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REPORTABLE  IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL  NO. 2826 OF 2006

COMMISSIONER OF  CENTRAL EXCISE, CHENNAI- II COMMISSIONERATE,  CHENNAI

—       APPELLANT  

VERSUS

M/S AUSTRALIAN FOODS  INDIA (P) LTD., CHENNAI

— RESPONDENT

J U D G M E N T

D.K. JAIN, J.

1. The short question of law which arises for consideration in  

this  appeal  is,  whether  the  manufacture  and  sale  of  

specified goods that do not physically bear a brand name,  

from branded sale outlets,  would disentitle an assessee  

from the benefit of S.S.I. Notification No. 1/93-C.E., dated  

28th February, 1993, as amended from time to time.  

2. Briefly stated, the material facts giving rise to the appeal,  

are as follows:

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Pursuant  to  an  inspection  by  the  officials  of  the  

enforcement Commissionerate, Chennai-II at the sales outlet  

of the respondent (hereinafter referred as “the assessee”),  

revealed that the assessee was engaged in the manufacture  

and sale of cookies from branded retail  outlets of “Cookie  

Man”. The assessee had acquired this brand name from M/s  

Cookie Man Pvt. Ltd, Australia (which in turn acquired it from  

M/s Auto- bake Pvt. Ltd.,  Australia).  The brand name used  

the words “Cookie Man” accompanied with a logo depicting  

the smiling face of a mustachioed chef. The assessee was  

selling some of these cookies in plastic pouches/containers  

on which the brand name described above was printed. No  

brand name was affixed or inscribed on the cookies.  Excise  

duty  was  duly  paid,  on  the  cookies  sold  in  the  said  

pouches/containers.   However,  on the cookies sold loosely  

from the counter of the same retail outlet, with plain plates  

and tissue paper, duty was not paid.

 3. The retail outlets did not receive any loose cookies nor did  

they  manufacture  them.  They  received  all  cookies  in  

sealed pouches/containers. Those sold loosely were taken  

out of the containers and displayed for  sale separately.  

Even  though  no  separate  register  was  maintained  to  

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account  for  the  sale  of  the  cookies  sold  loosely,  their  

numbers  were  calculated  from  the  number  of  empty  

pouches/containers left behind at the end of day.

4.   On scrutiny of the documents recovered from the said  

outlet and on the basis of the statement of the Executive  

Director, a notice dated 20th December, 2012 was issued  

to the assessee by the Commissioner to show cause as to  

why (i) the cookies sold by the assessee at its outlets be  

not  classified  under  Chapter  sub-heading  1905.11  as  

biscuits and (ii) in view of their use of brand name “Cookie  

Man”  on  sale  of  cookies  in  plastic  pouches/containers,  

S.S.I. exemption should not be disallowed.

5. Upon consideration  of  the  explanation  furnished by the  

assessee,  the  Commissioner  inter-alia  came  to  the  

conclusion   (relevant  for  the  controversy  at  hand)  that  

unless  the  specified  goods  or  the  packaging  in  which  

these  are  sold,  bear  the  brand  name  or  the  logo,  

prescribed S.S.I.  exemption cannot be denied. Thus, the  

Commissioner  held  that  since  there  was  neither  any  

material evidence nor averment to prove that the brand  

name was embossed on the cookies,  the assessee was  

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eligible to avail of the benefit of small scale exemption in  

respect  of  cookies sold loosely from the counter  of  the  

retail  outlet.  Being  aggrieved  by  the  order,  both  the  

Department and the assessee filed cross appeals before  

the Customs, Excise and Service Tax Appellate Tribunal,  

South Zonal Bench at Chennai (hereinafter referred to as  

“the Tribunal).

6.  The decision of the Commissioner having been affirmed  

by the Tribunal, the revenue is before us in this appeal  

under Section 35L(b) of the Central Excise Act, 1944 (for  

short “the Act”).

