M/S. VIR RUBBER PRODUCTS P. LTD.versusCOMMISSIONER OF CENTRAL EXCISE, MUMBAI-ILL

                      [2015] 4 S.C.R. 476


A           MIS. VIR RUBBER PRODUCTS P. LTD.

                               v.
      COMMISSIONER OF CENTRAL EXCISE, MUMBAI-Ill
B                 Civil Appeal No.2609 of 2004

                       MARCH 27, 2015

             [A.K. SIKRI AND R. F. NARIMAN, JJ.]
c      Central Excise Act, 1944 -Excise duty - Exemption -
  Assessee a Small Scale Industry (SS/) - Manufacturing
  products in its own brand name as well as for other
  companies on which the brand names of those companies
  were used - Claim by assessee for SS/ benefit under a
D
  Notification, for the goods which were manufactured by the
  assessee under its own brand name - Denial of, on the
  ground that the assessee did not fulfill the condition that
  aggregate value of clearance in the preceding financial
E year was not less than 3 crores - Held: The assessee was
  entitled to SS/ benefit under the Notification - The
  authorities were not right in adding the value of the goods
  which were manufactured for other companies, while
  considering the value of the goods cleared by the
F assessee in the previous year- Notification No. 1193.

        Words and Phrases - 'Brand name' - Meaning of

       Allowing the appeal, the Court

G       HELD: 1. The Notification No. 1/93 specifically
    mentions that the exemption contained in that
    Notification is not to apply to those goods bearing
    brand name or trade name whether registered or not of

H                             476
   VIR RUBBER PRODUCTS P. LTD. v. COMMNR. OF              477
           CENTRAL EXCISE, MUMBAI-Ill

another person, except in certain cases which are A
mentioned therein. [Para 4) [481-F]
     2. The brand name or trade name is defined to
mean a brand name or trade name, a name or a mark
such as a symbol, monogram, label, signature or B
invented word, etc., 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
of the identity of that person. [Para 4) [481-F-H]       c
     Commissioner of Central Excise, Jamshedpur v. Mis.
Tubes & Structurals and Another 2015(4) SCALE 78 -
relied on.
    3. On the goods manufactured by the appellant for D
the other automobile companies, the appellant had
been using brand name or trade name on those goods.
Thus, in respect of those goods where brand name of
other party is used on manufactured goods and that
other party is not a SSI unit, exemption is not available. E
This would lead to inevitable result that the value of
such goods cannot be added as well, while
considering the value of the goods cleared by the
assessee in the previous year. [Paras 5 and 7) [482-E; F
484-D-E]
    4. Therefore, the value of the goods meant for
other automobile companies could not have been
included while considering as to whether the appellant
is entitled to the benefit of the Notification or not. Once G
that is excluded and the case is confined to appellant's
own brand name and in respect of which the appellant
had claimed exemption, the value of goods cleared in
the previous year was less than Rs.3 crores. Thus, the
appellant shall be e.. !itled to the exemption under the H
478         SUPREME COURT REPORTS                  [2015) 4 S.C.R.


A said Notification. [Para 10] [486-D-F]

       Kohinoor Elastics (P) Ltd. v. Commissioner of Central
  Excise, Indore (2005) 7 SCC 528; Commissioner of
  Central Excise, Trichy v. Mis. Grasim Industries Ltd. 2005
B (3) SCR 466 - referred to.

                         Case Law Reference

        2015(4) SCALE 78           Relied on            Para 6

c       (2005) 1 sec 528           Referred to.         Para 8

        2005 (3) SCR 466           Referred to.         Para 9

          CIVIL APPELLATE JURISDICTION: Civil Appeal No
D     2609 of 2004.

          From the Judgment and Order dated 10.06.2003 of the
      Customs, Excise & Gold Control Appellate Tribunal, West
      Zonal Bench, Mumbai in Appeal No. E/3424/01-8 order
      Mumbai.
 E
         C. Hari Shankar, Pushkar Singh, Neeru Vaid for the
      Appellant.

           Neeraj Kishan Kaul, ASG, Arijit Prasad, Kapil Rustogi, 8.
 F    Krishna Prasad for the Respondent.

