KALI AERATED WATER WORKS, SALEMversusCOMMNR. OF CENTRAL EXCISE, MADURAI

                   [2015) 8 S.C.R. 283


       KALI AERATED WATER WORKS, SALEM                     A
                            v.
      COMMNR. OF CENTRAL EXCISE, MADURAI

             (Civil Appeal No. 3594 of 2005)
                                                           B
                      MAY 13, 2015

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

    Central Excise Act, 1944: SS/ Exe.mptiori- Notification C
1193-CE dated 28.2.1993 (as amended by Notification No.
59194-CE dated 1. 3. 1994) - Brand name of another person
- Benefit of exemption under the Notification denied by the
Revenue on the ground that brand name 'Kalimark' which
belonged to another person was used by appellant on the D
goods manufactured by it - Held: By virtue of a Family
Settlement contained in the deed of Mutual Agreement, the
trade name 'Ka/imark' vested in all the parties including the
appellant-As per agreement, appellant was allowed to use
the same and not required to make any payment of royalty E
to any other party- Thus, appellant was using its own brand
name 'Kalimark' - Appellant was thus entitled to exemption
under the Notification.

   CIVIL APPELLATE JURISDICTION: Civil Appeal No.          F
3594 of 2005.

     From the Judgment and Order dated 26.04.2005 passed
by the Customs, Excise and Services Tax Apellate Tribunal,
South Zonal Bench at Chennai in Appeal No. E/580/2002.     G

                           WITH
    C.A.· NO. 3611AND4387-4392 OF 2005

                          283                              H
284         SUPREME COURT REPORTS                     [2015] 8 S.C.R.


A           R. Venkataramani, Satya Mitra· Garg, Mahaboob Fazil,
      Manju Aggarwal, Neelam Singh, R. Anand Padmanabhan,
      Romil Pathak, Krishna Porchetan, Shashi Bhushan Kumar,
      for the Appellant.

B         K. Radhakrishnan, Arijit Prasad, Aruna Gupta, B. Krishna
      Prasad, P. Parmeswaran, Arvind Kumar Sharma for the
      Respondent.

          The Judgment of the Court was delivered by
c         A.K.SIKRl,J. 1. It is not in dispute that the appellant herein
  is a Small Scale Industrial Unit (hereinafter referred to SSI Unit)
  and is manufacturing Aerated Water under various brand
  names using the trade mark with the "Kalimark" I Mis.Kali
D Aerated Water Works" It sought exemption from payment of
  excise duty in terms of Notification 1/93-CE dated 28.2.1993
  (as amended vide Notification No.59/94-CE dated 1.3.1994)
  for the aforesaid goods manufactured in its factory. This has,
  however, been denied to the assessee by the Department on
E the ground that the brand name "Kalimark" has been used on
  the goods which belong to Mis. Shri K.P.R.Shakthivel and
  since the assessee is using the aforesaid branc;l name of the
  third party, by virtue of para 4 of the aforesaid Notification the
  exemption would not be allowed to the respondent. This stand
F taken by the respondent department has been accepted by
  the CESTAT in its impugned judgment.

       2. The Tribunal has noted the fact that business of
  manufacture and sale of Aerated water was started in the name
G of'KalimarkAerated Water Works' by the HUF of which Mis.
  Shri P.V.S. K.Palaniappa Nadar was the Kar:ta. Later on it
  was converted into a joint family business of Sh. Palaniappa
  Nadar and his three sons and a daughter. At some point of
  time the parties/partners fell apart and entered into a family
H settlement which is contained in Deed of Mutual Agreement
 KALI AERATED WATER WORKS, SALEM v. COMMNR. 285
    OF CENTRAL EXCISE, MADURAI [A.K.SIKRl,J.]

dated 12.3.1993. The Tribunal has recorded that in terms of A
this Mutual Agreement signed between the parties the
ownership of the aforesaid trademark/brand name 'Kalimark'
no longer remained with the appellant assessee and it belongs
to the other party. On this basis it arrived at the finding that the
appellant has been using the trade mark/brand name of the B
third party.

     3. We find tHat the aforesaid observation is against the
record and contrary to the Deed of Mutual Agreement which
has been entered into between the earstwhile partners. Para       C
9 of the recital to this family arrangement is as under:

     "Since all the parties herein have mutually intend to carry
    forward the reputation and well established Trade Mark
     'KALI MARK' in future also thus carrying out to the future D
    generations, a meeting was held among the parties
    herein, who are the direct male lineal decedents and users
    of established abovesaid Trade marks and who at present
    have interest in various factories being run in the name of
    Kali Aerated Water Works in various parts of Tamil Nadu E
    and. discussed the pros and cons and also to preserve
    the established Trade Name and Trade Marks throughout
    the future generation and agreed on certain terms and
    conditions and all the parties herein have agreed to abide
    by them and hence this Deed of Mutual Agreement.             F

    Thereafter, this aspect is dealt with in Paras L.M. and N
thereof, which read as under:

    L) If any party comes to know about any infringement and      G
    passing of use of any deceptively similar mark on any
    imitation by any person in the market, then the party in
    whose area the said imitation, infringement or passing
    off takes place shall take immediate legal steps against
    such erring persons at his cost, under the provisions of      H
286       SUPREME COURT REPORTS                     [2015]8S.C.R.


