Vi John Beauty Tech Vs. Commissioner of Central Excise, - Court Judgment

Excerpt:
1. in these four appeals, arising out of a common order, the issue involved is whether the excisable goods manufactured by m/s. vi john beauty tech and m/s. vi john beauty products (vjbt and vjbp in short) are not eligible to the benefit of ssi exemption as the goods were bearing the brand name of another person and whether the appellants suppressed the production and removed the goods clandestinely without payment of duty.2.1 shri m. chandrasekharan, learned senior advocate, submitted that the appellant companies vjbt and vjbp manufacture cosmetics; that the brand names of their products are as under: 2.2 he further, mentioned that the goods manufactured by them do bear their name and address; that there is another manufacturing concern, namely, m/s. maja cosmetics who manufacture cosmetics bearing the brand name "vi-john"; belonging to mrs. mohinder kaur; that the said concern avails of the benefit of exemption notification; that the revenue's case is that words 'vi-john' in the names of the appellants nos. 1 and 2 were printed in bold and thus were appearing permanently on their product which establishes a close linkage with the brand name "vi-john" and the appellants; that in addition, the stylizing and embossing of letter "v" on the caps clearly reflects the connection between the products and the brand name "vi-john"; that on account of these two reasons, it has been held that the goods manufactured by them shall be treated as bearing the brand name of another person making these goods ineligible for exemption under notification no. 140/83-ce., dated 5-5-1983. the learned senior counsel submitted that m/s. maja cosmetics, vjbt and vjbp are independent units; that in some of the products, and not on all products, the words vi-john in the name of the company were printed in bold but this is also a fact that words vi-john represent the name of the companies of the appellants and the name of the company cannot be taken as a brand name as per trade mark act; that simply printing a word in bold does not make it a brand name; that their brand name is printed in much bold letters than the words vi-john; that the fact is that vi-john was written only to depict the name of the company which is much smaller than the actual brand affixed and owned by them. he relied upon the decision in the case of astro.pharmaceuticals (p) ltd. v. cce, chandigarh - 1995 (75) e.l.t. 214 (s.c.) wherein it was held that house mark and brand name are different and a monograph, which only identifies the manufacturer, would not be a brand name. reliance was also placed on the decision in the case of wockhardt pvt. ltd. v. cce, aurangabad - 2000 (117) e.l.t. 197 (t) wherein it was held that the word "wockhardt" printed on the label of the product in a conspicuous manner and also embossed on the cap of the container not to be taken as a brand name or trade mark indicating a relationship in the course of the trade between the mark and the medicine. he also referred to the following decisions :unjha ayurvedic pharmacy v. cce, jaipur - 2001 (134) e.l.t. 706 (t) = 2001 (78) ecc 744vikram international v. cce, meerut - 2000 (126) e.l.t. 1110 (t)emkay investments pvt. ltd. v. cce - 2000 (124) e.l.t. 741 (t) = 1998 (28) rlt 36 (cegat)palsons drugs & chemical industries v. cce, calcutta-i -1998 (98) e.l.t. 665 (t)ag1 switches (p) ltd. v. cce 2.3 the learned senior counsel also mentioned that the word "v" is neither the brand name nor the part of the brand name of m/s. maza cosmetics or any other person; that there are number of cosmetics manufacturers in the market using similar caps; that in any case letter "v" has no significance because the product, i.e. shaving cream is put into cardboard carton and is marketed in the unit carton and there is no such inscription on the carton; that thus goods are not being sold with letter "v" as the same is not nakedly visible and letter "v" cannot be taken as the brand name. he relied upon the decision in the case of universal gem (p) ltd. v. cce, bombay -1999 (105) e.l.t. 600 (t), wherein it was held that invented word "d" mentioned on the label does not establish any relationship between the word and the medicine.he also contended that only common product manufactured by the appellants and m/s. maja cosmetics is shaving cream and the duty can be demanded at the most only in respect of that product and not in respect of any other products. reliance has been placed on the decision in the case of (t) and eicon components pvt. ltd. v. cce, new delhi, final order no.31/2000-b, dated 16-1-2001 [2001 (129) e.l.t. 224 (t)]. the learned senior counsel also mentioned that as per the decision of the supreme court in the case of union of india v. paliwal electrical pvt. ltd., 1996 (83) e.l.t. 241 (s.c.), the brand name of 'ineligible manufacturer' has to be affixed on the goods; that accordingly the absence of words "who is not eligible for the grant of exemption under this