          The Judgment of the Court was delivered by

       A. K. SIKRI, J. 1. The appellant herein was engaged in
  the manufacture of certain articles from vulcanized rubber as
G bushes for use in the motor vehicles. Indubitably, the
  appellant is a Small Scale Industrial unit (hereinafter referred
  to as 'SSI' for short). The appellant has its own brand name
  "VIR" and has been manufacturing these products under the
H said brand name and supplying the same to various
   VIR RUBBER PRODUCTS P. LTD. v. COMMNR. OF                         479
     CENTRAL EXCISE, MUMBAI-Ill [A. K. SIKRI, J.]

customers. In addition, the appellant was also having job A
orders from some automobile companies like Hindustan
Motors, Kinetic Honda, etc.

     2. Insofar as orders for manufacture of spare parts
placed by these automobile companies are concerned, on                B
the said goods, the appellant had been putting the
identification mark such as "HM", "PAL", "KH", etc. The
goods which were supplied to these automobile companies
used to be cleared by the appellant on payment of excise
duty. However, in respect of manufacture of its own goods             C
under the brand name "VIR", the appellant claimed SSI
benefit in terms of Notification No. 1/93 which provides for
exemption from payment of excise duty on fulfillment of
certain conditions. It is admitted case that the appellant fulfils
all the conditions mentioned in the aforesaid notification            D
except one, in respect of which the dispute has arisen. This
condition under the notification stipulates that the aggregate
value of clearances in the preceding financial year should be
less than Rs.3 crores. There is a lis as to whether the
appellant fulfils this condition or not.                              E

     3. While interpreting this notification, the Department
included the value of goods supplied to the automobile
companies under the brand name 'HM" "PAL", "KH", etc. and
on that basis, came to the conclusion that the total value of F
goods cleared by the assessee in the previous financial year
was much more than Rs.3 crores. The contention of the
appellant, on the other hand, was that since the appellant had
been using the brand name of the automobile industries
while carrying out their job work and even clearing those G
goods on payment of excise duty, the turnover in respect of
these goods should not be included while arriving at the
figure of Rs.3 crores. To put it otherwise, submission was
that it is only in respect of "VIR" brand goods, which is the H
480         SUPREME COURT REPORTS                  [2015] 4 S.C.R.


A     proprietory brand of the appellant, the value of clearances in
      the preceding year should be taken into consideration and if,
      that is done, the total value of clearances was much less
      than Rs. 3 cores. This contention of the appellant, however,
      has not been accepted by the authorities below including
 B    Customs, Excise & Gold (Control) Appellate Tribunal
      (hereinafter referred to as 'CEGAT'). Rejecting the aforesaid
      contention of the assessee and accepting the plea of the
      Department, the CEGAT has gone by the definition of "brand
      name" or "trade name" contained in para 4 of the aforesaid
C     Notification and reads as under: -

            "4. The exemption contained in this notification shall
           not apply to the specified goods bearing a brand name
           or trade name, whether registered or not, of another
D          person, except in the following cases: -

             (a) where such specified goods, being in the nature
           of components or parts of any machinery or equipment
           or appliances, are cleared for use as original
 E         equipment in the manufacture of the said machinery or
           equipment or appliances by following the procedure
           laid down in Chapter X of the Central Excise Rules,
           1944. Provided that manufacturers, whose aggregate
           value of clearances for home consumption of such
 F         specified goods for use as original equipment does not
           exceed rupees fifty lakhs in a financial year as
           calculated in the manner specified in the said Table,
           may submit a declaration regarding such use instead
           of following the procedure laid down in Chapter X of
G          the said rules;

           (b) where the specified goods bear a brand name or
           trade name of -

H          (i) the Khadi and Village Industries Commission; or
   VIR RUBBER PRODUCTS P. LTD. v. COMMNR. OF                     481
     CENTRAL EXCISE, MUMBAI-Ill [A. K. SIKRI, J.]

     (ii) a State Khadi and Village Industry Board; or            A

     (iii) the National Small Industries Corporation; or

     (iv) a State Small Industries Development Corporation;
     or
                                                                  B
     (v) A State Small Industries Corporation.

