SSI Exemption - Use of name "Minimax" - whether use of Brand name of another

PJ/Case Laws/2011-12/1258

Case: Commissioner of Central Excise versus Minimax Industries & Anr

Citation: 2011-TIOL-319-HC-DEL-CX

Issue:- Whether by use of the name 'Minimax' by the partnership firm which was also used by Proprietorship firm belonging to same individuals has violated condition no. 4 of SSI exemption Notification?

Brief Facts:- Respondent no.1, M/s Minimax Industries, is a partnership firm of which respondent no. 2 is one of the partners. It is manufacturing machines for production of wire and cables. Respondent no.1 were enjoying the status of Small Scale Industry for the purposes of Excise Act and were exempted from payment of excise duty under the said Act.

The Central Excise Officers visited to premises of Respondent No. 1-firm on 19th January, 2000 having prior information that this firm was using brand/logo/trade name of 'Minimax' which belonged to some other unit i.e. M/s Minimax Engineering Industries (MEI). The said Engineering Industries is a sole propriety concern of Mohd. Yamin. On enquiries, it was found that in the machines manufactured by the partnership firm, the name 'MINIMAX' is used alongwith the full name and address of the partnership firm i.e. M/s Minimax Industries.

Thereafter show-cause notice was issued to the partnership firm for withdrawing the status of Small Scale Industries and denying exemption on the ground that the said partnership firm has violated the provisions of condition no. 4 of Notification No.1/93-CE as well as Notification No.8/99 CE. This condition no. 4 stipulates that the exemption contained in the Notification would not be applied to the specified goods bearing the brand name or trade name (whether registered or not) of another person. Explanation-IX of the said Notification also defines the terms “Brand name” or “Trade name” to which we shall revert at the appropriate stage.

The Adjudicating Authority held that the brand name 'Minimax' belongs to MEI which was using the same since 1980 and, therefore, condition no. 4 as provided in Notification No.8/2002 was violated by Respondent No. 1-firm. On this basis, it was held that the partnership firm was not entitled to exemption under the aforesaid Notification.

Appeal filed by the partnership firm before the Commissioner (Appeal) was dismissed. However, on further appeal, the Tribunal allowed the appeal of the partnership firm/respondent.

Challenging the aforesaid order of the Tribunal, the Revenue filed this appeal before the High Court.

Reasoning of the Judgment:- The High Court observed that the Tribunal while passing the order had taken into consideration the aforesaid condition no. 4 and the definition of 'brand name' or 'trade name' appearing in Explanation-IX thereof. The Tribunal also took note of some judgments of its different Benches as well as the Supreme Court, Circulars of the Central Excise Board as well as opinion of the Ministry of Law. After taking note of all these material, the Tribunal opined that mere use of the name or logo used by others which has not acquired the status of 'brand name' or 'trade name' within the meaning of said expression under the aforesaid Notification would not amount to violation of condition no. 4 of the said Notification.

In the opinion of the Tribunal, in order to acquire the status of 'brand name' or trade name' it has to be established that a particular logo or mark is associated with the person and can be related to the said person of whom the particular logo or trade mark is used by the assessee.

The High Court held that the central idea contained in the definition is that the mark is used with the purpose to show connection of the said goods with some person who is using the name or mark. Therefore, in order to qualify as 'brand name' or 'trade name' it has to be established that such a mark, symbol, design or name etc. has acquired the reputation of the nature that one is able to associate the said mark etc. with the manufacturer.

The High Court relied upon the following cases:

Tarai Food Ltd. Vs. CCE, (2007) 12 SCC 721
CCE Vs. Grasim Industries ltd. (2005) 4, SCC 194
CCE Vs. Bhalla Enterprises, (2005) 8 SCC 308
Nirlex Spares (P) Ltd. Vs. Commissioner of Central Excise, (2008) 2 SCC 628
Commissioner of Central Excise, Chandigarh II Vs. Bhalla Enterprises, (2005) 8 SCC 308

It was held that what is necessary is that the said mark is of the nature tat it establishes connection between the product and the person.

It was held that the perusal all the afore-mentioned judgments brought out two aspects:

1. As per the Notification, 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 the assessee’s goods and such other person or uses the name in such a manner that it would indicate such connection. If there is no such intention or that the user of the brand name was entirely fortuitous and could not on a fair appraisal of the marks indicate any such connection, it would be entitled to the benefit of exemption.

2. The assessee would also be entitled to the benefit of exemption if the brand name belongs to the assessee himself although some one else may be equally entitled to such name.

It was held that when these principle are applied to the facts of this case, it is clear that the Tribunal perfectly applied the aforesaid principle in its order and the same does not call for any interference.

The High Court noted that Respondent No. 1-firm and MEI were being run by the family members. Two brothers are partners in the said firm while MEI is sole proprietorship concern of third brother. Both the entities are using the mark “Minimax” for the last number of years, though, the use by MEI is longer. Under these circumstances, it cannot be said that the partnership firm started using the name “Minimax” which belonged to MEI. It was held that the name “Minimax” belongs to both the entities namely, the partnership firm as well as MEI.

It was held that admittedly, MEI has not got the brand name/logo “Minimax” registered either under the Registration Act or under the Trade Mark Act or any other Act. It has also never claimed, at any time, its exclusive rights over the use of logo “Minimax” and never taken any action against the partnership firm. It is not a case of the department that the said MEI has allowed the partnership firm to use the said name. The Tribunal has also arrived at a finding of fact that “Minimax” has not acquired any such reputation that it can be associated with “MEI”.

It was held that the decision given in Commissioner of Central Excise, Delhi Vs. M/s Ace Auto Comp. Ltd [2010-TIOL-112-SC-CX] was distinguishable from the facts of the present case.

It was held that in the present case nothing could be brought on record by the Department to demonstrate or prove that 'Minimax' has acquired any brand name or trade name as defined in Explanation IX of the Notification No.1/93-CE. No substantial question of law arises.

Decision:- Appeal dismissed.

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PJ/Case Laws/2011-12/1258

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