In the case of Titan Industries Ltd. Vs. Commissioner of Central Excise, Chennai-III, it was held that a name or writing need not be a brand name or trade name in a sense it is normally understood. Even ordinary mark or letter is sufficient to indicate a connection between the product and the company. Further, brand name physically manifestation on the goods is not a compulsory requirement for the goods to be called as branded goods.
Facts of the Case
The brief facts of the case are that the appellants are engaged in the manufacture of Branded jewellery falling under Chapter 7113 under brand name “Tanishq” and unbranded jewellery and registered with Central Excise and discharging duty on Branded Jewellery. Appellants were issued two show-cause notices No.22/2009 dated 3.3.2009 and SCN No.76/2009 dt. 30.11.2009 demanding excise duty on the Branded jewellery. It was alleged in the show-cause notices that the appellant have affixed the mark “Q” and “I” on the jewellery and cleared without payment of duty. Further, it was alleged that the appellants were paying excise duty on the branded jewellery under the brand name “Tanishq” and paid duty @ 2% advelorem for the clearances made upto June 2006. Thereafter, appellant stopped using the brand name “Tanishq” and started using the mark “Q” and “I” and the jewellery were cleared and sold in the market, therefore the mark “Q” and “I” represents brand name or trade name.
The adjudicating authority in the impugned order, after following the principles of natural justice, confirmed the demand of excise duty of Rs.49,83,39,799/- for the period September 2005 to December 2008 in respect of show-cause notice dated 3.3.2009 and Rs.14,07,73,564/- for the period January 2009 to 06.07.2009 in respect of show-cause notice dated 30.11.2009 along with appropriate interest and also imposed penalties of Rs.4,98,33,980/- and Rs.1,40,77,360/- respectively under Rule 25 of CER. Hence the present appeal.
Contentions of the Assessee
The assessee submitted that the period involved in both the show-cause notices are from September 2005 to July 2009 & that levy was introduced for the first time on 1.3.2005. Subsequently, it was withdrawn in 2009 and was reintroduced in 2011. After introduction of levy of branded jewellery, they discharged excise duty on the jewellery having the brand name and logo of “TANISHQ” which was a registered brand name. Subsequently, they decided not to emboss the brand name on the jewellery from 1.7.2006 which they duly intimated to the Department. Thereafter, they started clearing unbranded jewellery and also submitted that during the period without affixing the brand name they cleared by another brand name “GoldPlus”. Once they decided not to affix their brand name they are not liable for excise duty. Whereas in the impugned order duty has been demanded on the ground that the letters “Q” and “I” embossed on the reverse of the jewellery have to be treated as brand name. The general practice in the jewellery trade that jewellery will have identification mark to indicate the name of the person who made the jewellery, name of the job worker.
The assessee relied on the Board’s Circular dated 29.12.2005 and submitted that the instruction of the Board’s circular has not been followed by the adjudicating authority. As per the circular, Board has categorically directed the field formation that if the Commissioner has any doubt and is not in a position to decide whether a particular jewellery is a branded jewellery or not, or when the jeweller contests that the jewellery sold by him is not branded jewellery, in such cases, the Chief Commissioner should forward all such references to the Board by addressing to the Member, Central Excise for his comments. Till such time, the matter is decided by the Board no precipitate action should be taken to charge excise duty on such jewellery. He submits that when such clear cut instruction was given by the Board, the Commissioner should have referred to the Board through the Chief Commissioner as they have contested and also informed the authority that they were not using the brand name “TANISHQ” with effect from 1.7.2006 and were clearing unbranded jewellery. The assessee relied on the following decisions:-
(a) Paper Products Ltd. Vs. CCE – 1999 (112) ELT 765
(b) Union of India Vs. Arviva Industries (India) Ltd. – 2007 (209) ELT 5
(c) Padinjarakara Agencies Ltd. Vs. State of Kerala 2008 (13) VST 151
The assessee further relied on the Board’s Circular dated 4.3.2005 where the Board has categorically clarified at para 2(i) and 2(ii) where a jeweller, when it sells articles of jewellery to customers, puts a distinctive sign / mark / initials etc. on the jewellery, it is only to identify that the article of jewellery was received from a particular goldsmith. Board has clarified that it is not branded jewellery and it will not attract tax. In the present case, it was submitted that “AE” and “AM” is identification on the part of the job worker.
The assessee also submitted that in trademark, a single letter of alphabet cannot be registered under Trademarks Act.
Contentions of the Revenue
The Revenue reiterated the findings of the adjudicating authority and submits that the appellants are manufacturing branded jewellery and they have two brands “TANISHQ” and “GOLDPLUS”. From 2006, the same jewellery of “TANISHQ” was “GOLDPLUS” were cleared without logo, instead they started affixing and marking on the jewellery with letter “Q” and “I”. They have replaced “TANISHQ” brand name with “Q”. The letter “Q” is automatically identified as jewellery of “TANISHQ” brand. Commissioner has rightly relied on CCE Vs. Grasim Industries case reported in 2005 (183) ELT 123 (SC).
