COMMISSIONER OF CENTRAL EXCISE, HYDERABAD IVversusM/S. STANGEN IMMUNO DIAGNOSTICS

                      [2015] 4 S.C.R. 528


A    COMMISSIONER OF CENTRAL EXCISE, HYDERABAD IV
                               v.
             M/S. STANGEN IMMUNO DIAGNOSTICS

                (Civil Appeal No. 9157 of 2003)
B
                       MARCH 19, 2015.

            [A.K. SIKRI AND R. F. NARIMAN, JJ.]

c      Central Excise Act, 1944 - Excise duty - Benefit of
  exemption/concessional rate of duty under the Notification
  No.175186-CE dated 1.3.1986 - Assessee-Small scale
  industrial unit (SS/) using the brand name 'Stangen' on
  the goods manufactured by it - Assessee granted benefit
o of exemption/concessional rate of excise duty under the
  Notification - Subsequently, issuance of notice to
  assessee that benefit of Notification was claimed wrongly
  as the use of brand name 'Stangen' and also logo
  belonged to DRL Company-manufacturer of bulk drug and
E under the Notification, exemption is denied in cases where
  the manufacturer (SS/) affixes the specified goods with a
  brand name or trade name registered or not, of another
  person who is not eligible for grant of exemption under the
  Notification - Proceedings dropped by the Adjudicating
F Authority on the ground that the goods were different -
  Tribunal also dismissed appeal filed by the department
  holding that the goods manufactured by the assessee
  were different from the goods manufactured by DRL - On
  appeal, held: Authorities below did not examine the matter
G in the right perspective - Factual aspects can be
  established before the Adjudicating Authority - Thus,
  matter remitted back to the Commissioner, Central Excise


H                             528
                                    (


   COMMNR. OF CENTRAL EXCISE, HYDERABAD IV v.                529
         STANGEN IMMUNO DIAGNOSTICS

to hear the respondent de nova on the said notice and A
decide the matter afresh after taking into consideration
the law laid down - Notification No. 175186-CE dated
1.3.1986.

    Commissioner of Central Excise, Chandigarh-I vs. B
Mahaan Dairies (2004) 11 SCC 798; Commissioner of
Central Excise, Chandigarh-II vs. Bhalla Enterprises 2005
(8) sec 308; Tarai Food Ltd. v. CCE (2007) 12 sec
721; CCE vs. Grasim Industries Ltd. 2005 (3) SCR 466:
(2005) 4 SCC 194; Nirlex Spares (P) Ltd. vs. C
Commissioner of Central Excise 2008 (1) SCR 117:
(2008) 2 sec 628 - referred to.

                 Case Law Reference
                                                              D
  (2004) 11 sec 798          Referred to.     Para 7

  2005 (8) sec 308           Referred to.     Para 8

  (2007) 12 sec 121          Referred to.     Para 11
                                                              E
  2005 (3) SCR 466           Referred to.     Para 12

  2008 (1) SCR 117           Referred to.     Para 14

   CIVIL APPELLATE JURISDICTION: Civil Appeal No.
9157 of 2003.                                                 F

    From the Judgment and Order dated 31.12.2002 of the
Customs Excise and Gold (Control) Appellate Tribunal South
Zonal Bench, Bangalore in Appeal No. E/66/1999.
                                                              G
    A. K. Sanghi, Nisha Bagchi, Ritesh Kumar, B. Krishna
Prasad for the Appellant.

     Neelima Tripathi, S. Majuvdan (For Dr. Kailash Chand)
for the Respondent.
                                                              H
530      SUPREME COURT REPORTS                [2015] 4 S.C.R.