notification" does not make any difference; that as maja cosmetics are eligible to avail exemption; the appellants cannot be denied the benefit of notification no. 140/83-ce." 3. regarding the allegation of clandestine removal of the goods, learned senior counsel submitted that the charge of clandestine removal is based only on statement of haripal, booking clerk of m/s. jainsons transport company who had deposed that m/s. vjbt used to book the goods under private marka "sk"; that '"sk marka" had been used in respect of electronic goods also which are not manufactured by them; that even the commissioner had mentioned this fact in the impugned order; that there is nothing to connect them with the goods; that the confiscation of goods seized from the premises of suchet agencies is not warranted; that in respect of goods seized from the premises of suchet agencies, calculations had been done presuming that the opening balance was nil; that with other dealers they had no direct dealings and goods lying with them are deemed to be duty paid. finally, he submitted that no penalty is imposable on the appellants; that virender singh kocher was not at all knowingly concerned with any goods, which were liable to confiscation.4. countering the arguments, shri a.k. jain, learned sdr submitted that the words "vi-john" were printed in bold and conspicuous letter in comparison to other words of the appellant's name in packages or wrappers of all the products manufactured by them; that on the plastic cap of the shaving cream and telecom powder word monogram "v" was embossed which associates the products with the brand name "vi-john"; that brand name "vi-john" was prominently printed on the carton along with the photo of a lady with bouquet of flowers under the carton "marry queen complexion cream," that shri virender singh kochar deposed, in his statement dated 2-12-1998, that the word 'v represent the brand vi-john and that the style and design of the words vi-john and 'v printed on the appellants' products were the same as printed on the packing of m/s. maja cosmetics and that using the name vi-john as first name of the appellants was done to represent to the customers that the products manufactured by them were vi-john products and the customers were buying their products as vi-john products; that as per the definition of brand name in explanation to notification no.140/83-c.e.' a brand name should be such that it should indicate a connection between the goods and a person using such name or mark in the course of trade; that from 1994 with the change in notification, they had placed the words vi-john prominently on their products under the pretext of their name; that by this act, a close linkage stands established between the brand name and the manufacturers. the learned sdk relied upon the decision in the case of fame incorporated v. cce, mumbai ii - 1999 (114) e.l.t. 989 (t), wherein it was held that goods prefixed with the words like "national", "sanyo" are not eligible for notification no. 175/86-ce. he also relied upon the decision in elymer havells electrics v. cce, new delhi - 1999 (35) rlt 793 (cegat) wherein the appellants used brand name "elymer havells' for their product and brand name "havells" belonged to another company, the benefit of notification 175/86 was denied. reliance was also placed on the following decisions :agrico engg. works v. cce, meerut (iii) bell products company v. union of india - 1995 (78) e.l.t. 404 (mad) 5. the learned sdr reiterated the findings as contained in the impugned order regarding the charge of clandestine removal of the goods wherein it was mentioned that the dealers from whose premises the goods were seized from, had admitted that they had received the goods without any bill and payments were made in cash; that in respect of m/s. suchet agencies, the tabulation of purchase and sale revealed that the sale of goods manufactured by the appellant nos. i and ii during the relevant period had been higher than the purchase which proves that the goods under seizure could have been received without coverage of any valid documents; that goods seized from m/s. jainsons transport company were without documents and were admittedly products of m/s. vjbt; that haripal booking clerk, deposed that the goods were vi-john products booked by the people of vi john and that in the past, the goods with the similar markings were booked by them; that this statement has neither been retracted nor its authenticity has been challenged by way of cross-examination.6. we have considered the submissions of both the sides. the benefit of exemption from duty under notification no. 140/83-c.e., dated 5-5-83 is not available if the excisable goods bear the brand name of another person. the revenue has disallowed the exemption under the notification on the ground that the appellant numbers i and ii have printed words "vi-john" in their name in bold and conspicuous letters and word "v" was printed on the caps. both the appellant nos. i and ii have, on the other