     5. This notification shall come into force on the 1st day
     of April, 1999.

     Explanation.- For the purposes of this notification,-
                                                                  c
     (A) "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, D
     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 E
     without any indication of the identity of that person;"
     4. The aforesaid para of the Notification specifically
mentions that the exemption contained in that Notification is
not to apply to those goods bearing brand name or trade
name whether registered or not of another person, except in F
certain cases which are mentioned therein. The brand name
or trade name is defined to mean a brand name or trade
name whether registered or not, that is to say, a name or a
mark such as a symbol, monogram, label, signature or G
invented word, etc., 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 of the identity of that person.
    5. From the aforesaid definition of brand name, it H
482         SUPREME COURT REPORTS                 [2015] 4 S.C.R.


A  becomes apparent that on the goods manufactured by the
   appellant for the aforesaid automobile companies, the
   appellant had been using brand name or trade name on
   those goods. In such cases, in respect of those goods which
   are manufactured for the other person, obviously no
 B exemption is to be given as the aforesaid Notification does
   not apply to those specified goods. To put it pithily, what
   would be the position if the appellant was doing job work
   only for other companies and using their brand name on the
   goods manufactured? Was it permissible to seek exemption
 C of notification in such circumstances? This issue has been
   considered time and again by this court in number of
   judgments.

           6. In a recent judgment dated 11.03.2015 pronounced
 D    by this very Bench in the case of 'Commissioner of Central
      Excise, Jamshedpur v. Mis. Tubes & Structurals and Another'
      [Civil Appeal Nos. 7955-7956 of 2003], after taking note of
      two earlier judgments of this court, the issue was dealt with
      as under: -
 E
              "This issue, on the facts of the present case as noted
           above, is no more res integra and has been settled by
           few judgments of this Court. It is not necessary to refer
           to all those judgments. Our purpose would be served in
 F         mentioning the judgment titled Commissioner of Central
           Excise, Chennai-11 v. Australian Foods India (P) Ltd.
           (2013) 287 E.L.T. 385 (SC). In the said case the Court
           took note of the original para 4 in Notification No. 1/93
           dated 28.2.1993 where the words mentioned are "the
 G         exemption contained in this Notification shall not apply
           to the specified goods, bearing a brand name or trade
           name (registered or not) of another person."

             This para 4 was amended vide Notification No. 59/
 H         94-CE dated 1.3.1994 and the word "affixes" was
VIR RUBBER PRODUCTS P. LTD. v. COMMNR. OF               483
  CENTRAL EXCISE, MUMBAI-Ill [A. K. SIKRI, J.]

 substituted by the word "bearing". The reason for this A
 substitution is explained in para (iii) of para J of the
 changes 1994-95 dealt with "changes in the SSI
 scheme". This is so stated in para 10 of the said
 judgment which we reproduce below for the sake of
 clarification:                                           B

   Part (iii) of Para J of the Budget Changes 1994-95
 dealt with "Changes in the SSI schemes" explains the
 purpose of the amendment in the following words:
                                                         c
    "(iii) Brand name provision has been amended so
 as to provide that SSI concession shall not apply to the
 goods bearing the brand name or trade name of
 another person. The effect of this amendment is that if
 an SSI unit manufactures the branded goods for D
 another person irrespective of whether the brand name
 owner himself is SSI unit or not, such goods shall not
 be eligible for the concession. Another implication of
 this amendment is that the requirement of affixation or
 brand name by the SSI unit has been changed and E
 now the only condition is that the goods cleared by SSI
 unit bearing a brand name of another person shall not
 be eligible for the concession irrespective of the fact
 whether the brand name was affixed by the SSI unit or
 that, the input material used by the SSI unit was F
 already affixed with brand name."

   It becomes clear from the reading of the aforesaid
 paras that amendment in para 4 in the manner
 mentioned above was brought to deny the benefit of G
 Notification to those SSI units which have been making
 use of branded good for another person irrespective of
 whether the brand name owner himself is SSI unit or
 not. It was also made abundantly clear here tharthe
 requirement of affixation or brand name by the SSI unit H
484       SUPREME COURT REPORTS                   [2015) 4 S.C.R.