7. There  is  no  dispute  that  the  specified  good  is  to  be  

classified  under  sub-heading  1905.11  as  Biscuits,  

manufactured  with  the  aid  of  power.  The  controversy  

revolves around para 4 of S.S.I. notification No. 1/93-C.E.  

dated 28th February,  1993,  which,  in  its  erstwhile  form,  

read as follows: -

“4. The exemption contained in this notification  shall not apply to the specified goods where a  manufacturer affixes the specified goods with a  brand name or trade name (registered or not) of  another person who is not eligible for the grant  of exemption under this notification…”

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8. The  meaning  of  a  “brand  name”  or  “trade  name”  is  

enunciated in Explanation IX of the said notification which  

says: -

“Explanation IX- ‘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.”

9. Para 4 of the said notification that deals with exemption  

for  certain  goods  “affixed”  with  a  brand  name  was  

amended vide notification No. 59/94-C.E. dated 1st March,  

1994, to read:-

“4. 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…”

10. Part (iii) of para J of the Budget Changes-1994-95 dealt  

with “Changes in the SSI schemes”  explains the purpose  

of the amendment in the following words:

“(iii) Brand name provision has been amended  so as to provide that SSI concession shall  not  apply to the goods bearing the brand name or  trade name of another person. The effect of this  amendment is that if an SSI unit manufactures  

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the  branded  goods  for  another  person  irrespective of whether the brand name owner  himself is SSI unit or not, such goods shall not  be  eligible  for  the  concession.  Another  implication  of  this  amendment  is  that  the  requirement of affixation or brand name by the  SSI  unit  has  been changed and now the only  condition is that the goods cleared by SSI unit  bearing a brand name of another person shall  not be eligible for the concession irrespective of  the fact whether the brand name was affixed by  the SSI unit or that, the input material used by  the  SSI  unit  was  already  affixed  with  brand  name.”

11.  Mr. N.Venkataraman, learned senior counsel appearing  

on behalf of the assessee argued that a combined reading  

of Para 4 and Explanation IX of the notification, along with  

Para  J  of  the  Budget  Changes,  would  lead  to  the  

conclusion  that  only  specified  goods  bearing  an  affixed  

brand  name,  or  in  other  words,  those  goods  that  

physically display the brand name, are not covered by the  

exemption.  Learned counsel relied on the decision of this  

Court in the case of  Commissioner of Central Excise,  

Jamshedpur  Vs. Superex  Industries,  Bihar1 for  the  

proposition that a physical manifestation of a brand name  

on a good is a necessary requirement for disqualification  

from the exemption granted by the concerned notification.  

Learned counsel also relied on the same decision to urge  1 (2005) 4 SCC 207

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that  this  Court  cannot  look  into  the  surrounding  

circumstances  of  a  good,  especially  the  specific  outlet  

from which it is sold, to construe if it is branded or not;  

scrutiny, in his opinion, must be limited to the specified  

good itself. The relevant paragraph of the order on which  

emphasis was laid, reads as follows:

“3. CEGAT  has  held  that  the  benefit  of  the  notification  would  be  lost  only  if  the  manufacturer affixes the specified goods with a  brand name or trade name of the another who  is  not  eligible  to  the  exemption  under  the  notification.  It  could  not  be  denied  that  the  name Kirloskar is not affixed to the generating  sets.  CEGAT has held that merely because,  in  the invoices, the set is passed off as a Kirloskar  generating  set,  the  benefit  of  the  notification  would not be lost.  We see no infirmity in this  reasoning.  We,  therefore,  see  no  reason  to  interfere.”