hand submitted that their brand names are kolber, seven flower (of vjbt) and marry queen (of vjbp) and they are marketing their products under these brand names. the learned senior counsel for the appellants has shown the photocopies of their product to stress the point that their brand names were prominently printed and that too in more bold and conspicuous letters. this fact has not been controverted by the revenue. no doubt both the appellants have printed words "vi john" in their name to some extent in bold letters, but in our view it cannot be said that the excisable goods, manufactured by them, were bearing the brand name of another person. in the case of palsons drugs and chemical industries, supra, logo and the name of the marketing firm were available on the medicine. even then the tribunal held that the products were having brand names, apitas, ventol and paltrim and "these brand names namely, apitas, ventol and paltrim are most prominent on the packages and immediately strike the eyes of the person purchasing the goods rather than logos of the appellants or of the marketing firm". similar views were expressed by the tribunal in the case of emkay investments pvt. ltd., supra. further, in the case of wockhardt pvt. ltd. (supra) the tribunal held that mentioning the word "wockhardt" does not mean use of brand name so as to make medicament a patent or proprietary medicament. the decisions relied upon by the learned sdr are not applicable to the facts in the present matters. for instance in the case of elymer havells electrics (supra), the appellants were using brand name "elymer havells" and the brand name havell's belonged to another company whereas in the present matters both the appellants are having their own brand names which are entirely different from brand name of m/s. maja cosmetics. in view of these facts and circumstances it cannot be said that the goods manufactured by the appellants were bearing the brand name of another company.similarly using word 'v on caps would not amount to use of brand name of another person as they are clearing their goods bearing their own brand name. accordingly the duty confirmed on this count against both the appellant nos. i and ii is not upheld.7. as far as the goods seized from the premises of various dealers is concerned, we observe that the appellants have merely mentioned that these were the dealers with whom they had no direct dealings. a perusal of some of the statements of the dealers shows that these dealers had not purchnsed the goods directly from the appellant nos. i and ii and as such there is no direct link of these dealers with the appellants.the department has thus not proved that the goods seized were cleared by the appellant nos, i and ii without payment of duty. regarding the seizure of goods from the premises of sachet agencies, the duty has been demanded on the basis of tabulation of goods purchased and sold by suchet agencies. the appellants have contended that calculations were made presuming that the opening balance as on 1-4-97 was nil whereas there was a stock in balance as on 31-3-98. suchet agencies have claimed to have purchased all goods against invoices/bells. the burden is cast upon the revenue to prove that the impugned goods were removed by the appellant nos. 1 and 11 without payment of duty. except the tabulation prepared by the officers, there is no evidence to show that the goods were cleared from the factory without payment of duty. in view of this the benefit of doubt has to be extended to the appellants.the goods seized from suchet agencies are, therefore not liable to confiscation. lastly, as far as seizure from transport company is concerned, we observe that except the statement of hari pal, booking clerk, there is no other evidence to prove that the excisable goods were cleared and transported by vjbt. their submission that there is nothing to connect marka 'sk' to them is strengthened from the fact that the said marka had been used also in respect of plastic articles, bed sheets, electrical goods, tractor parts, bras etc. in which they had never dealt with. the adjudicating authority had placed the burden of proof on the appellant. in our view the department has not conclusively proved that the goods bearing "sk" marka belonged to the appellant no. 1 and as such no duty can be demanded from them in respect of these goods. however, the goods seized at the premises of johnson transport co. are liable to confiscation as no duty paying document has been shown by the appellant and redemption fine as imposed is upheld. duty of excise will also be payable, if any. similarly, the goods which were found unaccounted in the factory premises of vjbt and vjbp are liable to confiscation. the redemption fine adjusted is upheld. the central excise duty at the appropriate rate will be payable at the time of clearance of the said goods.8. in view of this penalty on vjbt is reduced to rs. 35,000/- and on vjbp to rs. 2,000/-. penalties imposed on other two appellants are set aside.