A       The Judgment of the Court was delivered by

       A.K. SIKRI, J. 1. The respondent herein is the
  manufacturers of composite diagnostics or laboratory
  regents and pharmaceutical goods. It is registered as a
B small scale industrial unit (SSI unit). The respondent was
  using the brand name 'Stangen' on the goods manufactured
  by it. It is an admitted case that this brand name 'Stangen'
  was affixed on the packing of the goods and even on the
  goods manufactured. The respondent started availing the
C benefit of exemption/concessional rate of duty under
  Notification No.175/86-CE dated 1.3.1986 which grants
  exemption or concessional rate of excise duty to the SSI
  units.

o       2. However, in the year 1997 a show cause
  notice was issued to the respondent by the appellanU
  Excise Department stating that the respondent is wrongly
  claiming the benefit of the aforesaid Notification inasmuch
  as use of the brand name 'Stangen' and also the logo
E belonged to Dr.K.Anji Reddy, Chairman of Dr.Reddy's
  Laboratories (DRL). It was stated that DRL is the
  manufacturer of bulk drugs falling under Chapter 30 of the
  Central Excise Tariff Act, 1985, and the trade mark
  'Stangen' and related logo are used on the printed labels
F foils of the P & P medicine manufactured by DRL and also
  appear on .the classification list filed by the DRL. On this
  basis in the show cause notice it was mentioned that the
  respondent was not entitled to the benefit of concessional
  rate of duty under the aforesaid Notification inasmuch as
G para 7 of the said Notification denied exemption in those
  cases where the manufacturer (SSI) affixes the specified
  goods with a brand name or trade name, registered or not,
  of another person who is not eligible for grant of exemption
H under this Notification. Explanation VII I to the said
   COMMNR. OF CENTRAL EXCISE, HYDERABAD IV v.                  531
    STANGEN IMMUNO DIAGNOSTICS [AK. SIKRI, J.]

Notification which defines brand name reads as under:-          A

     " 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 B
     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 C
     of the identity of that person.

     3. The respondent replied to the aforesaid show cause
notices in which it was admitted that Dr.K.Angi Reddy is
the Chairman of Dr. Reddy Group of Industries which             D
includes the respondent Company as well as DRL. The
defence, however, was that Dr. K.Angi Reddy had not
assigned the trade mark either to the respondent firm or any
other manufacturer. It was also mentioned that the
respondent as well as the DRL are Public Limited                E
Companies having separate legal entities of their own with
their own independent spheres of activities. In this behalf
the contention was that DRL manufactured altogether
different products than the products mentioned by the
respondent Company. A pl_ea was also raised that Dr.            F
K.Angi Reddy in his individual capacity was not a
manufacturer within the meaning of said expression as
defined in the Central Excise Act. By raising the aforesaid
submissions request was made to drop the proceedings.
The aforesaid argument raised by the respondent                 G
persuaded the Adjudicating Authority who dropped the
proceedings.

   4. Challenging the said order, the Department filed an
appeal before the Customs, Excise and Gold (Control)            H
     532       SUPREME COURT REPORTS                 [2015) 4 S.C.R.


     A Appellate Tribunal (CEGAT). The contention of the
       Department was that dropping of the proceedings by the
       Commissioner only on the ground that the goods
       manufactured by the respondent are different from the
       goods manufactured by DRL was untenable as it is not a
     B relevant factor at all. However, this plea of the Department
       did not even prevail with the CEGAT which has, vide
       impugned judgment dated 31.12.2003, dismissed the
       appeal observing that the goods manufactured by the
       assessee were different from the goods manufactured by
     C DRL and as per the settled law the use of brand of another
       would attract only when that the Commissioner had reached
       an erroneous finding with regard to the goods being
       different. This order of the CEGAT is assailed in the
     D present proceedings.