12. We are unable to appreciate as to how a compulsory  

requirement of physical manifestation of a brand name on  

the specified good, for it  to be construed as a branded  

good,  can  be  derived  from  the  above  passage.  The  

decision  in  the  above  case  simply  recognizes  that  the  

benefit  would be lost only if  a manufacturer affixes the  

specified goods with a brand or  trade name of another  

who  is  not  eligible  for  the  exemption  under  the  

notification. It does not state that the specified good must  

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itself bear or be physically affixed with the brand or trade  

name. Such an interpretation would lead to absurd results  

in case of goods, which are incapable of physically bearing  

brand names. For instance, the goods, which, due to their  

very nature and structure, are incapable of bearing brand  

names, would always be deemed unbranded. Liquids, soft  

drinks,  milk,  dairy  products,  powders,  edible  products,  

salt,  pepper,  sweets,  gaseous  products,  perfumes,  

deodorants etc., to name a few, are either liquids, gases  

or amorphous/brittle solids, making it impossible for the  

good to be affixed with a brand name. In some situations,  

such an affixation may be impossible,  in  which case,  it  

would be permissible for the specified good to continue  

being a branded good, as long as its environment conveys  

that it  is  branded. By environment we mean packaging  

and wrapping of the good, accessories it is served with,  

uniform of vendors, invoices, menu cards, hoardings and  

display  boards  of  outlet,  furniture  and  props  used,  the  

specific outlet itself in its entirety and other such factors,  

all  of  which  together  or  individually  or  in  parts,  may  

convey that a good is a branded one, notwithstanding that  

there is no physical inscription of the brand or trade name  

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on  the  good  itself.  Further,  a  specific,  dedicated  and  

exclusive outlet  from which a good is  sold is  often the  

most  crucial  and  conclusive  factor  to  hold  a  good  as  

branded.  The  decision  referred  to  above  only  made  a  

limited point that invoices alone cannot be the sole basis  

of construing whether a good is a branded good or not; it  

does not hold that a specified good itself must be stamped  

with  a  brand  name.  It  is  therefore,  permissible  to  look  

into the environment  of  the good.  However,  like  in  the  

case  of  Kirloskar  generators  [Superex  Industries  

(supra)],  invoices bearing brand name could not be the  

sole  basis  of  construing  whether  goods  are  branded or  

not.  That  decision  would  depend  on  the  facts  and  

circumstances  of  the  case.  There  can  be  no  precise  

formula for such a determination; in some cases certain  

factors may carry more weight than in other situations.  

However,  in  most  circumstances,  an  exclusive  branded  

outlet  from which  the  good is  sold,  would  be  a  crucial  

factor in determining the question.

13.   Learned counsel strongly relied on another decision of  

this  Court  in  Kohinoor  Elastics  (P)  Ltd.  Vs.  

Commissioner  of  Central  Excise,  Indore2, for  the  2 (2005) 7 SCC 528

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proposition  that  only  the  “specified  good”  in  question  

must  be  scrutinized  and  the  expression  cannot  be  

expanded  to  mean  “specified  outlets”  or  other  

surrounding  circumstances.   To  bring  home  his  point,  

reliance was placed on the following paragraphs from the  

said decision:

“5. Clause  4  of  the  notification  is  unambiguous  and clear. It specifically states that the exemption  contained  in  the  notification  shall  not  apply  to  specific goods which bear a brand name or trade  name (registered or not) of another person. It is  settled  law  that  to  claim  exemption  under  a  notification  one  must  strictly  comply  with  the  terms of the notification.  It  is  not permissible to  imply  words  into  the  notification  which  the  legislature  has  purposely  not  used.  The  framers  were  aware  that  use  of  a  brand/trade  name  is  generally  to  show  to  a  consumer  a  connection  between  the  goods  and  a person.  The  framers  were aware that goods may be manufactured on  order  for  captive  consumption  by  that  customer  and bear the brand/trade name of that customer.  The framers were aware that such goods may not  reach the market in the form in which they were  supplied to the customer. The framers were aware  that the customer may merely use such goods as  an input for the goods manufactured by him. Yet  clause  4  provides  in  categoric  terms  that  the  exemption is lost if the goods bear the brand/trade  name of another. Clause 4 does not state that the  exemption is lost only in respect of such goods as  reach  the  market.  It  does  not  carve  out  an  exception  for  goods  manufactured  for  captive  consumption.  The  framers  meant  what  they  provided. The exemption was to be available only  to goods which did not bear a brand/trade name of  another. The reason for this is obvious. If use of  brand/trade names were to be permitted on goods  

