Holding

The exemption under Notification No.1/93‑CE is goods‑specific; eligibility is satisfied if the manufacturer of the specified goods is an SSI unit eligible for exemption, and the brand‑name owner’s eligibility suffices even without actual manufacturing by the brand‑name owner.

Summary

The respondent, Mis. Sri Ganganagar Bottling Co., a small‑scale industrial (SSI) unit, manufactured aerated water and affixed the brand name "Citra" belonging to M/s Limca Flavours and Fragrances Ltd., which was also an SSI unit eligible for exemption under Notification No.1/93‑CE. The Revenue issued a show‑cause notice to recover excise duty, arguing that exemption was unavailable because the brand owner did not actually manufacture the identical goods. The Assistant Commissioner accepted the defence that the brand owner’s eligibility sufficed and dropped the proceedings; the Revenue’s appeal was allowed by the Appellate Authority and the Tribunal, but the Supreme Court dismissed the appeal. The Court held that the exemption is goods‑specific and requires that the manufacturer of the specified goods be an SSI unit eligible for exemption; since the brand‑name owner satisfied this condition, the respondent was entitled to the exemption. Consequently, the appeal was dismissed.

Issues considered

Whether a small‑scale unit can claim exemption under Notification No.1/93‑CE when it affixes the brand name of another manufacturer, provided the brand‑name owner is also an SSI unit eligible for exemption.
Whether actual manufacturing of the specified goods by the brand‑name owner is a prerequisite for claiming the exemption.

Legislation cited

Subjects

Central ExciseExemptionSmall Scale IndustriesBrand nameAerated waterNotification interpretationExcise dutyGoods specific exemption

Judgment

> COMMISSIONER OF CENTRAL EXCISE, JAIPUR A
v.
MIS. SRI GANGANAGAR BOTILING CO.

AUGUST 31, 2007

(DR. ARIJIT PASAY AT AND S.H. KAPADIA, JJ.) B

Central Excise Act, 1944/Central Excise Rules, 1944; R.(1)(8)/
Notification No. 1193-CE issued thereunder:

Exemption Notification-Aerated water-Assessee a.fftxing brand name C
belonging to another manufacturer on its product-Show cause Notice-
Dropping the proceedings against the assessee, Authority held that actual
manufacturing of the product not necessary for claiming exemption under the
Notification-Reversed by Appellate Authority-Appeal filed by the assessee
allowed by Tribunal-On appeal, Held: The manufacturer whose brand name D
used by the assessee is a small scale industrial unit eligible for availing
exemption under the Notification in respect of the specified product, the
product in question-Exemption Notification is goods specific-Requirement
is that the manufacturer should be eligible for availing exemption under the
Notification in respect of specified goods-Any other interpretation would
render the Notification redundant-Hence, Tribunal rightly held the assessee E
eligible for exemption in terms of the Notification-Interpretation of Statutes.

Respondent-Company, a small industrial unit, is manufacturer of aerated
water and cleared the same after affixing the brand name "Citra" belonged
to Mis. Limca Flavours and Fragrances Ltd., which was eligible for exemption
as SSI unit under Notification No.1/93-CE dated 28.2.1993. The Revenue F
issued a show cause notice proposing to recover Central Excise Duty from
the assessee on the clearances of the said branded goods alleging that the
exemption under the Notification was not available to such goods. Assistant
Commissioner, Revenue dropped the proceedings accepting the defence of the
assessee that it was sufficient for purposes of Para 4 of Notification No.1/93 G
that the brand name of the owner should also be eligible for exemption under
the Notification and it was not necessary that the assessee should actually
manufacture identical goods and market the same after affixing the brand
name. An appeal was preferred by the Revenue to the Appellate Authority,
which was allowed by the Appellate Authority. Assessee preferred appeal before H
669
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670 SUPREME COURT REPORTS (2007} 9 $.C.R.

A the Tribunal, which was allowed by the Tribunal. Hence the ,present appeal:
Appellant-Revenue contended that the .real purpose of paragraph 4 of
the Notification has been lost sight of by the Tribunal.

Dismissing the appeal, the Court
B
HELD:l.l. In the instant case the brand name of owner 'Mis Limca'
which is SSI unit had eligibility for availing the exemption under the
Notification No.1193-CE in respect of the products. Therefore, t~e question 'r.

whether there is brand name of owner for exemption under ·the Notification
did not arise. (Para 5) .(672-A]
c
1.2. The brand. name of owner was also a unit eligible for exemption
under the Notification and was t~e manufacture <>f specified goods. That being
so, the view taken by the Tribunal has to be accepted. (Para 6) 1672-A, BJ

Namtech Systems ltd v. Commissioner oj Central Excise, New Delhi,
D (2000) 115 E.L.T. 238 Tribunal, referred to.
).
1.3. Clause 7 of the Notification after amendment deals with exemption
of specified goods and circumstances where the exemption is not available.
The notification is 'goods specific'. W,hat :is required is that a person, who
E may be a manufacturer, must be eligible for exem~ption under the notification
in respect of the specified goods. Any <>th er interpretation would render the
purpose for which the notification has been issued redundant. (Para to)

1.4. The notification is 'goods specific'. The emphasis is on 'specified
goods'. The intention is crystal clear t~at at the' relevant .time, .the unit should
F be eligible for exemption und~r the Notification ,in respect of the 'specified
goods'. (Paras 1tand12J ,(674-C, D!

