Case: The Commissioner of Central Excise, Navi Mumbai Vs. M/S. Ramply (India) Limited &amp; Another

2. A few facts may be set out. The Respondent admittedly was not the owner of the mark Rams which belonged to M/s. Rammaica (India) Ltd., earlier known as M/s. Ram Decorative and Industrial Laminates Ltd. Admittedly M/s. Rammaica (India) Ltd., was not entitled to the exemption of payment of excise duty whereas the respondent being a small scale industry would be entitled to the concessional rate of duty, if otherwise eligible.Revenue on information received intercepted a lorry and seized goods belonging to the respondent, on which the mark Rams was used. A show cause notice was issued on 21st April, 1995. On 11th August, 1997 an order came to be passed by the Commissioner, confirming the demand of Central Excise Duty in the sum of Rs.44,39,794/and a penalty of Rs.44.00 lakhs. A direction was given to appropriate the bank guarantee of Rs.6.00 lakhs for the release of the goods. The Respondents aggrieved preferred an Appeal before the CESTAT. The Tribunal by its order dated 31st December, 2002 allowed the Appeal. The Revenue preferred Civil Appeal to the Supreme Court, being Civil Appeal No.538384/ 2004 against the order of CESTAT. The Supreme Court remanded the matter back, to decide the issue of limitation by its order of 30th September, 2004. By order dated 10th September, 2007, CESTAT set aside the demand of duty for the period from April, 1990 to 30th September, 1994 along with the penalty and order for confiscation of the goods in the godown and confiscation of said vehicle. The issue was remanded back to the Adjudicating Authority for limited purpose of quantification of the demand for the period October, 1994 to 14th November, 1994 and consequent penalty. The Tribunal in partly allowing the appeal was pleased to observe that the question of affixing the brand name was a contentious one and the appellant had not erred in nondeclaring the brand name in the classification list. It is this order which is the subject matter of the present appeal.

Court's reasoning:
It would thus be clear that two periods of limitation are set out. In a case where duty of excise has not been levied or not paid orid or erroneously refunded or the like, a power is conferred on the Central Excise Officer within one year from the relevant date to issue show cause notice why the assessee should not pay the amount specified in the notice. The proviso, however, sets out that in a case where duty has not been levied or paid or short paid or erroneously refunded by reason of fraud; collusion or any willful misstatement or suppression of facts or contravention of any of the provisions of the Act or of the Rules made thereunder, with intent to evade payment of duty, then the period of limitation is five years.A few additional facts may also be set out. A show cause notice was issued amongst others to the Respondents dated 20th April, 1995 on the basis that they have suppressed the fact of affixing their goods with labels containing the monogram of Rams, registered in the name of M/s. Rammaica (India) Ltd. Considering the reply filed the Commissioner by his original order dated 2171997/ 61 on the admission by Shri Rambtar Jhunjhunwala, Director of the assessee company held that affixing of sticker and monogram ofwas never informed to the Central Excise Department. The matter ultimately reached the Supreme Court at the instance of Revenue. That appeal was disposed off with various other Appeals and the orders were set aside and the matters were remanded. While disposing of the Appeal the Supreme Court noted that the object of the notification was clear, which was, to grant benefits only to those industries which otherwise do not have advantage of a brand name. The Supreme Court also dealing with the apprehension of the assessees that they may be denied exemption merely because some other traders even in a remote area of the country had used the trade mark earlier, held that such fear was unfounded. The Court noted that the Notification clearly indicates that 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 such goods and such other person uses the name in such a manner that it would indicate such connection. The Court further held that the assessee is entitled to the benefit of exemption. if the brand name belongs to the assessee himself although someone else may be equally entitled to such name.On remand, by order dated 10th September, 2007 the learned Tribunal noted that the assessees are not challenging the order on merits, but only on the ground of limitation. They further held that in the assessees own case, a larger Bench by its order dated 25th July, 2007 had considered the reason whethernondeclaration of brand namein the classification list would amount to suppression. They held that the omission to disclose the use of brand name of another person in the classification list cannot lead to application of extended period. The learned Tribunal held that the question of affixing the brand name is a contentious one and the Respondents had been following the procedure by filing classification list and clearing the goods subsequently and as such the appellant has not erred in nondeclaring the brand name in the classification list. Hence set aside the demand for duty for the period between October 1994 to 14th November, 1994. Also set aside the order of confiscation of the goods and confiscation of the vehicles. It may be mentioned that in respect of duty for the period between October, 1994 to 14th November, 1994 and penalty on the same remanded the matter for computation and consequential order.12. The first question that arises for our consideration in the context of the extended period of limitation, is whether there was suppression by the respondents and whether at all, the Tribunal could have held that the issue was contentious. There is a factual finding that the Respondents in the classification list did not disclose the use of the brand name belonging to another person. In so far as the Notification of 1993 is concerned, a perusal of Clause 7 clearly sets out, that where a manufacturer affixes the specified goods with a brand name or trade name of another person who is not eligible for the grant of exemption under this Notification, then they are not entitled to the exemption. The issues which came up before the Tribunal were not on the use of the trade name of an assessee by another who was not eligible for exemption. Some of the cases were in respect of the same brand name used by two different persons. At any rate irrespective of this and what the Tribunal held the order of the larger Bench was ultimately set aside by the Supreme Court. Clause 7 in our opinion is clear and explicit. The issue of entitlement to benefit when the same brand name or make was used by two persons was clarified by the Circular of the Board in 1988, before the Respondent herein began its manufacturing operations. In the instant case the Respondents admittedly was using the mark of another company, may be a group company. That group company was not eligible for exemption. To contend that this is a contentious issue, in our opinion, is begging the issue. Similarly, in so far as Clause 4 of the Notification dated 28th February, 1993, it is clear that the exemption contained in the Notification shall not apply to the specific goods, if the brand name or trade name used is registered or owned by another person. In other words, if the assessee uses the brand name of another person then he is not entitled to exemption. On the face of the language in the notification it cannot be said that the interpretation of the notification was contentious. The assessee was using a brand name or trade name on his goods admittedly which belonged to another and did not disclose them in the classification list. Clearly, therefore, the finding recorded by the Tribunal that this is a contentious issue is devoid of any merit.Apart from that on behalf of the appellant their learned Counsel drew our attention to the judgment of the Supreme Court in Commissioner of C.Ex., Pune vs. Vora Products, 2008 (221) E.L.T. 321 (S.C.) where considering the proviso to Section 11A of the Central Excise Act in a case where an assessee was using the brand name of another and had not disclosed the same in the classification list and had contended that it was done in ignorance of law, that defence was rejected. The Court posed to itself the question whether there was a willful default. The Court in the circumstances held that the predicates were satisfied and that the assessee was liable. This further supports the view that we have taken.14. In the instant case it may be that the mark Rams belongs to the sister company of the respondent. However, the sister company was not eligible for exemption nor could the respondent knowing that the mark belongs to another use the same. This really cannot be said to be contentious.