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manufactured as per the orders of customers or  which  are  to  be  captively  consumed  then  manufacturers, who are otherwise not entitled to  exemption, would get their goods or some inputs  manufactured on job-work basis or through some  small party, freely use their brand/trade name on  the  goods  and  avail  of  the  exemption.  It  is  to  foreclose such a thing that clause 4 provides, in  unambiguous terms, that the exemption is lost if  the “goods” bear a brand/trade name of another.”

xxxxx xxxxx xxxxx   

“7. ….Now  in  this  case  there  is  no  dispute  on  facts.  The “course of  trade” of  the appellants is  making  elastics  for  specified  customers.  It  is  an  admitted position that the appellants are affixing  the brand/trade name of  their  customers on the  elastics.  They  are  being  so  affixed  because  the  appellants and/or the customer wants to indicate  that the “goods (elastic)” have a connection with  that customer. This is clear from the fact that the  elastics  on  which  brand/trade  name  of  ‘A’  is  affixed will not and cannot be used by any person  other  than the  person  using  that  brand/trade  name. As set out hereinabove once a brand/trade  name  is  used  in  the  course  of  trade  of  the  manufacturer,  who  is  indicating  a  connection  between  the  “goods”  manufactured  by  him and  the  person  using  the  brand/trade  name,  the  exemption  is  lost.  In  any  case  it  cannot  be  forgotten that the customer wants his brand/trade  name  affixed  on  the  product  not  for  his  own  knowledge or interest. The elastic supplied by the  appellants  is  becoming  part  and  parcel  of  the  undergarment.  The  customer  is  getting  the  brand/trade name affixed because he wants  the  ultimate  customer  to  know  that  there  is  a  connection between the product and him…”

14. We  feel  that  to  hold  from  the  above  passages  that  

every good must be physically stamped with a brand or  

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trade name to be considered a branded good in terms of  

the notification, and that, one is forbidden to look beyond  

the specified good into  the surrounding environment  of  

the good in construing if it is a branded good or not, would  

be a complete misunderstanding of the above judgment  

and a distortion of the concept of a brand or trade name.  

The above judgment makes no such observation and was  

delivered  on  a  completely  different  set  of  facts  and  

circumstances.  It  involved  a  case  of  undergarments  

manufactured  by  a  producer  P2,  which  used  branded  

elastics produced by P1, and retained the brand name of  

P1 in the final product. P2 was denied exemption under  

the  same  notification  involved  in  the  present  case  

because of the appearance of brand name of another i.e.  

P1, not covered by the same notice. P2 argued that the  

presence of P1’s brand name should not be taken as a  

basis  for  disqualification  from  the  benefits  of  the  

exemption  since  the  customer  buying  the  good  would  

continue to associate the good with P2 and not P1, thus  

making it a branded good of only P2. This Court rejected  

the contention and held that P1 is providing a stamped  

input for captive consumption to P2 “because he wants  

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the ultimate customer to know that there is a connection  

between  the  product  and  him”.  The  Court  further  

observed that the term “specified goods” is used without  

any caveats and hence rejected the contention that some  

consideration should be given to the fact that P1 was used  

only as an input in the making of the final product of P2.  

It is in this background that this Court observed that the  

requirement  of  the  notifications  must  be  adhered  to  

strictly  and  cannot  be  diluted  by  substituting  the  term  

“specified goods” with the nature of goods or the manner  

of disposal.  In case the specified good clearly exhibits a  

brand name of another not covered by the notification, it  

would squarely fall  within the confines of Para 4 of the  

notification; looking beyond the specified good to consider  

whether it is an input or not is not necessary in case of a  

conspicuous brand name. However, to apply this principle  

to the scenario of a specified good that does not contain a  

brand name at all would be equivalent to fitting a square  

peg  in  a  round  hole.  If  a  final  product  is  marked  or  

stamped with a brand name, it is clearly a branded good;  

to stretch this principle to imply that one not marked by  

any brand is an unbranded good, is untenable. In case a  

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scrutiny of the good itself  fails  to reveal  a brand name  

then the search must not end there; one ought to look  

into  the  surrounding  circumstances  of  the  good  to  

decipher, if it is in fact branded or not.  