Judgment:
1. In these four appeals, arising out of a common Order, the issue involved is whether the excisable goods manufactured by M/s. Vi John Beauty Tech and M/s. Vi John Beauty Products (VJBT and VJBP in short) are not eligible to the benefit of SSI exemption as the goods were bearing the brand name of another person and whether the Appellants suppressed the production and removed the goods clandestinely without payment of duty.

2.1 Shri M. Chandrasekharan, learned Senior Advocate, submitted that the Appellant companies VJBT and VJBP manufacture cosmetics; that the brand names of their products are as under: 2.2 He further, mentioned that the goods manufactured by them do bear their name and address; that there is another manufacturing concern, namely, M/s. Maja Cosmetics who manufacture cosmetics bearing the brand name "VI-JOHN"; belonging to Mrs. Mohinder Kaur; that the said concern avails of the benefit of exemption Notification; that the Revenue's case is that words 'VI-JOHN' in the names of the Appellants Nos. 1 and 2 were printed in bold and thus were appearing permanently on their product which establishes a close linkage with the Brand Name "VI-JOHN" and the Appellants; that in addition, the stylizing and embossing of letter "V" on the caps clearly reflects the connection between the products and the Brand Name "VI-JOHN"; that on account of these two reasons, it has been held that the goods manufactured by them shall be treated as bearing the brand name of another person making these goods ineligible for exemption under Notification No. 140/83-CE., dated 5-5-1983. The learned Senior Counsel submitted that M/s. Maja Cosmetics, VJBT and VJBP are independent units; that in some of the products, and not on all products, the words VI-JOHN in the name of the Company were printed in Bold but this is also a fact that words VI-JOHN represent the name of the Companies of the Appellants and the name of the company cannot be taken as a brand name as per Trade Mark Act; that simply printing a word in bold does not make it a brand name; that their brand name is printed in much bold letters than the words VI-JOHN; that the fact is that VI-JOHN was written only to depict the name of the Company which is much smaller than the actual brand affixed and owned by them. He relied upon the decision in the case of Astro.

Pharmaceuticals (P) Ltd. v. CCE, Chandigarh - 1995 (75) E.L.T. 214 (S.C.) wherein it was held that House Mark and Brand Name are different and a monograph, which only identifies the manufacturer, would not be a brand name. Reliance was also placed on the decision in the case of Wockhardt Pvt. Ltd. v. CCE, Aurangabad - 2000 (117) E.L.T. 197 (T) wherein it was held that the word "WOCKHARDT" printed on the label of the product in a conspicuous manner and also embossed on the cap of the container not to be taken as a brand name or trade mark indicating a relationship in the course of the trade between the mark and the medicine. He also referred to the following decisions :Unjha Ayurvedic Pharmacy v. CCE, Jaipur - 2001 (134) E.L.T. 706 (T) = 2001 (78) ECC 744Vikram International v. CCE, Meerut - 2000 (126) E.L.T. 1110 (T)Emkay Investments Pvt. Ltd. v. CCE - 2000 (124) E.L.T. 741 (T) = 1998 (28) RLT 36 (CEGAT)Palsons Drugs & Chemical Industries v. CCE, Calcutta-I -1998 (98) E.L.T. 665 (T)AG1 Switches (P) Ltd. v. CCE 2.3 The learned Senior Counsel also mentioned that the word "V" is neither the brand name nor the part of the brand name of M/s. Maza Cosmetics or any other person; that there are number of cosmetics manufacturers in the market using similar caps; that in any case letter "V" has no significance because the product, i.e. shaving cream is put into cardboard carton and is marketed in the unit carton and there is no such inscription on the carton; that thus goods are not being sold with letter "V" as the same is not nakedly visible and letter "V" cannot be taken as the brand name. He relied upon the decision in the case of Universal Gem (P) Ltd. v. CCE, Bombay -1999 (105) E.L.T. 600 (T), wherein it was held that invented word "D" mentioned on the label does not establish any relationship between the word and the medicine.