            5. We have already taken note of para 7 of
       Notification No.175/86-CE as well as definition of brand
       name appearing in Explanation VIII contained in the said
       Notification. As far as para 7 is concerned, it states that the
     E benefit of exemption would not apply to the specified goods
       where a manufacturer affixes the specified goods with
       brand name or trade name (registered or not) of another
       person who is not eligible for grant of exemption under this
     F Notification. As per this, in order to deny the exemption
       under this Notification, the Department has to show that on
       the goods which are          manufactured          by      the
       manufacturer i.e. the SSI, the brand under or trade name
       of another person is affixed and that another person is
     G not eligible for grant of exemption in this Notification.
       In other words, when that other person             w h o s e
       brand name or trade name is used by the SSI is not itself
       a SSI, then the user is not entitled to exemption under the
       said Notification.
     H


..
   COMMNR. OF CENTRAL EXCISE, HYDERABAD IV v.               533
    STANGEN IMMUNO DIAGNOSTICS [AK. SIKRI, J.]

      6. Explanation VIII defines that brand name or trade      A
name. As per this explanation, it would be 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 the trade between        B
such specified goods and some person using such name
or mark with or without any indication of the identity of the
person. Therefore, what follows from the reading of this
Explanation is that if the brand name is used in relation to
the specified goods indicating a connection in the course       C
of the trade between such specified goods and some other
person using the name, it would fit the description and the
matter would be covered by the mischief of Explanation VIII.
It is no where stated that brand name which is the name of      D
other person and is being used by the SSI which is
claiming benefit has to be in relation to same goods.
Therefore, that could not have been reason to drop the
 proceedings and the CEGAT was not justified in dismissing
the appeal of the Department on this ground.                    E
    7. The aforesaid principle of law is no more res integra
and has been decided by this Court authoritatively in couple
of judgments. In Commissioner of Central Excise,
Chandigarh-I Vs. Mahaan Dairies (2004) 11 SCC 798 this F
Court while interpreting the similar nature of definition of
brand name or trade name, held as under :

     "We have today delivered a judgment in CCE
     v. Rukmani Pakkwell Traders wherein we have held in
     respect of another notification containing identical G
     words that it makes no difference whether the goods
     on which the trade name or mark is used are the
     same in respect of which the trade mark is registered.
     Even if the goods are different, so long as the trade H
534         SUPREME COURT REPORTS                  [2015] 4 S.C.R.


A          name or brand name of some other company is used
           the benefit of the notification would not be available.
           Further, in our view, once a trade name or brand
           name is used then mere use of additional words
           would not enable the party to claim the benefit of the
B          notification.

      8. It is clear from the above that the Court was of the
  view that even if the goods are different, so long as brand
  name or trade name of some other Company is used, the
C benefit of Notification would not be available. To the same
  effect is the judgment of this Court in the case of
  Commissioner of Central Excise, Chandigarh-II vs. Bhalla
   Enterprises (2005 ('8) SCC 308) wherein aforesaid
  judgment in Mahaan Dairies was followed by reiterating the
D same principle.

            9. At this stage, Mrs. Neelima Tripathi, learned counsel
      appearing for the respondent, had made a plea before us
      to the effect that on the facts of this case the respondent
E     would still be entitled to exemption. Her case in this behalf
      was that the respondent had been using the aforesaid
      name and logo since 1986, and the show cause notice
      pertained to the year 1988. On the other hand the said
      trade name and logo was being registered in favour of Dr.
F     K.Angi Reddy only in the year 1989. Her submission, thus,
      was that in its own independent right the respondent had
      been using the said trade name and logo as an owner
      thereof and therefore, would be entitled to exemption even
      if the same was used by the DRL and it is a case where
G     both the parties were using the same trade mark and logo
      simultaneously in there own rights. What is argued is that
      the respondent was not using the trade mark/logo or brand
      name of DRL but it was its own e<nd therefore would not
H     come within the mischief of para 4 of the Notification.
    COMMNR. OF CENTRAL EXCISE, HYDERABAD IV v.                    535
     STANGEN IMMUNO DIAGNOSTICS [A.K. SIKRI, J.]

