By TIOL News Service

NEW DELHI, NOV 26, 2015: THE Revenue is in appeal before the Supreme Court challenging the order of the CESTAT whereby the Tribunal has granted the respondent-assessee the benefit of Exemption Notification No. 08/2001 CE dated 01.03.2001 and on that basis held that the assessee is not liable to pay any excise duty on its product known as "Crane Gutkha" which is containing chewing Tobacco.

The assessee is engaged in the manufacture of Pan Masala/Gutkha containing Tobacco falling under Chapter sub-heading 2404.49. This product is manufactured and sold under the brand name "Crane Gutkha". The assessee claimed exemption under Notification No. 08/2001 dated 01.03.2001 w.e.f. 01.04.2001. It was stated that since the assessee is not using the brand name of any third party but being a small scale industrial unit, the aforesaid brand name is its own brand name, for the purposes of the said Notification No. 08/2001 it should be treated as "unbranded" product. Though, this contention was not accepted by the Commissioner in his Order-in-Original who raised the demand for payment of duty @ of 60% which is a normal duty payable on the said product, the Tribunal by the impugned order has been persuaded by the aforesaid contention and therefore, held that the assessee is entitled to the benefit of the aforesaid notification to the extent of 32%.

As per the notification, All goods falling under Chapter 24 of the First Schedule (other than unbranded chewing tobacco and preparations containing chewing tobacco, falling under heading No. 24.04, are not eligible for the exemption. This means branded chewing tobacco is not eligible for the exemption.

The Supreme Court observed,

The only question is as to whether branded or unbranded preparations in order to qualify for exemption under the aforesaid Notification, the assessee has to prove that goods are unbranded. The assessee is selling these goods under the brand name "Crane Gutkha". However, the contention of the counsel for the assessee is that since this is the home brand name that brand name belongs to the assessee itself which has to be treated as unbranded. This contention proceeds on the premise that the branded goods belonging to third party only would be treated as branded and insofar as goods sold under brand name belonging to the assessee are concerned, they have to be treated as unbranded. This contention is clearly misconceived and untenable.

The Notification itself contains the definition of "brand name" which reads as under:

"Explanation - For the purposes of this notification:

(A) "brand name" or "trade name" means a brand name or a trade name, whether registered or not, that is to say, 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 of the identity of that person;"

The Supreme Court further observed,

The definition, as stipulated, does not limit the brand name to third party brand name. Therefore, the irresistible conclusion would be that once the goods are sold under any brand name, whether that belongs to the assessee or the third party the goods would be treated as branded name.

Supreme Court held that the judgment of the Tribunal is unsustainable in law and is liable to be set aside. Thus, while holding that the assessee is not entitled to any exemption under the aforesaid Notification, these appeals are allowed and the order of the Tribunal is set aside

The counsel for the assesseee submits that if the assesseee is to pay the duty, then he would be entitled to CENVAT credit which he had foregone as it had claimed the benefit of the exemption Notification. The Commissioner while raising the demand of duty, shall keep the aforesaid aspect in mind.

(See 2015-TIOL-284-SC-CX)