1. The case was argued at length by Shri M.K. Gupta, learned J.C.D.R.and Shri V. Sridharan, learned advocate for the appellants. There are two appeals. We take up the appeal (No. E/785/02) filed by the department first. This appeal is against the finding of the Commissioner (Appeals) that interest under Section 11AB is not leviable prior to 28.09.1996. The learned counsel submits that Board has issued a circular subsequently on 26.06.2002 clarifying that interest under Section 11AB is not chargeable prior to the period 28.09.1996. In view of the Board's Circular, we do not find any merit in the department's appeal (E/785/02) and we dismiss the same.
2. Now we take up the appeal (No. E/705/02) filed by M/s. General Pharma Ltd. The issue involves interpretation of paragraph 4 of the small scale exemption Notification No. 1/93 dated 28.02.1993. The said paragraph 4 reads as under:- "The exemption contained in this notification shall not apply to the specified goods, bearing a brand name or trade name (registered or not) of another person." "Brand name" or "trade name" shall mean a brand name or 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." 3. The lower authorities have confirmed the duty demand of Rs. 18,01,221/- in respect of the following six products manufactured by the appellants:- It was clarified by the learned J.C.D.R. that out of these 6 products, only Diakanol and Diakamin are registered brand names of M/s. Dai Ichi Karkaria Ltd. The other 4 are also unregistered brand names of M/s. Dai Ichi Karkaria Ltd. It is the case of the department that the appellants are hit by the said paragraph 4 since they are using the brand names of M/s. Dai Ichi Karkaria Ltd. The appellants have argued that they are eligible for small scale exemption under Notification No. 1/93 for the following reasons:- (1) M/s. Dai Ichi Karkaria are no longer manufacturing the products except Noigen and they are not using these brand names. In view of such non-use, Dai Ichi is no longer the owner of the said brand name. Further in view of the honest and continued/concurrent use of the brand name, the appellants become owners of the said brand names under Section 12(3) of the Trade Marks Act. Further, Dai Ichi has indirectly acquiesced the right over these brand names. The learned counsel also contends that this Tribunal can decide as to who is the owner of the brand name applying the provisions of the Trade Marks Act.
(2) The demand is not sustainable on the ground of limitation as the show cause notice dated 30.2.2000 was received by the appellants on 1.4.2000 and covers duty demand for the period from 1995-96 to August 1999. The appellants contend that extended period of time limit is not available as they have been filing classification list indicating the trade name of the impugned goods. They have also contended that they were under the bonafide belief that they were the owners of the brand name.
4. The learned counsel has cited the following case laws in his support:-P & B Pharmaceuticals (P) Ltd. v. CCE - 2003 (153) E.L.T. 14 (S.C.)P & B Pharmaceuticals P. Ltd. v. CCE, Ahmedabad - 1995 (76) E.L.T. 616 (Tribunal) 3) Mahamaya Dassi v. Commissioner of Income-tax - (1980) 126 ITR 0748 4) Champa Properties P. Ltd. v. Commissioner of Income-tax - (1987) 166 ITR 0367 5) St. Mary's Finance Ltd. v. Devadasan (P.N.), Asst. CIT - (1993) 204 ITR 0470.
5. The learned J.C.D.R., on the other hand, states that Notification No. 1/93, being an exemption notification, requires to be construed strictly. He also states that since brand name is defined in the notification itself there is no need to refer to the provisions of the Trade Marks Act in view of the Apex Court decision in the case of Commissioner of Central Excise, Cochin v. Tata Tea Ltd. - 2002 (142) E.L.T. 3 (S.C.). He also states that the affidavits filed indicate that the brand names are that of Dai Ichi and Dai Ichi has also filed a classification list for the very same products. He further cites paragraph 5 of the Tribunal's decision in the case of Prince Valves Industry v. CCE, Chandigarh-II - 2003 (54) RLT 724 (CEGAT-Del.) to support the department's case that the brand names are owned by the Dai Ichi and that the continued use of the same by the appellants does not entitle them to the benefit of exemption. On the question of limitation, he submits that the appellants never disclosed to the department that they were using the brand names of Dai Ichi and therefore extended time of limitation is applicable on the ground of suppression.
6. After hearing both sides and perusal of case records and cited case laws, we are of the opinion that the excise authorities are not required to make a determination regarding ownership of the brand names under the Trade Marks Act, when the subject Notification 1/93 itself provides for a definition of brand name under Explanation IX in view of the ratio of Tata Tea (Supra). We also find that the bar under paragraph 4 of the notification applies if the specified goods bear brand name or trade name (registered or not) of another person. In the present case there is no doubt that M/s. Dai Ichi are the brand name owners and hence paragraph 4 of the notification comes into play whether or not the appellants are the concurrent users of the said brand names. It is also not the case of the appellants that some authorities under the Trade Marks Act have gone into this question and given a finding that M/s. Dai Ichi are no longer the owners of the impugned brand names or that the appellants have become the sold owners of the same. On the contrary, as pointed out by the learned J.C.D.R., M/s. Dai Ichi are still manufacturing Noigen and have filed classification lists for all the items.
7. As regards limitation, it has been argued by the appellants that there is no material or evidence in the show cause notice to say that the appellants knew Dai Ichi to be the owners of the brand name or that this fact was suppressed from the department. At the same time, it has been contended that because of the classification lists giving the brand name were filed, the department was aware that the appellants have been using the trade marks of Dai Ichi. We find such arguments to be frivolous and untenable as the materials on record clearly show that the appellants were aware regarding the ownership of the impugned brand names by Dai Ichi. It is also on record that the Managing Director of the appellant Company in his statement admitted that they were using the brand name of M/s. Dai Ichi in which his wife Smt. S.P. Vakil is a Managing Director and that they were using these brand names of M /s.
Dai Ichi as these were already popular in the market. The appellants have cited the Apex Court decision in the case of P & B Pharmaceuticals (Supra) to the effect that there was no obligation on the owner of a brand name to make a roving inquiry as to whether any other person is using the brand name and disclose it to the authorities to avert a possible allegation of suppression. In the instant case, the appellants were using the brand name of M/s. Dai Ichi in full knowledge that these were owned by the latter and hence there was no need for any further inquiry and they should have in the very first instance disclosed the factual position to the excise authorities in view of the clear cut provision in paragraph 4 of the exemption Notification 1/93. It is clear that they merely declared the brand names of the impugned goods in the classification list but did not disclose that the brand names were owned by M/s. Dai Ichi regarding which they had full knowledge.
8. In view of our findings as above, we are of the view that the appellants are not eligible for the benefit of small scale exemption under Notification No. 1/93 and the extended period of limit time limit is applicable in respect of the duty demand. However, we feel some reduction in the penalty imposed under Section 11AC is called for and accordingly, we reduce the penalty of Rs. 13,80,269/- to Rs. 2,50,000/- with consequential benefit to the appellants.
9. Appeal (No. E/705/02) is dis-allowed except for reduction in the penalty amount as indicated above.