      10. We would like to observe that if the aforesaid A
contention of the respondent is factually correct, viz. The
respondent used the brand name as the owner thereof
itself, and was not using the brand name as belonging to
DRL and authorized by DRL, then the submission of Ms.
Tripathi is legally tenable.                                B

      11. Condition No.4, as already noted above, stipulates
that the exemption contained in this Notification would not
be given to a person in respect of goods where 'brand
name' or 'trade name' of another person is used i.e. the           C
goods bearing the 'brand name' or 'trade name' which
belongs to some other person. It is immaterial whether
such 'brand name' or 'trade name' is registered or not.
However, Explanation IX gives a unique and particular
definition to the term 'brand name' or 'trade name'. It is         D
clear from the reading of the said explanation that the
definition of 'brand name' or 'trade name' contained therein
is concerned with a particular name or mark which is used
to indicate, in the course of trade, a connection between
such specified goods as satisfying the criterion provided in       E
aforesaid condition 4 and the manufacturer which is using
such name or mark with or without any indication of the
identity of itself. The central idea contained in the aforesaid
definition is that the mark is used with the purpose to show       F
connection of the said goods with some person who is
using the name or mark. Therefore, in order to qualify as
'brand name' or 'trade name' it has to be established that
such a mark, symbol, design or name, etc. has acquired
the reputation of the nature that one is able to associate the     G
said mark, etc. with the manufacturer. We are supported in
this view by series of judgments of this Courtln Tarai Food
 Ltd. v. CCE, (2007) 12 SCC 721, the expression "brand
 name" was explained in the following terms:
                                                                   H
536      SUPREME COURT REPORTS                [2015) 4 S.C.R.


A       "7. The words brand
        name connotes such a mark, symbol, design or
        name which is unique to the particular manufacture
        which when used on a particular product would
        establish a connection between the product and the
B       manufacturer.

        xx                       xx                   xx
        9. Furthermore the definition of the words 'brand
c       name' shows that it has to be a name or a mark or
        a monogram, etc. which is used in relation to a
        particular product and )Nhich establishes a connection
        between the product and the person. This name or
        mark, etc. cannot, therefore, be the identity of a
o       person itself. It has to be something else which is
        appended to the product and which established the
        link."

      12. Thus, what is necessary is that the said mark is of
E the nature that it establishes connection between the
  product and the person. To the same effect is the judgment
  of Supreme Court in CCE V$. Grasim Industries ltd., (2005)
  4 SCC 194 wherein this Court observed as under:

        "15 ......... ln our view, the Tribunal has completely
F
        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
G       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
H       ordinary mark is sufficient. It is then elaborated that
COMMNR. OF CENTRAL EXCISE, HYDERABAD IV v.                 537
 STANGEN IMMUNO DIAGNOSTICS [A.K. SIKRI, J.]

 the "name or mark" such as a "symbol" or a                 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     B
 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      C
 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        D
 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        E
 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     F
 a case we do not express any opinion on this aspect.

 16. This Court has, in the case of Royal Hatcheries
 Pvt. Ltd. v. State of A.P., 1994 Supp (1) SCC 429,
 already held that words to the effect "that is to say" G
 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 H
538      SUPREME COURT REPORTS                  [2015] 4 S.C.R.


A        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/
B        company."

       13. Likewise, in CCE Vs. Bhalla Enterprises, (2005) 8
  SCC 308 this Court was eloquent in observing that as per
  the aforesaid Notification, the assessee will be debarred
C only if it uses on the goods, in respect of which exemption
  is sought, the same/similar brand name with the intention of
  indicating a connection with the assessees goods and such
  other person or uses the name in such a manner that it
  would indicate such connection.
D
       14. All these judgments were taken note by this Court
  in a recent case in Nirlex Spares (P) Ltd. Vs.
  Commissioner of Central Excise, (2008) 2 SCC 628. On
  the facts of that case, the Supreme Court was of the
E opinion that the assessee had not offended condition no.4.
  In that case, the goods were manufactured by the assessee
  and the Marketing Company which was its marketing
  agent. On the packing of goods, brand names of the
  assessee "INTATEX" and "INTACO" were clearly and
F prominently printed. In between these two brand names, a
  hexagonal shape/design, which was claimed by the
  Department to be the brand of the Marketing Company,
  was also printed. In this backdrop, the question was as to
  whether the assessee company was using the said
G hexagonal shape/design of other person. On the facts of
  that case, the Court found that there was nothing on record
  to show that the said hexagonal shape/design belonged to
  or was owned by the Marketing Company and thus they
H had permitted the assessee to use the same on the
   COMMNR. OF CENTRAL EXCISE, HYDERABAD IV v.               539
    STANGEN IMMUNO DIAGNOSTICS [A.K. SIKRI, J.]