A         was immaterial. That was the purpose for substituting
          the word "affixing" by the word "bearing". Going by the
          aforesaid consideration this Court held in Australian
          Foods (India) (P) Ltd. case that after this amendment
          in para 4 it was not necessary that there has to be
 B        affixation of the name or mark on the goods.

             Applying the ratio of this case to the facts of the
          present case, the irresistible conclusion is to hold that
          the impugned order of the CEGAT is untenable and not
C         in accordance with law. We may mention that while
          giving its decision the CEGAT has gone by the
          unamended para 4 without taking into consideration the
          amended para and the implication thereof."

 o      7. Once we come to the conclusion that in respect of
   those goods where brand name of other party is used on
   manufactured goods and that other party is not a SSI unit,
   exemption is not available, it would lead to inevitable result
   that the value of such goods cannot be added as well, while
 E considering the value of the goods cleared by the assessee
   in the previous year.

        8. We, however, find that the CEGAT has given two
   other reasons to deny the relief to the appellant. In its order
 F it has observed that letters such as "HM" and "PAL", no
   doubt, were initials of the buyers of the goods and they
   constitute the brand name as well, however, what was
   indicated was only initials with lhe sole purpose to identify
   the goods for particular automobile company. After the supply
 G of these goods, the said automobile companies were affixing
   their proper trade mark/ brand name thereupon. On this
   basis, it is mentioned that the Notification in question would
   not apply. This reasoning of the CEGAT is contrary to the law
   laid down by this court in 'Kohinoor Elastics (P) Ltd. v.
 H Commissioner of Central Excise, Indore' [(2005) 7 SCC
   VIR RUBBER PRODUCTS P. LTD. v. COMMNR. OF                    485
     CENTRAL EXCISE, MUMBAI-Ill [A. K. SIKRI, J.]

528]. This very argument was repelled by the court in the        A
following words:

         "However, the words "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 B
     such specified goods and some person using such
     name or trade between such specified goods and
     some person using such name or mark" cannot be
     read dehors clause 4. They have to be read in the
     context of clause 4. The word "used" indicates use by C
     the manufacturer. It is the manufacturer, in this case the
     appellant, who is applying/affixing the brand/trade
     name on the goods. Thus, the words "for the purpose
     of indicating" refers to the purpose of the manufacturer
     (appellant). The "course of trade" is of that D
     manufacturer and not the general course of trade. Even
     if a manufacturer only manufactures as per orders of
     customer and delivers only to that customer, the course
     of trade, for him is such manufacture and sale. In such
     cases it can hardly be argued that there was no trade. E
     Such a manufacturer stated that it was not argued that
     here was no trade. Such a manufacturer may, as per the
     order of his customer, affix the brand/trade name of the
     customer on the "goods" manufactured by him. This will F
     be for the purpose of indicating a connection between
     the "goods" manufactured by him and his customer."

     9. The other reason given by the CEGAT is that "HM"
and "PAL" are not the brand names. Here again, it has fell
into legal error. Similar contention was rejected by this Court G
in 'Commissioner of Central Excise, Trichy v. Mis. Grasim
Industries Ltd.'[2005 (3) SCR 466] in the following words: -

     "In our view, the Tribunal has completely misdirected
     itself. The term "brand name or trade name" is qualified    H
486          SUPREME COURT REPORTS                  [2015] 4 S.C.R.


A           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
 B          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
c           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".
D      10. Upshoot of the aforesaid discussion would be to hold
  that value of the goods meant for "HM", "PAL", "KH", etc.
  could not have been included while considering as to
  whether the appellant· is entitled to the benefit of the
  aforesaid Notification or not. Once that is excluded and the
E case is confined to the brand name 'VIR' which is the
  appellant's own brand name and in respect of which the
  appellant had claimed exemption, the value of goods cleared
  in the previous year was less than Rs.3 crores. Therefore,
F the appellant shall be entitled to the exemption under the said
  Notification.

      11. Appeal is, accordingly, allowed, upsetting the order
  of CEGAT and the authorities below, with direction to give
  the appellant exemption of the aforesaid Notification for the
G year in question.

      Kalpana K. Tripathy                             Appeal allowed.