Held by Hon’ble CESTAT
The Hon’ble CESTAT stated that on the preliminary issue raised by the appellant that the adjudicating authority not followed the directions of Board’s circular dt. 29.12.2005 and decided the issue without referring to the Board, from para-3 of the said circular, it is stated that when the Commissioner is in doubt and not in a position to decide whether a particular jewellery is branded jewellery or not, such cases should be referred to the Board. In the present case, the adjudicating authority had no doubt on the issue and there was no seizure and regular show cause notices were issued and the charges/allegations were brought out in the said notices for demanding excise duty on branded jewellery. Therefore, it was held that the Commissioner of Central Excise had not violated the Board’s circular and duly followed the principles of natural justice in this case.
As per the classification of jewellery, the definition of brand name and trade name is identically worded in both Chapter Note-12 and in the notification and the definition is unambiguous. It has been clearly brought out in the findings of the adjudicating authority that appellants were duly registered with Central Excise and paid excise duty on the branded jewellery cleared under the brand name “TANISHQ”. Subsequently the appellants decided not to use the logo of “TANISHQ”. Instead, they started using the letter “Q” for jewelleries which were earlier cleared under the brand name “TANISHQ” and under letter “I” for the jewelleries cleared under the brand name “GoldPlus” respectively.
On perusal of the photographs of the branded jewellery reproduced in the OIO and copies produced by appellant before Tribunal, we find that letters “Q” and “I” are indelibly embossed on the jewellery. These marks “Q” & “I” are embossed on the jewellery in place of ‘TANISHQ’ and “GoldPlus” brands. The appellant’s only contention that since they stopped using the logo of “TANISHQ” on the jewellery it is not chargeable to duty as branded jewellery and heavily relied the Board’s circular No.354/38/2011-TRU dt. 2.3.2012 and Circular No. B-1/1/2005-TRU dt. 4.3.2005.
The Hon’ble CESTAT further stated that the Government has clarified that excise duty is leviable on articles of jewellery where brand name or trade name is indelibly affixed or embossed on the articles of jewellery and duty is not leviable on any jewellery which do not themselves bear any marking of trade name or brand name. The appellants, in the present case, embossed the mark or symbol or letter ‘Q” and “I” on the jewellery and it is in connection with sale of goods indicating the goods belonged to the appellant. The very fact that the goods bear the markings “Q” & “I” which were earlier cleared as “Tanishq” and “GoldPlus” logo clearly conforms to the definition of brand name stipulated in Note 12 to Chapter 71 and Explanation to the said Notification.
It is pertinent to state that this is not a case that appellants cleared unbranded jewellery without any mark or symbol embossed on the jewellery. They have only replaced the logo of brand/trade name “Tanishq” and ‘GoldPlus” with marking “Q” & “I”. It is relevant to see that the definition of brand name or trade name defined under Chapter Note 12 to Chapter 71 and the Explanation to the Notification are wide and covers any name whether registered or not and includes a mark, symbol, letter which is used in relation to the product so as to indicate a connection in the course of trade between the product and the appellants. The appellant clearly admitted before the adjudicating authority that articles of jewellery which was earlier cleared under the brand name of “Tanishq” has now changed to letter “Q” and the logo “GoldPlus” is replaced by letter “I” and the product line is also maintained separately from the manufacture stage till the clearance and sale. The appellant’s plea that letters “Q” and “I” are embossed only for the purpose of identification and not for the purpose of brand name is beyond acceptance as the appellants are one of the reputed branded jewellery manufactures in India manufactured and cleared branded jewellery under their brand name “Tanishq” & “GoldPlus” in the past and all of a sudden decided not to use the brand name/logo of “Tanishq” and “GoldPlus” instead they have started embossing mark i.e. “Q” and “I” and this act is nothing but replacement of one logo with other mark on the same product. Further, the definition of brand name given in Chapter Note 12 and the Explanation to the notification are similarly worded to the definition of “brand name” given in the SSI exemption notification. The Hon’ble apex Court in the case of CCE Trichy Vs Grasim Industries Ltd.(supra) and held laid down the principle which clearly held that a name or writing need not be a brand name or trade name in a sense it is normally understood. Even ordinary mark or letter is sufficient to indicate a connection between the product and the company.
Further, in addition to mark “Q” and “I”, the appellant also embossed the mark “AEI” and “AE” which are marks to indicate persons who manufactured the jewellery. Therefore, by respectfully following the apex Court decision, it was that mark “Q” & “I” embossed on the jewellery manufactured and cleared by appellant is the brand/trade name of the appellants even whether registered or not. The mark “Q” simply replaced the logo of “Tanishq” which was brand jewellery since 1994. The jewellery manufactured and cleared by the appellant embossed with the mark of “Q” & “I” clearly satisfies the definition of branded jewellery defined in Chapter Note 12 of Chapter 71 of CET and the Explanation to the notification No.4/2005 and chargeable to excise duty. The demand of the differential duty confirmed by the adjudicating authority in the impugned order is liable to be upheld.