirely
  fortuitous, it would be entitled to the benefit of the exemption.

H 12. c2oos) 4 sec 194.
COMMISSIONER CENTRAL EXCISE, DELHI v. ACE 1113
      AUTO COMP. LTD. [D.K. JAIN, J.]

     15. In the instant case, admittedly, the brand name "TATA" A
did not belong to the assessee. It is also evident that by using
the said brand name, the assessee had not only intended to
indicate a connection between the goods manufactured by them
and a Tata Company; but also the quality of their product as
that of a product of Tata Company, as they were supplying their B
goods to the said company. Thus, the bar created in Clause 4 ·
read with Explanation IX of the Notification is clearly attracted
in the present·case, disentitling the assessee from the benefit
of the exemption notifications under consideration. We are of
the opinion that the decision of the Tribunal is clearly erroneous  c
and deserves to be set aside.

       16. Consequently, for the foregoing reasons, the appeal
is allowed; the impugned order is set aside and the order
passed by the Adjudicating Authority is restored.
                                                                    D
     17. Before parting with the case, we place on. record our
deep appreciation for the valuable assistance rendered by Shri
S.K. Bagaria, the learned Amicus Curiae.

       18. There will be no ord.er as to costs.
                                                                    E
N.J.                                              Appeal allowed.