Whether registration of trade mark by third party would affect the right of the appellant to avail the benefit SSI exemption?

PJ/Case Laws/2012-13/1442

Case:- M/s MANKOO MACHINE TOOLS PVT LTD, SHRI SURJIT SINGH MANKOO Vs COMMISSIONER OF CENTRAL EXCISE, LUDHIANA.

Citation: - 2013-TIOL-293-CESTAT-DEL

Brief facts: -   The appellants have preferred appeals against the order in original dated 17.02.2012 whereby the jurisdictional Commissioner confirmed central excise duty of Rs.61,57,852/- against the appellant M/s.Mankoo Machine Tools Pvt.Ltd. with interest and imposed equal amount of penalty on the company. Besides that penalty of Rs.30 lakhs was imposed on appellant Shri Surjit Singh, Director on the premise that the appellant company has wrongly availed SSI exemption under Notification No.8/2003-CE dated 1.3.2003, despite the fact that during the relevant period, the appellant was using their brand name 'Mankoo' which belonged to M/s.Mankoo International Industries.

Appellant’s Contention :- The learned Counsel for the appellant has contended that the impugned order is not sustainable in law for the reason that the adjudicating authority has confirmed the duty demand and imposed penalty ignoring the fact that the trademark was registered in the name of M/s.Mankoo International Industries in the year 2004 whereas the appellants have using this trademark which belonged to their family since 1981 onwards. Learned Counsel submits that merely because M/s.Mankoo International Industries got trademark registered in its own name, it would not divest the appellants of their right to use trademark which they have been using since much prior to the registration of trademark in the name of M/s.Mankoo International Industries. In support his contention, learned Counsel for the appellants has referred to section 33 and 34 of Trade and Merchandise Marks Act, 1958 as also section 33 to 35 of Trade Marks Act, 1999. He has also relied upon the judgement of Hon'ble Supreme Court in the matter of Meghraj Biscuits Industries Ltd. vs. CCE-2007 (210) ELT 161 (SC) = (2007-TIOL-36-SC-CX) wherein the Hon'ble Supreme Court has held that "the trade mark exists independently of the registration which merely affords further protection under the statute. Common law rights are left wholly unaffected. Priority in adoption and use of a trade mark is superior to priority in registration." Learned Counsel for the appellants submits that exactly similar issue on the facts and law came up before the Supreme Court in the matter of CCE, Chandigarh vs. Bhalla Enterprieses-2004 (173) ELT 225 (SC) = (2004-TIOL-90-SC-CX) wherein the Supreme Court has decided in favour of the assessee. Thus the appellants have a strong prima facie case as such there is reason for dispensation with condition of pre-deposit.

Respondent’s Contention:-   The learned DR for the respondent, on the contrary has opposed the stay applications for stay and he has reiterated the findings of the adjudicating authority. Learned DR submits that admittedly the trademark 'Mankoo' is registered in the name of another party, therefore, the benefit of SSI exemption under Notification No.8/2003-CE is not available to the appellant. As such there is no reason for dispensing with condition of pre-deposit.

Reasoning of Judgment:- The Tribunal look on relevant provisions of Trade and Merchandise Marks Act, 1958 and Trade Mark Act, 1999. Section 33 of Trade and Merchandise Marks Act, 1958 deal with saving for vested rights which is reproduced thus:

"33. Saving for vested rights. Nothing in this Act shall entitle the proprietor or a registered user of a registered trade mark to interfere with or restrain the use by any person of a trade mark identical with or nearly resembling it in relation to goods in relation to which that person or a predecessor-in-title of his has continuously used that trade mark from a date prior –

(a) to the use of the first-mentioned trade mark in relation to those goods by the proprietor or a predecessor-in-title of his; or

(b) to the date of registration of the first-mentioned trade mark in respect of those goods in the name of proprietor or a predecessor-in-title of his;

Whichever is the earlier, and the Registrar shall not refuse (on such use being proved) to register the second-mentioned trade mark by reason only of the registration of the first-mentioned trade mark."

Similarly, section 34 of Trade Mark Act, 1999 which superseded the earlier Act deals with saving for vested rights which reads thus:

"34. Saving for vested rights. Nothing in this Act shall entitle the proprietor or a registered user of a registered trade mark to interfere with or restrain the use by any person of a trade mark identical with or nearly resembling it in relation to goods or services in relation to which that person or a predecessor in title of his has continuously used that trade mark from a date prior –

(a) to the use of the first-mentioned trade mark in relation to those goods or services by the proprietor or a predecessor in title of his; or

(b) to the date of registration of the first-mentioned trade mark in respect of those goods or services in the name of proprietor or a predecessor in title of his;

Whichever is the earlier, and the Registrar shall not refuse (on such use being proved)
to register the second-mentioned trade mark by reason only of the registration of the first-mentioned trade mark."

In the instant case, admittedly the appellant has been using the trade mark 'Mankoo' continuously since 1981. Therefore, registration of trade mark 'Mankoo' in favour of M/s.Mankoo International Industries prima facie would not affect the right already vested in the appellant. Since the appellant has been using the brand name 'Mankoo' on his products much prior to registration of brand name in favour of Mankoo International Industries, prima facie it cannot be said that the appellant was using the brand name with the intention of indicating a connection with the assessees' goods and such other person or used the name in such a manner that it would indicate such connection. Thus prima facie he cannot be denied the benefit of exemption notification. The Hon'ble Supreme Court in the matter of Chandigarh vs. Bhalla Enterprises while dealing with similar situation held thus:

"6. The apprehension of the assessees that they may be denied the exemption merely because some other traders even in a remote area of the country had used the trade mark earlier is unfounded. The notification clearly indicates that the assessee will 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 assessees' goods and such other person or uses the name in such a manner that it would indicate such connection. Therefore, if the assessee is able to satisfy the assessing authorities that there was 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. An assessee would also be entitled to the benefit of the exemption if the brand name belongs to the assessee himself although someone else may be equally entitled to such name."

In view of aforesaid judgement of Hon'ble Supreme Court, the appellant has been able to make a strong prima facie case, in appeal which justifying the waiver of condition of pre-deposit. The stay applications are accordingly allowed and condition of pre-deposit of duty demand, interest and penalty is dispensed with and recovery stayed.

Decision: - Stay granted

Comment:-The conclusion that can be drawn from this case is that merely because some other person is registered with the trade mark which the assessee is using much before the registration of such trade mark by the third party would not disentitle him to claim the benefit of SSI exemption.

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PJ/Case Laws/2012-13/1442

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