He also contended that only common product manufactured by the Appellants and M/s. Maja Cosmetics is shaving cream and the duty can be demanded at the most only in respect of that product and not in respect of any other products. Reliance has been placed on the decision in the case of (T) and Eicon Components Pvt. Ltd. v. CCE, New Delhi, Final Order No.31/2000-B, dated 16-1-2001 [2001 (129) E.L.T. 224 (T)]. The learned Senior Counsel also mentioned that as per the decision of the Supreme Court in the case of Union of India v. Paliwal Electrical Pvt. Ltd., 1996 (83) E.L.T. 241 (S.C.), the brand name of 'ineligible manufacturer' has to be affixed on the goods; that accordingly the absence of words "Who is not eligible for the grant of exemption under this notification" does not make any difference; that as Maja Cosmetics are eligible to avail exemption; the Appellants cannot be denied the benefit of Notification No. 140/83-CE." 3. Regarding the allegation of clandestine removal of the goods, learned Senior Counsel submitted that the charge of clandestine removal is based only on statement of Haripal, booking clerk of M/s. Jainsons Transport Company who had deposed that M/s. VJBT used to book the goods under private marka "SK"; that '"SK marka" had been used in respect of electronic goods also which are not manufactured by them; that even the Commissioner had mentioned this fact in the impugned Order; that there is nothing to connect them with the goods; that the confiscation of goods seized from the premises of Suchet Agencies is not warranted; that in respect of goods seized from the premises of Suchet Agencies, calculations had been done presuming that the opening balance was nil; that with other dealers they had no direct dealings and goods lying with them are deemed to be duty paid. Finally, he submitted that no penalty is imposable on the Appellants; that Virender Singh Kocher was not at all knowingly concerned with any goods, which were liable to confiscation.

4. Countering the arguments, Shri A.K. Jain, learned SDR submitted that the words "VI-JOHN" were printed in bold and conspicuous letter in comparison to other words of the Appellant's name in packages or wrappers of all the products manufactured by them; that on the plastic cap of the shaving cream and telecom powder word monogram "V" was embossed which associates the products with the brand name "VI-JOHN"; that brand name "VI-JOHN" was prominently printed on the carton along with the photo of a lady with bouquet of flowers under the carton "Marry Queen Complexion Cream," that Shri Virender Singh Kochar deposed, in his statement dated 2-12-1998, that the word 'V represent the brand VI-JOHN and that the style and design of the words VI-JOHN and 'V printed on the Appellants' products were the same as printed on the packing of M/s. Maja Cosmetics and that using the name VI-JOHN as first name of the Appellants was done to represent to the customers that the products manufactured by them were VI-JOHN products and the customers were buying their products as VI-JOHN products; that as per the definition of Brand Name in Explanation to Notification No.140/83-C.E.' a brand name should be such that it should indicate a connection between the goods and a person using such name or mark in the course of trade; that from 1994 with the change in Notification, they had placed the words VI-JOHN prominently on their products under the pretext of their name; that by this act, a close linkage stands established between the Brand name and the manufacturers. The learned SDK relied upon the decision in the case of Fame Incorporated v. CCE, Mumbai II - 1999 (114) E.L.T. 989 (T), wherein it was held that goods prefixed with the words like "National", "Sanyo" are not eligible for Notification No. 175/86-CE. He also relied upon the decision in Elymer Havells Electrics v. CCE, New Delhi - 1999 (35) RLT 793 (CEGAT) wherein the Appellants used Brand Name "Elymer Havells' for their product and brand name "Havells" belonged to another company, the benefit of Notification 175/86 was denied. Reliance was also placed on the following decisions :Agrico Engg. Works v. CCE, Meerut (iii) Bell Products Company v. Union of India - 1995 (78) E.L.T. 404 (MAD) 5. The learned SDR reiterated the findings as contained in the impugned Order regarding the charge of clandestine removal of the goods wherein it was mentioned that the dealers from whose premises the goods were seized from, had admitted that they had received the goods without any bill and payments were made in cash; that in respect of M/s. Suchet Agencies, the tabulation of purchase and sale revealed that the sale of goods manufactured by the Appellant Nos. I and II during the relevant period had been higher than the purchase which proves that the goods under seizure could have been received without coverage of any valid documents; that goods seized from M/s. Jainsons Transport Company were without documents and were admittedly products of M/s. VJBT; that Haripal Booking Clerk, deposed that the goods were VI-JOHN products booked by the people of VI JOHN and that in the past, the goods with the similar markings were booked by them; that this statement has neither been retracted nor its authenticity has been challenged by way of cross-examination.

