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Commissioner of Central Excise Vs. Tarai Foods - Court Judgment

LegalCrystal Citation
CourtCustoms Excise and Service Tax Appellate Tribunal CESTAT Delhi
Decided On
Reported in(2000)(72)ECC342
AppellantCommissioner of Central Excise
RespondentTarai Foods
Excerpt:
.....2001.10 of the ceta, as these were not only put up in a unit container, but carried their brand name also. regarding the second type of packings, they avered that the same were not covered by that sub-heading of the ceta as those packings did not bear their brand name. their brand name, as alleged, by them was "inland valley". therefore, they were not liable to pay the duty in respect of the clearances made in second type of packings as the same were covered by sub-heading 2001.90 of the ceta under which nil rate of duty was provided.4. the assistant commissioner, however, did not agree with their contention and confirmed the duty demand in all of rs. 4,26,685.96 as raised through two show cause notices dated 12-5-1997 and 13-8-1997.5. the respondents, however, challenged the.....
Judgment:
1. This appeal has been filed by the Revenue against the impugned order of the Commissioner (Appeals) dated 27-10-1998 vide which he had reversed the order in original dated 24-10-97 of Assistant Commissioner confirming the duty demand of Rs. 4,26,685.96 against the respondents by classifying their product under sub-heading 2001.10 of the CETA.2. The facts giving rise to the present appeal may briefly be stated as under: 3. The respondents M/s. Tarai Foods Ltd. are engaged in the manufacture of vegetable preparation i.e. French Fries and Frozen foods. They had been using two types of packings for the sale of their product. First packing carried the name "Inland Valley" alongwith other details while the second packing bore all other details except the words "Inland Valley". They classified their first packing under sub-heading No.2001.10 and cleared the same from the factory by paying duty at the rate of 8% as prescribed in that sub-heading. But the second packing had been classified by them under sub-heading 2001.90 and cleared at nil rate of duty. They were served with two show cause notices for paying duty on the clearances made during the period 18-4-1997 to 21-7-1997 in second type of packings of the product, "French Fries" as the same in fact were covered by sub-heading 2001.10 of the CETA. They, however, contested the correctness of that notice and maintained that the clearances of the product made by them in the first type of packings were only covered under sub-heading 2001.10 of the CETA, as these were not only put up in a unit container, but carried their brand name also. Regarding the second type of packings, they avered that the same were not covered by that sub-heading of the CETA as those packings did not bear their brand name. Their brand name, as alleged, by them was "Inland Valley". Therefore, they were not liable to pay the duty in respect of the clearances made in second type of packings as the same were covered by sub-heading 2001.90 of the CETA under which nil rate of duty was provided.

4. The Assistant Commissioner, however, did not agree with their contention and confirmed the duty demand in all of Rs. 4,26,685.96 as raised through two show cause notices dated 12-5-1997 and 13-8-1997.

5. The respondents, however, challenged the aforesaid order in original of the Assistant Commissioner and the Commissioner (Appeals) reversed the same by holding that the clearance of the products made in second type of packings by the respondents were not covered by sub-heading 2001.90 of the CETA. He through the impugned order accepted the appeal of the respondents and quashed the duty demand.

6. The learned JDR has assailed the validity of the impugned order of the Commissioner (Appeals) on the ground that the definition of the expression "brand name" as given in Chapter Note of the Chapter 20 of the CETA had been misinterpreted by the Commissioner (Appeals) and that the clearances of the product. "French Fries" in the second type of packings, made by the respondents were also covered by sub-heading 2001.10 of the CETA.7. On the other hand, the learned counsel for the respondents has argued that since the second type of packings in which the product had been cleared by the respondents did not bear the brand name "Inland valley" were covered only under sub-heading 2001.90 of the CETA which provided nil rate of duty and not under sub-headings 2001.10.

Therefore, the respondents were not liable to pay any duty on those clearances and that the impugned order of the Commissioner (Appeals) is perfectly valid.

9. In order to appreciate the issue involved in the appeal and the contentions raised by both the sides, it would be beneficial to refer to both the subheadings 2001.10 and 2001.90 of Chapter 20 of the CETA.Both these subheadings read as under :- 2001.10 - Put up in unit containers and bearing a brand name.

