Case: Commissioner Of Cental Excise,Chandigarh Vs. M/S. Khanna Industries

question has not been decided by the CEGAT.8. In order to appreciate the rival submissions, the relevant notifications need to be noted. 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 (1) of rule 8 of the 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 to the Central Excise Tariff Act, 1985 (5 of 1986) (hereinafter referred to as the "specified goods), and cleared for home consumption on or after the 1st day of April in any financial year, by a manufacturer from one or more factories.” xxx xxx xxx- ANNEXURE Xxx xxx xxx 4. All other goods specified in the said Schedule other than the following, namely :- (i) all goods failing under Chapters 9, 24, 31, 51, 52, 53. .54, 55, 56, 57, 58, 59, 60, 61, 62, 71, 73 and 74; (ii) all goods falling under heading Nos. 21.06, 25.04, 36.03, 40.11, 40:12, 40.13, 87.01, 87.02, 87.03, 81.04, 81.05, 87.06, 87.11, 91.01, 91.02 and 96.13; (iii) all goods fallings under sub-heading Nos. 2101.10, 2101.20, 3304.00, 3305.90, 3307.00, 4005.00, 4006.10, 4008.21 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 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 (1) of Rule 8 of the Central Excise Rules, 1944, the Central Government hereby makes the following further amendments in the notification of the Government of India in the Ministry of Finance (Department of Revenue) No. 175/86- Central Excise, dated the 1st March, 1986, namely:In the said notification,(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) 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 consumption before the 1st day of October, 1987".(ii) after Explanation VII, the following Explanation shall be inserted, namely :-"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 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 of that person." 10. Clause 7 of the notification after amendment deals with exemption of specified goods and circumstances where the exemption is not available. Stand of the respondent is that if manufacturer need not be a manufacturer of specified goods, and brand name as used is entitled to exemption contained in the notification, it is really of no consequence whether he is manufacturer of goods. The stand is clearly untenable. The notification is goods specific. What is required is that a person, who may be a manufacturer, must be eligible for exemption under the notification in respect of the specified goods. Any other interpretation would render the purpose for which the notification has been issued redundant.11. As noted above, the notification is goods specific. The emphasis is on specified goods. That being so, the impugned judgment of the CEGAT is indefensible. 12. Undisputedly, M/s Arkson Pvt. Ltd. is different from M/s Arkson Engg. Co. In the present case, the issue relates to manufacture of "brass sanitary bathroom fittings". M/s Arkson Engg. Co. manufactures C.I. castings while M/s Arkson Pvt. Ltd. are the owners of the stylized brand name "ARK". However, the said company is engaged in trading of "brass sanitary fittings". Thus, they are traders. Assessees cannot take the benefit of the registration certificate of M/s Arkson Engg. Co. as both are separate legal entities. Therefore, when M/s Khanna Industries and others i.e. the assesses use the brand name/trade name of "ARK" in the context of "brass sanitary fittings" the assessees are not entitled to claim the benefit as the stylized brand name "ARK" belongs to M/s Arkson Pvt. Ltd. and not to M/s Arkson Engg. Co. However, as noted above, M/s Arkson Pvt. Ltd. is a trader and not the manufacturer of "sanitary bath fittings". This is clearly accepted by Ms. Aarti Khanna, Executive Director of M/s Arkson Pvt. Ltd. in her statements on 22.1.1993 and 18.3.1993.13. 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 CEGAT has held that affixation of specified good with a brand name of ineligible Indian manufacturer will entail disqualification from exemption. It is 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 Namtech Systems Ltd. (supra) has not been considered by the CEGAT in the present case. 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.14. However, as rightly contended by learned counsel for the respondents, the plea relating to non-applicability of extended period of limitation has not been considered by the CEGAT.

Decision (1 = appeal accepted, 0 = rejected): 1

Explanation:
1[ds]10. Clause 7 of the notification after amendment deals with exemption of specified goods and circumstances where the exemption is not available. Stand of the respondent is that if manufacturer need not be a manufacturer of specified goods, and brand name as used is entitled to exemption contained in the notification, it is really of no consequence whether he is manufacturer of goods. The stand is clearly untenable. The notification is goods specific. What is required is that a person, who may be a manufacturer, must be eligible for exemption under the notification in respect of the specified goods. Any other interpretation would render the purpose for which the notification has been issued redundant.11. As noted above, the notification is goods specific. The emphasis is on specified goods. That being so, the impugned judgment of the CEGAT is indefensible.Undisputedly, M/s Arkson Pvt. Ltd. is different from M/s Arkson Engg. Co. In the present case, the issue relates to manufacture of "brass sanitary bathroom fittings". M/s Arkson Engg. Co. manufactures C.I. castings while M/s Arkson Pvt. Ltd. are the owners of the stylized brand name "ARK". However, the said company is engaged in trading of "brass sanitary fittings". Thus, they are traders. Assessees cannot take the benefit of the registration certificate of M/s Arkson Engg. Co. as both are separate legal entities. Therefore, when M/s Khanna Industries and others i.e. the assesses use the brand name/trade name of "ARK" in the context of "brass sanitary fittings" the assessees are not entitled to claim the benefit as the stylized brand name "ARK" belongs to M/s Arkson Pvt. Ltd. and not to M/s Arkson Engg. Co. However, as noted above, M/s Arkson Pvt. Ltd. is a trader and not the manufacturer of "sanitary bath fittings". This is clearly accepted by Ms. Aarti Khanna, Executive Director of M/s Arkson Pvt. Ltd. in her statements on 22.1.1993 and 18.3.1993.13. 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 CEGAT has held that affixation of specified good with a brand name of ineligible Indian manufacturer will entail disqualification from exemption. It is 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 Namtech Systems Ltd. (supra) has not been considered by the CEGAT in the present case. 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.14. However, as rightly contended by learned counsel for the respondents, the plea relating to non-applicability of extended period of limitation has not been considered by the CEGAT.