By TIOL News Service

MUMBAI, JAN 13, 2015: THE appellant was manufacturing cakes/pastries/biscuits/cookies/chocolates and selling these products through their franchisees. All the products were being sold under the brand name "Ribbons & Balloons". Most of the products carried the brand name and in some of the products when the goods are dispatched to the franchisees, the same are in bulk pack, the franchisees are selling the same with the above mentioned brand name. Further, the franchisees have exclusive outlets and they indicate "Ribbons and Balloons" as their name.

The dispute in the present case relates to the period October 2005 to 16.07.2007. The appellant was clearing the above mentioned excisable goods by availing SSI Exemption. Revenue's case is that the brand name "Ribbons and Balloons" is owned by M/s. Bharat Cafe Pvt. Ltd. and not by the appellant and, therefore, they are not entitled to claim the benefit of SSI Exemption under Notification No. 8/2003-CE dated 01.03.2003 as amended.

A demand of Rs.35,44,512/- came to be confirmed by the original authority and upheld by the Commissioner(A).

The appellant is before the Tribunal.

The appellant submitted that the brand name "Ribbons and Balloons" belongs to the appellant only and the goods were known to the buyers as those of the appellant and not of M/s. Bharat Cafe Pvt. Ltd. and there is no evidence to show that the brand name is of M/s. Bharat Cafe Pvt. Ltd.; that M/s. Bharat Cafe Pvt. Ltd. is only in Hotel business, they never manufactured the said goods nor are traders of such goods; that M/s. Bharat Cafe Pvt. Ltd. only applied for registration of the brand to the Registrar of Trade Mark; after accepting the application and allotting No. to the applicant, no Brand Registration Certificate is issued to M/s. Bharat Cafe Pvt. Ltd. and M/s. Bharat Cafe Pvt. Ltd. never used the said brand.

It was further submitted that the department knew that they are manufacturing the excisable goods bearing the said brand name and they were also granted registration on 1.12.2006. Inasmuch as the extended period of limitation cannot be invoked. Reliance is inter alia placed on the decisions in CCE v. Bhalla Enterprises - 2004-TIOL-90-SC-CX where it is held that exemption is not to be denied merely because some other trader, even in a remote area of country had used trade mark earlier.

The AR submitted that there is no dispute about the fact that M/s. Bharat Cafe Pvt. Ltd. had applied for registering the above mentioned trade mark in respect of commodities in question on 22.09.2005 and a provisional certificate was issued to them and that the said trade mark was assigned to the appellant by an Agreement dated 21.09.2005 between the appellant and M/s. Bharat Cafe Pvt. Ltd. In the matter of invoking the extended period it is submitted that inquiries were started by the Revenue in June 2006 itself and during the preliminary enquiry appellant informed that they were using the brand name of "Ribbons and Balloons" but did not inform that the said brand name belongs to M/s. Bharat Cafe Pvt. Ltd., and they were permitted to use the name. Moreover, registration was taken after more than one year of starting the production and much after the enquiries by department was started.

Reliance is placed on the decisions in ACE Auto Comp. Ltd. - 2010-TIOL-112-SC-CX, CCE Trichy v. Rukmani Pakkwell Traders - 2004-TIOL-51-SC-CX and CCE v. Mahaan Dairies - 2004-TIOL-52-SC-CX to justify the denial of the small scale exemption. It is also submitted that the appellant cannot be granted cum-duty benefit in view of the judgment of the Apex Court in Amrit Agro Industries Ltd. vs. CCE Ghaziabad - 2007-TIOL-244-SC-CX. The case laws cited by the appellant were also sought to be distinguished.

The Bench observed that it was not impressed by the argument of the appellant that the brand name belonged to them as M/s. Bharat Cafe Pvt. Ltd. were neither manufacturer nor seller nor are trader and, therefore, the brand name cannot be said to belong to M/s. Bharat Cafe Pvt. Ltd. It was also noted that M/s. Bharat Cafe Pvt. Ltd had submitted a letter dated 19.04.2011 addressed to the Registrar of Trade Mark, Mumbai wherein it is apparent that M/s. Bharat Cafe Pvt. Ltd. had filed an application on 22.09.2005 for registration of trade mark 'Ribbons and Balloons' and which was accepted and advertised vide TMJ 1373 Regular on 01.08.2007 and that vide the instant letter they were withdrawing the said trade mark application. Further, the letter very clearly indicated that during the period from 22.09.2005 to 19.04.2011 the said brand name belongs to them viz. M/s. Bharat Cafe Pvt. Ltd.

The Bench, therefore, held that it had no hesitation in concluding that the said brand name belonged to M/s. Bharat Cafe Pvt. Ltd during the material period.

After extracting condition no. 4 of the Notification 8/2003 the Bench observed -

"Undoubtedly the brand name did not belong to the appellant but to M/s. Bharat Cafe Pvt. Ltd and therefore, the appellant will not be entitled to the benefit of the said Notification. The fact that M/s. Bharat Cafe Pvt. Ltd were not manufacturer of trader or seller of the said goods at the relevant time is of no consequence. We, therefore, hold that the appellants are not entitled for the benefit of Notification 8/2003."

The case laws cited by the appellant were also distinguished as being not comparable on facts.

In the matter of invocation of extended period of limitation the Bench observed -

"8. The other argument of the learned Counsel was that extended period of limitation is not invokable as they have informed the department vide letter dated 13.6.2006 that they are manufacturing under the brand name "Ribbons and Balloons". We have gone through the said letter. The letter was in pursuance to the visit of the Central Excise Officers to the said unit....and therefore the appellant cannot claim that he had informed the department. We also note that the said letter clearly suppresses the fact that brand name of "Ribbons and Balloons" belongs to M/s. Bharat Cafe Pvt. Ltd., and appellant is using the same consequence to a deed of agreement. We are in agreement with the learned A.R.'s contention that the Proprietor of the appellant firm is one of the Directors in M/s. Bharat Cafe Pvt. Ltd and is the main promoter and hence it cannot be assumed that the appellant's firm was not aware of the fact that the said brand name belongs to M/s. Bharat Cafe Pvt. Ltd. In fact, conduct of the appellant proves his willful intention to evade duty. Under the circumstances, we hold that extended period of limitation is correctly invoked."

The appellant also submitted that since they had paid full rate of duty in FY 2006-07 after crossing the exemption limit on 9.11.2006 demand cannot be raised for the period thereafter. The Bench agreed.

In the matter of the claim of cum-duty benefit the Bench observed that in the case of Amrit Agro Industries (relied by the AR) the facts are different inasmuch as the dispute in that case was about excisability of the goods. Noting that there is no such dispute in the present case, the Bench held that the appellant is entitled to the benefit of cum-duty.

In fine, the CESTAT held as under -

+ The impugned order is upheld on merits including extended period of limitation, however, demand of duty during 9.11.2006 to 31.3.2007 is set aside as the appellant had already paid the duty.

+ Further for remaining demand, the appellant would be entitled to cum-duty benefit and the original authority is directed to re-compute the duty.

+ The penalty under Section 11AC will also come down in view of the fact that the duty liability of the appellant will come down after excluding the clearances from 9.11.2006 to 31.3.2007 and extending the benefit of cum-duty. The original authority will accordingly impose penalty under Section 11AC equal to the duty after re-computation as above. Interest is also to be computed thereafter.

The appeal was disposed of in the above terms.

(See 2015-TIOL-95-CESTAT-MUM)