Full Judgment
Notice dated 1-4-1994 was later issued to it alleging that it affixed on the containers of these goods the brand name "JK" which belonged, not to it, but to M/s. J.K. Brothers at Morvi, who were not entitled to the benefit of the notification. The notice proceeded to say that by this act, paragraph 4 of the notification, which denies the benefit to goods which bear the brand name of a person other than their manufacturer, was attracted, and went on to demand the duty consequently payable.
2. The assessee replied to the notice accepting that it had been using the brand name, but contending that it had not been established that name in question belonged to J.K. Brothers, or was being used by them.
It produced an affidavit affirmed by a partner of M/s. J.K. Brothers, stating that the firm had ceased using the brand name "JK" from 1-4-1994 onwards. The Assistant Commissioner did not accept either of these contentions and concluded that the brand name belongs to J.K.Brothers, and that therefore the benefit of the exemption would not be available to the goods manufactured by the respondent packed in container bearing this brand name.
3. The assessee appealed this order. The Commissioner (Appeals) said that the benefit of the notification could not be denied to the goods because the condition in the notification referred to affixing a brand name or trade name used by another manufacturer. The affidavit of the partner of J.K. Brothers shows that it discontinued use of the brand name by J.K. Brothers from 1-4-1994 onwards. He therefore allowed the appeal. The department challenges that finding in this appeal.
4. The department does not challenge the finding of the Commissioner (Appeals) that it is use, and not ownership, of the brand name, which is to be considered in deciding whether or not paragraph 4 is attracted. Paragraph 4 of the notification provides that "The exemption contained in this notification shall not apply to the specified goods, bearing the brand name or trade name (registered or not) of another person." The Commissioner (Appeals)'s view is thus clearly wrong, and neither the counsel for the manufacturer, nor the departmental representative, supports it.
5. The appeal emphasises that the affidavit filed by the partner of M/s. J.K. Brothers is insufficient to conclude that the ownership of the brand name ceased to vest with M/s. J.K. Brothers. Before confronting this question, another has to be answered. The manufacturer had challenged the presumption in the show cause notice that the brand name belonged to M/s. J.K. Brothers. The brand name was not registered with the appropriate authorities. There is no other evidence of ownership by J.K. Brothers of this brand name. The use by it of the brand name has to be distinguished from its ownership of that name. If J.K. Brothers were not the legal owner of the brand name, it did not have the right to exclusive use of it. The name remained in the public domain, and anyone was free to use it. There is therefore no contravention of the provisions of paragraph 7 of the notification.
6. The Board in fact has explained this position to its officers. In its Circular 52/52/94-CX., dated 1-9-1994, the Board had explained that there was a practice prevailing of brand names, not belonging to anyone, being used by more than one manufacturer; in that situation, there was no contravention of the condition contained in paragraph 4.
The Assistant Commissioner's order is thus not only contrary to law, but ignores the directions of his own superiors.