15. We  are  of  the  opinion  that  such  an  approach  is  

necessary  to  maintain  the essence of  the concept  of  a  

brand name. A brand/ trade name must not be reduced to  

a label  or  sticker that is  affixed on a good.  The test of  

whether the good is branded or unbranded, must not be  

the physical presence of the brand name on the good, but  

whether it, as Explanation IX reads, “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  

the person.” Therefore, whether the brand name appears  

in entirety or in parts or does not appear at all cannot be  

the chief criterion; primary focus has to be on whether an  

indication of  a  connection is  conveyed in  the course of  

trade  between  such  specified  goods  and  some  person  

using the mark. Highlighting this principle,  this Court in  

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Commissioner of Central Excise, Trichy Vs. Rukmani  

Pakkwell Traders3 observed thus: -

“6. The  Tribunal  had  also  held  that  under  the  notification  the  use  must  be  of  “such  brand  name”. The Tribunal has held that the words “such  brand  name”  show  that  the  very  same  brand  name or trade name must be used. The Tribunal  has held that if there are any differences then the  exemption would not be lost. We are afraid that in  coming to this conclusion the Tribunal has ignored  Explanation IX. Explanation IX makes it clear that  the 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, code number,  design  number,  drawing  number,  symbol,  monogram,  label,  signature  or  invented word  or  writing. This makes it very clear that even a use of  part of a brand name or trade name, so long as it  indicates a connection in the course of trade would  be sufficient to disentitle the person from getting  exemption  under  the  notification.  In  this  case,  admittedly, the brand name or trade name is the  word “ARR” with the photograph of the founder of  the  group.  Merely  because  the  registered  trade  mark is not entirely reproduced does not take the  respondents  out  of  clause  4  and  make  them  eligible to the benefit of the notification.”

16. Similarly,  in  Commissioner  of  Central  Excise,  

Chandigarh-I,  Vs. Mahaan  Dairies4, it  was  noted  as  

follows:

“6. We  have  today  delivered  a  judgment  in CCE v. Rukmani  Pakkwell  Traders,  (2004)  11  SCC  801  wherein  we  have  held  in  respect  of  another notification containing identical words that  it  makes  no  difference  whether  the  goods  on  

3 (2004) 11 SCC 801 4 (2004) 11 SCC 798

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which  the  trade  name  or  mark  is  used  are  the  same  in  respect  of  which  the  trade  mark  is  registered. Even if the goods are different, so long  as the trade name or brand name  of some other  company  is  used  the  benefit  of  the  notification  would not be available. Further, in our view, once  a trade name or brand name  is used then mere  use of additional words would not enable the party  to claim the benefit of the notification.” “8. It is settled law that in order to claim benefit of  a notification, a party must strictly comply with the  terms  of  the  notification.  If  on  wording  of  the  notification  the  benefit  is  not  available  then  by  stretching  the  words  of  the  notification  or  by  adding words to the notification benefit cannot be  conferred. The Tribunal has based its decision on a  decision  delivered  by  it  in Rukmani  Pakkwell  Traders v.  CCE (1999)  109 ELT  204 (CEGAT).  We  have already overruled the decision in that case.  In this case also we hold that the decision of the  Tribunal  is  unsustainable.  It  is  accordingly  set  aside.”

17. As aforesaid, once it is established that a specified good  

is a branded good, whether it  is sold without any trade  

name on it, or by another manufacturer, it does not cease  

to be a branded good of the first manufacturer. Therefore,  

soft  drinks  of  a  certain  company  do  not  cease  to  be  

manufactured  branded  goods  of  that  company  simply  

because  they  are  served  in  plain  glasses,  without  any  

indication of  the  company,  in  a  private restaurant.  The  

good will continue to be a branded good of the company  

that manufactured it. The same principle would apply in  

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the  case  of  potato  chips,  chocolates,  biscuits,  wafers,  

powders  and other  such  goods  often  sold  from various  

locations.  