corrugated boxes. The Court also found that the hexagonal A
design/shape could not be said to be descriptive enough to
serve as an indicator of nexus between the goods of the
assessee and the Marketing Company. On this basis, it
was concluded that the alleged monogram could not be the
brand name or trade name of the Marketing Company.         B

   15. We would also like to reproduce the following
observation from Commissioner of Central Excise,
Chandigarh II Vs. Bhalla Enterprises, (2005) 8 SCC 308:-
                                                              c
     "The apprehension of the assessees that they may be
     denied the exemption merely because some other
     traders even in a remote area of the country had
     used the trade mark earlier is unfounded.
                                                               D
     The notification clearly indicates that the assessee will
     be debarred only if it is uses on the goods in
     respect of which exemption is sought, the same/
     similar brand name with the intention of indicating a
     connection with the assessees goods and such other E
     person or uses the name in such a manner that it
     would indicate such connection. Therefore, if the
     assessee is able to satisfy the assessing authorities
     that there was no such intention or that the user of the
     brand name was entirely fortuitous and could not on a . F
     fair appraisal of the marks indicate any such
     connection, it would be entitled to the benefit of
     exemption. An assessee would also be entitled to the
     benefit of the exemption if the brand name belongs
     to the assessee himself although someone else may G
     be equally entitled to such name."

   These observations bring out two significant aspects
namely:-
                                                              H
540         SUPREME COURT REPORTS                  (2015] 4 S.C.R.


A         (1) As per the Notification, the assessee would be
          debarred only if it uses on the goods in respect of
          which exemption is sought, the same/similar brand
          name with the intention of indicating a connection with
          the assessees goods and such other person or uses
B         the name in such a manner that it would indicate such
          connection. If there is no such intention or that the user
          of the brand name was entirely fortuitous and could not
          on a fair appraisal of the marks indicate any such
          connection, it would be entitled to the benefit of
c         exemption.

          (2) The assessee would also be entitled to the benefit
          of exemption if the brand name belongs to the
          assessee himself although someone else may be
D         equally entitled to such name.

            16. Having clarified the real position, we find that
      matter is not examined by the authorities below in the right
      perspective. The factual aspects can be established only
E     before the adjudicating authority. Therefore, while setting
      aside the judgment, we remit the case back to the
      Commissioner, Central Excise to hear the respondent de
      novo on the show cause notice which was issued by him
      and decide the matter afresh after taking into consideration
F     the law laid down in the aforesaid judgments. It would be
      open to the respondent to place on record whatever
      material it wants to place in consonance with the stand
      already taken in the reply to show cause notice and
      opportunity in this behalf shall be given to the respondent.
G     Respondent shall also be given oral hearing by the
      Commissioner before recording its finding on those issues
      and deciding the fate of show cause notice. It would be
      open to the respondent to press the plea of limitation as
H     well.
    COMMNR. OF CENTRAL EXCISE, HYDERABAD IV v.               541
     STANGEN IMMUNO DIAGNOSTICS [AK. SIKRI, J.]

    17. The appeal is allowed in the aforesaid terms with     A
no order as to costs.

    18. It would be open to the respondent to press the
plea of limitation as well.
Nidhi Jain                                 Appeal allowed.