M/S Zasfa Packaging vs Cce, Delhi Ii

[Arising out of the Order-in-Appeal No. 19-20/CE/DLH/2006 dated 23/03/2006 passed by The Commissioner of Central Excise (Appeals), New Delhi.]

For Approval and signature :

Honble Shri Ashok Jindal, Member (Judicial)

Honble Shri B. Ravichandran, Member (Technical)

1. Whether Press Reporters may be allowed to see :

the Order for publication as per Rule 27 of the

CESTAT (Procedure) Rules, 1982?

2. Whether it would be released under Rule 27 of :

the CESTAT (Procedure) Rules, 1982 for

publication in any authoritative report or not?

3. Whether their Lordships wish to see the fair :

copy of the order?

4. Whether order is to be circulated to the :

Department Authorities?

M/s Zasfa Packaging ] Appellant

Shri Zakir Ashraf Ali Soomar, Partner ]

Versus

CCE, Delhi  II Respondent

Appearance

Shri Amit Jain, Advocate  for the appellant.

Shri Pramod Kumar, Authorized Representative (Jt. CDR)  for the Respondent.

CORAM: Honble Shri Ashok Jindal, Member (Judicial)

Honble Shri B. Ravichandran, Member (Technical)

Final Order No. 52479-52480/2015 Dated : 04/08/2015

Per. B. Ravichandran :-

There are two appeals on the same issue one by the main appellant contesting the demand of Central Excise duty, the other by partner of the main appellant contesting the penalty imposed. Both the appeals are taken up together for decision. The appellant is engaged in the manufacture of printed as well as non-printed cartons, labels on paper board etc. They were clearing printed cartons, printed boards and skin packaging bearing the brand name of buyers on payment of normal duty of excise treating these items as branded goods. They were availing SSI exemption under Notification No. 8/2002-CE in respect of non-printed cartons. The Department felt that as the printed cartons with brand name of others are not sold in the market as such these could not be treated as branded goods and as such the value of these clearances cannot be excluded in the aggregate value of clearances to arrive at SSI limit. Accordingly, proceedings were initiated against the appellant resulting in confirmation of demand with equal penalty and also penalty on the partner of the appellant firm. On appeal the learned Commissioner (Appeals) vide his order dated 23/3/2006 upheld the original order. The present appeals are against the said Commissioner (Appeals) order.

2. The short point for decision is whether or not the value of printed cartons and skin packagings with the brand name of others are to be added in the aggregate value to arrive at SSI exemption in terms of Notification No. 8/2002-CE. The relevant portion of the notification is as below :-

(A) brand name or trade name means a brand name or a trade name, whether registered or not, that is to say, a 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;

As per Notification No. 8/2002-CE, following goods will be considered as branded goods :-

(a) Goods must bear the identification of the buyer such as brand name, trade name, logo, symbol etc.

(b) Such identification of the buyer must indicate connection between the goods and the buyer with whom such identification relates in the course of trade of such goods. In other words, whenever the goods bearing such identification are sold by the buyer, such goods give an impression as goods of the buyer and not of any other person.

3. In the impugned order, the learned Commissioner (Appeals) held that the printed cartons are used by the buyers for packing their products. He held that branding or trade name has significance only because it conveys to the customer in the market a connection between the goods and some person. Since, the printed cartons are not traded in the market these cartons are not to be treated as branded goods and consequently value of clearance of these goods are to be added to arrive at SSI limit. In the appeal before us, the learned Counsel strongly contested the above finding of the lower authority stating that printed cartons are nothing but branded goods that established a clear link between the brand owner, the product and the customer in the course of trade. In this connection, he relied on the Honble Supreme Court decision in the case of Kohinoor Elastics Pvt. Ltd. vs. CCE, Indore reported in 2005 (188) E.L.T. 3 (S.C.) and Vir Rubber Products P. Ltd. vs. CCE, Mumbai  III reported in 2015 (318) E.L.T. 578 (S.C.). On the other hand, the learned AR reiterated the findings of the lower authorities.

4. Heard both the sides and examined the appeal records. It is seen that the Honble Supreme Court in the case of Kohinoor Elastics Pvt. Ltd. vs. CCE, Indore (supra) overruled the full bench judgment of this Tribunal in the case of Prakash Industries vs. CCE, Bhubaneswar reported in 2000 (119) E.L.T. 30 (Tribunal  LB). The Honble Supreme Court in both the cases cited (supra) held that once the brand/trade name is used in the course of trade of the manufacturer, which is indicating a connection between the goods manufactured by him and the person using the brand/trade name, the exemption is lost. It was held that in any case, it cannot be forgotten that the customer wants his brand/trade name affixed on the product not for his own knowledge or interest. The customer is getting the brand or trade name affixed because he wants the ultimate customer to know that there is a connection between the product and him. The above reasoning of the Honble Supreme Court is squarely applicable to the branded cartons involved in the present case. Incidentally it may be noted an amendment has been carried out in the said Notification to deny the exclusion under the category of brand name for products like printed cartons etc. w.e.f. 01/09/2008 only. Considering the above legal position and the Honble Supreme Courts decisions, we find the order by the lower authorities is not sustainable and the same is set aside. Consequently, both the appeals are allowed with consequential relief, if any.

(Operative part of the order pronounced in the open court.)

(Ashok Jindal)

Member (Judicial)

(B. Ravichandran)

Member (Technical)

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