6. We have considered the submissions of both the sides. The benefit of exemption from duty under Notification No. 140/83-C.E., dated 5-5-83 is not available if the excisable goods bear the brand name of another person. The Revenue has disallowed the exemption under the Notification on the ground that the Appellant Numbers I and II have printed words "VI-JOHN" in their name in bold and conspicuous letters and word "V" was printed on the caps. Both the Appellant Nos. I and II have, on the other hand submitted that their brand names are KOLBER, SEVEN FLOWER (of VJBT) and MARRY QUEEN (of VJBP) and they are marketing their products under these brand names. The learned Senior Counsel for the Appellants has shown the photocopies of their product to stress the point that their Brand names were prominently printed and that too in more bold and conspicuous letters. This fact has not been controverted by the Revenue. No doubt both the Appellants have printed words "VI JOHN" in their name to some extent in bold letters, but in our view it cannot be said that the excisable goods, manufactured by them, were bearing the brand name of another person. In the case of Palsons Drugs and Chemical Industries, supra, logo and the name of the marketing firm were available on the medicine. Even then the Tribunal held that the products were having brand names, Apitas, Ventol and Paltrim and "these brand names namely, Apitas, Ventol and Paltrim are most prominent on the packages and immediately strike the eyes of the person purchasing the goods rather than logos of the Appellants or of the marketing firm". Similar views were expressed by the Tribunal in the case of Emkay Investments Pvt. Ltd., supra. Further, in the case of Wockhardt Pvt. Ltd. (supra) the Tribunal held that mentioning the word "WOCKHARDT" does not mean use of brand name so as to make medicament a patent or proprietary medicament. The decisions relied upon by the learned SDR are not applicable to the facts in the present matters. For instance in the case of Elymer Havells Electrics (supra), the Appellants were using Brand name "Elymer Havells" and the brand name Havell's belonged to another Company whereas in the present matters both the Appellants are having their own brand names which are entirely different from brand name of M/s. Maja Cosmetics. In view of these facts and circumstances it cannot be said that the goods manufactured by the Appellants were bearing the brand name of another company.

Similarly using word 'V on caps would not amount to use of brand name of another person as they are clearing their goods bearing their own brand name. Accordingly the duty confirmed on this count against both the Appellant Nos. I and II is not upheld.7. As far as the goods seized from the premises of various dealers is concerned, we observe that the Appellants have merely mentioned that these were the dealers with whom they had no direct dealings. A perusal of some of the statements of the dealers shows that these dealers had not purchnsed the goods directly from the Appellant Nos. I and II and as such there is no direct link of these dealers with the Appellants.

The Department has thus not proved that the goods seized were cleared by the Appellant Nos, I and II without payment of duty. Regarding the seizure of goods from the premises of Sachet Agencies, the duty has been demanded on the basis of tabulation of goods purchased and sold by Suchet Agencies. The Appellants have contended that calculations were made presuming that the opening balance as on 1-4-97 was nil whereas there was a stock in balance as on 31-3-98. Suchet Agencies have claimed to have purchased all goods against invoices/bells. The burden is cast upon the Revenue to prove that the impugned goods were removed by the Appellant Nos. 1 and 11 without payment of duty. Except the tabulation prepared by the officers, there is no evidence to show that the goods were cleared from the factory without payment of duty. In view of this the benefit of doubt has to be extended to the Appellants.

The goods seized from Suchet Agencies are, therefore not liable to confiscation. Lastly, as far as seizure from transport company is concerned, we observe that except the statement of Hari Pal, Booking Clerk, there is no other evidence to prove that the excisable goods were cleared and transported by VJBT. Their submission that there is nothing to connect Marka 'SK' to them is strengthened from the fact that the said Marka had been used also in respect of plastic articles, bed sheets, electrical goods, tractor parts, Bras etc. in which they had never dealt with. The Adjudicating Authority had placed the burden of proof on the Appellant. In our view the Department has not conclusively proved that the goods bearing "SK" Marka belonged to the Appellant No. 1 and as such no duty can be demanded from them in respect of these goods. However, the goods seized at the premises of Johnson Transport Co. are liable to confiscation as no duty paying document has been shown by the Appellant and redemption fine as imposed is upheld. Duty of excise will also be payable, if any. Similarly, the goods which were found unaccounted in the factory premises of VJBT and VJBP are liable to confiscation. The redemption fine adjusted is upheld. The Central Excise duty at the appropriate rate will be payable at the time of clearance of the said goods.

8. In view of this penalty on VJBT is reduced to Rs. 35,000/- and on VJBP to Rs. 2,000/-. Penalties imposed on other two Appellants are set aside.