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PJ/CASE LAW/2015-16/3000

whether Gutkha containing chewing tobacco sold under assessees own brand name, be treated as unbranded for notification no.08/2001?

Case-COMMISSIONER OF C. EX., GUNTUR Versus VIRAT CRANE INDUSTRIES LTD.

Citation-2015 (326) E.L.T. 10 (S.C.)

Brief Facts-The brief facts of the matter are that 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 had filed revised declaration under Rule 173B of the Excise Rules claiming exemption under Notification No. 8/2001, dated 1-3-2001 w.e.f. 1-4-2001. 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. 8/2001 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%.

Appelants Contention-The Department/Revenue is in appeal before us challenging the order of the Customs, Excise and Service Tax Appellate Tribunal (hereinafter referred to as ‘the Tribunal’) [2007 (208)E.L.T.262 (Tribunal)] whereby the Tribunal has granted the respondent/assessee the benefit of Exemption Notification No. 8/2001-C.E., dated 1-3-2001 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.

Respondents Contention-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. 8/2001 it should be treated as “unbranded” product. Learned counsel for the assessee also submits that if the assessee 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.

Reasoning Of Judgement-In order to appreciate the respective cases of the parties, it would be necessary to traverse through the notification in question. This Notification No. 08/2001 pertains to SSI exemption scheme which was made effective from 1-4-2001 for units not availing Cenvat credit. The notification exempt clearances, specified in column (ii) of the table annexed to the said notification, for whom consumption of excisable goods of the description specified in the said annexure. The annexure is in the following terms:
“All goods specified in the First Schedule and the Second Schedule to the Central Excise Tariff Act, 1985 (5 of 1986), other than the following namely:
(i)         All goods which are chargeable to nil rate of duty or are exempt from the whole of the duty of excise leviable thereon;
(ii)        All goods falling under heading No. 09.02;
(iii)       All goods falling under heading No. 21.06 and sub-heading Nos. 2101.10 and 2101.20;
(iv)       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.”
A reading of the aforesaid annexure clearly demonstrates that the goods which are specified in the First and Second Schedules to the Central Excise Tariff Act, 1985 are exempted in respect of SSI units. However, four categories of goods are excluded from such exemption. They are concerned with the exclusion contained in para (iv) as per which if the goods fall under Chapter 24 of the First Schedule, such goods would not be entitled to any exemption. It is not in dispute that the goods manufactured by the assessee fall under Chapter 24. However, this very para, while excluding the goods falling under Chapter 24 of the First Schedule states that if the goods are unbranded chewing Tobacco or unbranded preparations containing chewing Tobacco falling under Chapter 24.04, they would be entitled to exemption.As mentioned above, the goods of the assessee are preparations containing chewing Tobacco. Thus, 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. They have already pointed out above that the assessee is selling these goods under the brand name “Crane Gutkha”. However, the contention of the learned 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 definition, as stipulated above, 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.They also pointed out here that the learned counsel for the assessee had referred para 3 of the notification and particularly clause (b) thereof which talks of brand name or trade name of other person. However, para 3 pertains to determining the aggregate value of clearances for home consumption, and in this behalf, it is mentioned in clause (b) thereof that for the purpose of arriving at the aggregate value, the clearances bearing the brand name or trade name of other person would not be taken into consideration. That has no bearing on the issue which arises in the present case wherein the Court has to decide as to whether the preparation of the assessee is under the brand name or not. For this purpose, one has to only look into the definition of brand name as contained in the said notification. They would also like to remark that same definition of “brand name” appears in Note-I of Chapter 24, within which Chapter the goods of the assessee fall. Thus, they are of the opinion 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, they allow these appeals and set aside the order of the Tribunal.
 
Decision-Appeals allowed

Comment-The analogy of the case is that the Gutkha containing chewing tobacco sold under brand name belonging to assessee itself could not be treated as unbranded because the definition of brand name in Notification No. 8/2001-C.E. does not limit brand name to third party brand name only. Therefore the irresistible conclusion would be that once the goods are sold under any brand name, whether belonging to the assessee or the third party the goods would be treated as branded name and henceforth disentitle the assessee from the benefit related to unbranded chewing tobacco given in Notification No.8/2001-C.E. And in the present case the references to clause (b) of para 3 is irrelevant because it is for arriving at aggregate value of clearances bearing brand name or trade name of other person.

Prepared By-Neelam Jain

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