Commissioner of Central Excise, Chandigarh v. Mis. Khanna Industries
& Ors., (20061 9 Supp. SCR 725, relied on.
. , .
CIVIL APPELLA TE JURISDICTION : Civil Appeal No. 8563 .of 200 l.
G
From the Final Order No. t l/200UC dated l9.l.200l ·Ofthe Customs,
Excise & Gold (Control) Appellate Tribunal, New Delhi in Appeal No. E/2922/
2000-C. '

K. Radhakrishnan, Binu Tamta, T.A. Khan, Ajay Sh.anna and B. Krishna
H Prasad for the Appellant.
COMMR. OF CENTRAL EXCISE v. SRI GANGANAGAR BOTILINGCO. [PASAYAT, J.) 671
Vijay Hansaria, Sunil Kumar Jain for the Respondent. A
The Judgment of the Court was delivered by

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

2. Background facts in a nutshell are as follows:

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

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

4. In response, learned counsel for the respondent submitted that the
Tribunal's view is unexceptionable and the appeal is sans merit. H
672 SUPREME COURT REPORTS (2007] 9 S.C.R.
A 5. We notice that in the instant case the brand name owner Mis Limca ""'(.
which is SSI unit had eligibility for availing the exemption under the Notification
No.l/93-CE in respect of the products. Therefore, the question wh~~herthere
is brand name of owner for exemption under the Notification did not arise.

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

7. In the case of Namtech Systems Ltd. v. Commissioner of Central
Excise, New Delhi, (2000) 115 E.L.T./ 238 (Tribunal), the larger Bench of
CEGA T has held that affixation of specified good with a brand name of
C ineligible Indian manufacturer will entail disqualification from exemption. It
was further held that the benefit of small scale exemption under Notification
No. 175/86-CE as amended, is not available to the specified goods if they are
affixed with the brand name or trade name of a trader who is not a manufacturer.
The judgment of the larger Bench in Nam tech Systems Ltd 's case (supra) has
D not been considered by the CEGA T in present· case.
)..
8. Notification No.175/86-C.E. dated 1.3.1986 reads as follows:

"EXEMPTION TO SMALL SCALE UNITS

In the exercise of the powers conferred by sub rule (I) of rule 8 of the
E Central Excise Rules, 1944 and in supersession of the notification of
the Government of India, in the Ministry of Finance (Department of
Revenue) No. 85/85-Central Excises dated the 17th March, 1985 the
Central Government hereby exempts the excisable goods of the
description specified in annexure below and falling under the Schedule t
F to the Central Excise Tariff Act, 1985 (5of1986) (hereinafter referred
to as the "specified goods'), and cleared for home consump~ion on or
after the l st day of April in any financial year, by a manufacturer from
one or more factories.-

xxx xxx xxx
G
ANNEXURE

xxx xxx ~xx

4. All other goods specified in the said Schedule other than the
following, namely :-
H
-+
COMMR. OF CENTRAL EXCISE v. SRI GANGANAGARBOTILINGCO. [PASAYAT, J.] 673
(i) all goods failing under Chapters 9, 24, 3I, 5I, 52, 53 .. 54, 55, 56, 57, A
58, 59, 60, 6I, 62, 7I, 73 and 74;
·(ii) all goods falling under heading Nos. 21.06, 25.04, 36~03, 40. I I,
40:12, 40.13, 87.0I, 87.02, 87.03, 81.04, 81.05, 87.06, 87.11, 91.0I, 91.02
and 96.13;
B
(iii) all goods fallings under sub-heading Nos. 210 I. I0, 210 I .20, 3304.00,
3305.90, 3307.00, 4005.00, 4006. IO, 4008.2 I and 9505.10 and

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

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

"In exercise of the powers conferred by sub-rule (I) of Rule 8 of D
the Central Excise Rules, I 944, the Central Government hereby makes
the following further amendments in the Notification of the Governmen~
of India in the Ministry offinance (Department of Revenue) No. I 75/
86- Central Excise, dated the I st March, I986, namely:

In the said notification, -
E
(I) after paragraph, 6, the following paragraph shall be inserted,
namely:-

"7. The exemption contained in this notification shall not apply to the
specified goods with a brand name where a manufacturer affixes the
specified goods with a brand name or trade name (registered or not) F
of another person who is not eligible for the grant of exemption under
this notification:

Provided that nothing contained in this paragraph shall be
applicable in respect of the specified goods cleared for· home G
consumption before the 1st day of October, I987".

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

"Explanation VIII - "Brand '!ame" or "trade name" shall mean a
H
674 SUPREME COURT REPORTS [2007} 9 S.C.R.

A brand name or trade name, whether registered or not, that is to say
a name or a mark, such as symbol, monogram, label, signature or
invented word or writing which is used in relation to such specified
goods for the purpose of indicating, or so as to Indicate a connection
in the course of trade between such specified goods and some person
using such name or mark with or without any indication o the identity
B of that person."
. "
I 0. Clause 7 of the Notification after amendment deals with exemption
of specified goods and circumstances where the ex~mption is not available.
The notification is 'goods specific'. What is required is that a person, who
C may be ~manufacturer, must be eligible for exempti~n under the notification
in respect of the specified goods. Any other interpretation would render the
purpose for which the notification has been issued redundant.

l I. As noted above, the no~ification is 'goods specific'. The emphasis
is on 'specified goods'.
D
12. The intention is crystal clear that at the relevant time, the unit
should be eligible for exemption under the Notification in respect of the
'specified goods'.

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

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

F S.K.S. Appeal dismissed.

.,