2001.90 Others 9. The expression "brand name" had been also defined in the Chapter Note of Chapter 20 of the CETA in the following words :- "In this chapter 'Brand Name' means a brand name, whether registered or not, that is to say, a name or a mark, such a symbol, monogram, label, signature or invented words or any writing which is used in relation to product, for the purpose of indicating, or so as to indicate, a connection in the course of trade between the product and some person using such name, mark with or without any indication of the identity of that person".

Admittedly, the product, "French Fries" had been cleared from the factory premises by the respondents by using two types of packings. The first type of packing weighed 500 gms. and carried the following words on the front side:- "Inland Valley TM where Flavour Grows Cripsy French Fries and name of the manufacturer as Tarai Foods Ltd." and other details had been mentioned.

The plea of the respondents is that "Inland Valley" is their trade and this trade name had been mentioned by them only on first type of packing and as such their second type of packings did not fall within the ambit of sub-heading 2001.10 of the CETA. But their this plea is only misconceived and not liable to be accepted. In fact, the second type of packings weighing 1 Kg. which too can be termed as "put up in unit container" carried all other details as given in the first type of packings, except the words "Inland valley", also falls under that sub-heading 2001.10 of CETA, keeping in view the definition of "brand name" set out above, as given in Chapter 20 in which this sub-heading 2001.10 of the CETA falls. The close reading of this definition shows that any writing which is used on a container, in relation to the product, for the purpose of indicating or so as to indicate a connection in the course of trade, between the product and the same person using such name with or without any indication of the identity of that person, is to be treated as brand name.

11. The perusal of the writing on the second type of packings used by the respondents, referred to above clearly establishes a connection in the course of trade, between them as manufacturer and the product. The other mark like logo fixed on this packing which has been termed by the respondents house mark, also establishes a connection in the course of trade between the product and them, as manufacturer. This second type of packings also contained the same product i.e (French Fries) which the respondents packed in the first type of packings. Even the details of the manufacturer and the other marks like logo put on this packing, virtually tallied with the first type of packings. The only words missing on the second type of packing were "Inland Valley". These words had been intentionally omitted by the respondents just with a view to take out their clearances made in this packing from the ambit of subheading 2001.10 of the CETA and to avoid payment of duty. The benefit of Sub-heading 2001.90 which provides nil rate of duty, relied upon by the respondents for the clearances made in the second type of packings is, in fact not at all available to them as this sub-heading only covers clearances, other than those made in a unit containers and did not bear any brand name. But here the clearances of the product made by the respondents using the second type of packings squarely fall under sub-heading 2001.10 of the CETA being put up in a unit container and carried the brand name as defined in Chapter 20 of the CETA. The wording of this sub-heading has to be accepted and interpreted in a manner as it is without adding or substracting any word therefrom. The wording has not to be interpreted so as to held the assessee/manufacturer in evading the duty. The meaning of the expression "brand name" as explained in Chapter 20 of the CETA (referred to above) is wide enough to cover the sale of the product by the respondents by using the second type of packings, under sub-heading 2001.10 of the CETA. The view of the Commissioner (Appeals) that the details and the mark displayed on this type of packing did not establish relationship between the product and the manufacturer/respondents, in the course of trade, cannot be subscribed by us being totally erroneous and unfounded. As observed above, a complete connection stands established from the wording used on the second type of packing between the product (French Fries) and the respondents who are its manufacturer, in the course of trade.

Therefore, the impugned order of the Commissioner (Appeals) deserves to be set aside.Astra Pharmaceuticals (P) Ltd. v.Chandigarh,Universal Gem (P) Ltd. v. CCE, Bombay, 1999 (105) E.L.T. 600 (Tribunal) referred by the counsel for the respondents, is not attracted to the facts of this case. The former case before the Apex Court related to medicines wherein the Apex Court has drawn distinction between the house mark and product mark and observed that a monogram which identified the manufacturer would not make the medicine patent or proprietary.

Similarly, the later case also pertained to the medicine and the Tribunal followed the ratio of the law laid down by the Supreme Court in the former case referred to above. But in the case in hand, as discussed above, complete identity between the product and the manufacturer in the course of trade stands established from the wording displayed on the second type of packings, used by the respondents for clearing the product in question.

13. In the light of the discussion made above, the impugned order of the Commissioner (Appeals) is set aside and the order in original of Assistant Collector dated 24-10-1997 is restored. Consequently, the appeal filed by the Revenue is accepted.


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