A       Trade and Merchandise Mark Act, 1958 or any other
        common law in which suitable an effective remedies are
        provided.

        M) In any party falls to initiate legal action against such
B       erring persons in order to protect the Trade Mark and Trade
        name, then any other party can take action against such
        defaulting parties as well as against the person committing
        such infringement, passing off or imitation for suitable
        remedy.
c
        N) For removal of doubts, it is clarified specifically that
        the right to use the Trade name M/s. Kali Aerated Water
        Works and Trade Marks mentioned above are solely
        vested with the parties 2 to 10 herein who are the direct
o       male lineal descendents and subject to clause 'G' herein
        the parties herein cannot and shall not permit or give their
        existing rights to any female de'§cendents or any third
        person, nor the parties 2 to 10 herein have right to transfer/
        sell for consideration or without consideration to third
E       parties. If any party herein or their respective male
        descendents wants to close down the business they shall
        have to either sell their rights of Trade name and Trade
        Marks to other remaining parties or to their male lineal
        descendents only. Such parties shall acquire the rights
F       subject to the terms and conditions of this Agreement and
        are liable to exercise their rights within the terms of this
        Mutual Agreement.

      4. It is clear from the above that the trade name 'Kalimark
G Aerated Water Works' and trade mark mentioned in the said
  agreement would remain vested in all the parties including the
  appellant and the appellant was also allowed to use the same.
  The agreementfurther provides that the user of this trade mark,
  therefore, shall not make any payment of royalty or
H remuneration to any other party. This very fact was correctly
 KALI AERATED WATER WORKS, SALEM v. COMMNR. 287 ,
    OF CENTRAL.EXCISE," MADURAI [A.K.SIKRl,J.]

appreciated by the Commissioner who decided the appeal in A
favour of the appellant. The discussion in the order of the
Commissioner, on this aspect, reads as under:

    23: During the personal hearing Shri RathinaAsohan drew
    my attention to the certificates issued by the Trade Mark       B
    Registry from the year 1948 to 1985 which were filed
    before the lower authority. I find the Appellant's name also
    figures in the certificates issued in the year 1962 and 1970
    when he became one of the partner of the erstwhile HUF
    Firm. The appellant have been· marketing his products           C
    only within his own marketing area. It is not the case of the
    Revenue that any other person is using the same Brand
    names in the same area. Similarly the appellant is not
    selling' his goods outside his marketing area. So far his
    business is concerned the appellant appears to be the           D
    only legal owner of the Trade Mark within his marketing
    area. This has been clearly brought out in the Mutual
    Agreement dated 12.3.1993 which has been duly
    presented on 12.3.1993 itself for registration whereas the
    impugned Notification No.59/94 came into effect only from       E
     1.4.1994 and hence no motive can be attributed against
    the appellant in respect of the Mutual Agreement. I have
    read the entie contents of Mutual Agreement. I find that
    Mr. K.P.R. Sakthivel is also a party to the said Mutual         F
    Agreement and no royalty is also payable to the said
    K.P.R. Sakthivel. Even Mr. l(.P.R.Sakthivel has specifically
    agreed that he cannot use the brand name in the marketing
    area of the appellant. Thus there seems to be recognition
    of individual proprietary rights over the brand names within    G
    the respective specified marketing area. The.nature of
    succession of the proprietary rights of the brand names
    have also been clearly dealt with. It clearly establishes
    that the appellant and the male descendants are alone
    are entitled to succeed over the ownership of the brand         H
288          SUPREME COURT REPORTS                    [2015] 8 S.C.R.


A          name within their marketing area. It is not the case of the
           Revenue that the appellant is marketing his products
           outside his marketing area.

           24. I find that the appellant is the legal owner of the trade
B          Marks used in his product in his own marketing area, the
           Trade Mark certificates produced before me clearly
           establish that the appellant had been havirig the right of
           ownership over the Brand names in the year 1962 itself
           when he became the coparcener in the HUF firm. The
c          appellant has had his exclusive ownership rights even prior
           to the said impugned notification. Hence the subsequent
           notification cannot take away the ownership right of the
           appellant over the brand names 'KaliMark' •Bovonto' and
           •Frutang' and other brand names and applying the same
D          to the specified goods manufactured by the appellant and
           marketing the same within his own marketing area in
           exclusion of others. On perusing the trade mark
           certificates, Decree of the Civil Court, Mutual Agreement
           dated 12.3.1993 and also considering the above
E        · contentions, I find that the appellant is the legal owner of
           the brand names within his marketing area."

            5. It is thus manifest that the appellant has been using its
      own brand name 'Kalimark' and it belongs to the appellant. In
F     view thereof, the case of the appellant is squarely covered in
      its favour by the judgment of this. Court in Civil Appeal No.9157
      of 2003 lilied CCE. Hyderabad IV vs. Stangen lmmuno
      Diagnostics decided on 19.3.2015.

G          6. All the appeals are disposed of accordingly.

      Devika Gujral                                  Appeals disposed of.




H