Raj Laxmi Enterprises Vs. Collector of Central Excise - Court Judgment

Excerpt:
1. this is an appeal filed by m/s. raj laxmi enterprises with reference to the order-in-original dated 27-8-1990 passed by the additional collector of central excise, allahabad.2. arguing for the appellants shri m.p. devnath submits that whether the appellants are entitled to benefit of exemption in terms of notification no. 175/86, dated 1-3-1986 or not is an issue to be considered in this case. he said that the appellants manufacture metal labels with monograms with the brand name of ravi. he submits that the appellants are entitled to benefit in terms of notification no. 175/86 since their clearances did not exceed the limit as specified therein.the additional collector has denied the benefit on the ground that brand name owner is not eligible for exemption and furthermore in the case of jay engineering, reported in 1988 (39) e.l.t. 169 the supreme court has held that brand name goes along with the manufactured item.he submitted that supreme court has decided the issue with reference to notification no. 201/79 on the issue of eligibility of set off that too in the context of finished products i.e., fans were manufactured by the assessees. in the present case, the assessee is nothing to do with the finished products and they are manufacturing only monograms with the brand name and, as such, exemption cannot be denied in terms of notification no. 175/86. he also submits that this position has been clarified by the board issuing a circular as per letter no.345/35/87-tru, dated 29-10-1987. he drew our attention to the relevant contents therein which reads as under : "clarification. the name/logo printed on the metal labels etc. is a brand name/trade name in respect of goods on which such labels are to be affixed, because such name/logo indicates a connection in the course of trade between the goods on which such labels are affixed and the brand name owner. names printed on such metal labels are not brand name by themselves and as long as these metal labels are not affixed on the goods in the trade of which the name/logo printed on such metal labels etc. serves as brand name (within the definition of explanation vii) they are not hit by the mischief of para 7 of the notification. therefore, ssi units manufacturing metal/collapsible tubes/crown corks/p.p, caps, which bear the name of logo of brand name owners, would continue to enjoy the benefit of notification no. 175/86-c.e., subject to satisfying other conditions of the notification." further he said that board has issued the notification no. 1/93 clarifying the same position following the earlier circular referred to above.3. shri nunthuk countering the arguments submitted that in view of the ratio of the decision of the supreme court in the case of jay engineering the department was justified in denying the benefit interms of notification no. 175/86.4. we have carefully considered the matter. we find that the supreme court has delivered the judgment in the case of jay engineering in different context with reference to the finished products while claiming set off in terms of notification no. 201 /79 and the same ratio is not applicable to this case as it was rightly pointed out by the counsel for the appellants. in this context, the circular issued by the board is very clear which clarifies that names printed on such metal labels are not brand name by themselves and as long as these metal labels are not affixed on the goods in the trade of which they name/logo printed on such metal labels etc. serves as brand name they are not hit by the mischief of para 7 of the notification. further, it was held therein that ssi units manufacturing such metal labels which bear the name of logo of brand name owners, would continue to enjoy the benefit of notification no. 175/86-c.e. it was also brought to our notice by the learned counsel for the appellants that circulars are binding on the department as it was held by the supreme court in the case of ranadey micronutrients reported in 1996 (87) e.l.t. 19. in the facts and circumstances, we do not find any justification in denying the benefit in terms of notification no. 175/86-c.e. if otherwise eligible. accordingly, this appeal is allowed. the cross objections are also disposed of accordingly.

Judgment:
1. This is an appeal filed by M/s. Raj Laxmi Enterprises with reference to the Order-in-Original dated 27-8-1990 passed by the Additional Collector of Central Excise, Allahabad.

2. Arguing for the appellants Shri M.P. Devnath submits that whether the appellants are entitled to benefit of exemption in terms of Notification No. 175/86, dated 1-3-1986 or not is an issue to be considered in this case. He said that the appellants manufacture metal labels with monograms with the Brand name of Ravi. He submits that the appellants are entitled to benefit in terms of Notification No. 175/86 since their clearances did not exceed the limit as specified therein.

The Additional Collector has denied the benefit on the ground that Brand name owner is not eligible for exemption and furthermore in the case of Jay Engineering, reported in 1988 (39) E.L.T. 169 the Supreme Court has held that brand name goes along with the manufactured item.

He submitted that Supreme Court has decided the issue with reference to Notification No. 201/79 on the issue of eligibility of set off that too in the context of finished products i.e., fans were manufactured by the assessees. In the present case, the assessee is nothing to do with the finished products and they are manufacturing only Monograms with the Brand name and, as such, exemption cannot be denied in terms of Notification No. 175/86. He also submits that this position has been clarified by the Board issuing a circular as per Letter No.345/35/87-TRU, dated 29-10-1987. He drew our attention to the relevant contents therein which reads as under : "Clarification. The name/logo printed on the metal labels etc. is a brand name/trade name in respect of goods on which such labels are to be affixed, because such name/logo indicates a connection in the course of trade between the goods on which such labels are affixed and the brand name owner. Names printed on such metal labels are not brand name by themselves and as long as these metal labels are not affixed on the goods in the trade of which the name/logo printed on such metal labels etc. serves as brand name (within the definition of Explanation VII) they are not hit by the mischief of para 7 of the notification. Therefore, SSI units manufacturing metal/collapsible tubes/crown corks/P.P, caps, which bear the name of logo of brand name owners, would continue to enjoy the benefit of Notification No. 175/86-C.E., subject to satisfying other conditions of the notification." Further he said that Board has issued the Notification No. 1/93 clarifying the same position following the earlier circular referred to above.

3. Shri Nunthuk countering the arguments submitted that in view of the ratio of the decision of the Supreme Court in the case of Jay Engineering the department was justified in denying the benefit interms of Notification No. 175/86.

4. We have carefully considered the matter. We find that the Supreme Court has delivered the judgment in the case of Jay Engineering in different context with reference to the finished products while claiming set off in terms of Notification No. 201 /79 and the same ratio is not applicable to this case as it was rightly pointed out by the Counsel for the appellants. In this context, the circular issued by the Board is very clear which clarifies that names printed on such metal labels are not brand name by themselves and as long as these metal labels are not affixed on the goods in the trade of which they name/logo printed on such metal labels etc. serves as brand name they are not hit by the mischief of para 7 of the notification. Further, it was held therein that SSI units manufacturing such metal labels which bear the name of logo of brand name owners, would continue to enjoy the benefit of Notification No. 175/86-C.E. It was also brought to our notice by the learned Counsel for the appellants that circulars are binding on the department as it was held by the Supreme Court in the case of Ranadey Micronutrients reported in 1996 (87) E.L.T. 19. In the facts and circumstances, we do not find any justification in denying the benefit in terms of Notification No. 175/86-C.E. if otherwise eligible. Accordingly, this appeal is allowed. The Cross Objections are also disposed of accordingly.