18. In case of goods sold from exclusive single brand retail  

outlets or restaurants or  stores, the fact that a good is  

sold  from such  a  store  ought  to  be  a  relevant  fact  in  

construing if the good is its branded good or not. In the  

case  of  such  goods,  perhaps  a  rebuttable  presumption  

arises in favour of such goods being branded goods of the  

specified store. Such a presumption can be rebutted if it is  

shown  that  the  specified  good  being  sold  is  in  fact  a  

branded  good  of  another  manufacturer.  Thus,  branded  

potato chips, soft drinks, chocolates etc. though sold from  

such outlets, will not be considered to be goods of such  

outlets.  However,  all  other  goods,  sold  without  any  

appearance of a brand or trade name on them, would not  

be deemed unbranded goods; to the contrary, they may  

be deemed to be branded goods of that outlet unless a  

different brand or trade name appears.

19. Hence, we hold that it is not necessary for goods to be  

stamped with a trade or brand name to be considered as  

branded  goods  under  the  SSI  notification,  discussed  1

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above. A scrutiny of the surrounding circumstances is not  

only permissible, but necessary to decipher the same; the  

most important of these factors being the specific outlet  

from which the good is sold. However, such factors would  

carry different hues in different scenarios. There can be  

no single formula to determine if a good is branded or not;  

such determination would vary from case to case. Also,  

our observations must be limited to this notification and  

not supplanted to other laws with similar subject matter  

pertaining to trade names and brand names.

20. Applying the said principles on the facts at hand, we fail  

to see how the same branded cookies, sold in containers,  

can transform to become unbranded ones, when sold from  

the  same  counter,  or  even  from  an  adjoining  counter,  

without packaging carrying the brand name. Admittedly,  

on  the  same cookies,  physically  bearing  brand  “Cookie  

Man” sold in containers carrying brand name duty is paid.  

It is interesting to note that learned counsel appearing on  

behalf of the assessee first argued that to determine if the  

cookies sold from the counter are branded or not, scrutiny  

must  be  limited  to  the case of  the  cookies  themselves  

without  looking  at  the  surrounding  circumstances;  yet  

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went on to argue that the tissues and plates they were  

served on did not bear the brand of the specified good.  

Either the environment of the goods can be looked into, or  

cannot  be  taken  into  consideration  at  all.  Once  it  is  

established, as in the instant case, that the environment  

of the goods can be gone into to construe if it is branded  

or not, we do not see why the environment of the goods  

should be limited to the plates and tissues, on which they  

are served.  As aforesaid, in the instant case, the cookies  

were sold from a dedicated outlet of “Cookie Man” where  

no other products but those of the assessee were sold.  

The  invoices  carry  the  name  of  the  company  and  the  

cookies  were  sold  from a  counter  of  the  store.   In  our  

opinion, the store’s decision to sell some cookies without  

containers that are stamped with its brand or trade name  

does  not  change  the  brand  of  the  cookies.   We  are  

convinced that the cookies sold even without inscription of  

the  brand  name,  indicate  a  clear  connection  with  the  

brand  name,  in  the  course  of  assessee’s  business  of  

manufacture and sale of cookies under the brand name  

“Cookie Man”.  They continue to be branded cookies of  

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“Cookie Man” and hence cannot claim exemption under  

the SSI Notification.

21. In  view  of  the  aforegoing  discussion,  we  are  of  the  

opinion  that  the  impugned  decision  of  the  Tribunal  is  

erroneous and unsustainable. Consequently, the appeal is  

allowed and the impugned order is set aside, leaving the  

parties to bear their own costs.   

……..…………………………………. (D.K. JAIN, J.)  

……..…………………………………. (JAGDISH SINGH KHEHAR,  J.)

NEW DELHI, JANUARY 14, 2013

RS

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