REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NOS. 4500-4502 OF 2003

Commissioner of Central Excise, Mumbai      …. Appellant

Versus

M/s. Kalvert Foods India Pvt. Ltd. & Ors.    ….  

Respondents

JUDGMENT

Dr. MUKUNDAKAM SHARMA, J.

1. These  appeals  arise  out  of  Judgment  and  Order  

passed  by  the  Customs,  Excise  and  Gold  (Control)  

Appellate  Tribunal,  New  Delhi Bench  [for  short  

“CEGAT”]  on 02.08.2002 whereby the  Tribunal  had  

allowed the appeals filed by the respondents holding  

that  the  respondents  were  not  guilty  of  clandestine  

removal of excisable goods and also that the goods of  

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the respondent no. 1 were not excisable inasmuch as  

they  were  not  packed in  containers  under  a  brand  

name.

2. Before entering into rival contentions of the parties, it  

would be necessary although in a nutshell to look into  

the facts of the case leading to filing of the present  

appeals.

3. The respondent No. 1, M/s.  Kalvert Foods India Pvt.  

Ltd. is a company (in short hereinafter referred to as 'the  

Company')  engaged  in  the  manufacture  of  P  &  P  Food  

Products,  such  as,  assorted  jams,  pickles,  squashes,  

cooking sauces, chutneys, syrups, synthetic vinegars etc.  

The company is also trading in sugar, salt and pepper by  

packing  into  small  packs.  The  respondent  No.  2,  Shri  

Yunus A. Kalvert is the Managing Director of the Company.  

4. On  22.11.2000,  on  receiving  information  that  

respondents were indulging in clandestine removals of its  

finished P & P food products without payment of Central  

Excise Duty, the revenue authorities searched the factory  

premises of the respondent no. 1.    Searches were also  

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carried out  at  the  premises of  its  distributors/wholesale  

dealers/traders of respondent no. 1 situated in and around  

Mumbai and other connected premises.   

5. During the search conducted at the premises of the  

respondent no. 1 several incriminating documents, articles  

and records were found.  A huge quantity of finished goods  

were also found lying in the factory premises.  Further, it  

was also noticed that there was one tempo parked inside  

the  factory  premises  loaded  with  cartons  containing  the  

excisable  goods manufactured by  the  said  company and  

was about to leave the factory premises.  On inquiry from  

the driver of the said tempo it was found that the driver  

was not  in  possession of  any documents  relating  to  the  

goods loaded in the said tempo.  On inspection of invoices  

at the premises of the respondent no. 1, it was also found  

that there were two invoices with the same serial number,  

in respect of different products.   The officers took stock of  

the goods in the factory and it was found that the finished  

goods lying in the factory were in excess of the stock shown  

and accounted for in the RGI Register.   

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6. Specific allegation against the respondent is that the  

goods  found  lying  excess  in  the  stock  than  what  were  

entered into RGI register, valued at Rs. 7,33,668/- and the  

same was seized.   

7. Thereafter,  search  was  also  carried  out  at  the  

premises  of  the  dealers/traders,  to  whom  the  company  

allegedly  supplied  the  finished  goods.   The  goods  found  

lying in those premises to the value of Rs. 6,22,946/- were  

also seized on the ground that they were not duty paid.  

8. Similarly, the search was carried out by the officers  

on  28-11-2000,  at  the  premises  of  M/s.  Relish  Trading  

Company  (in  short  'RTC')/the  selling  agent  of  the  

respondent-company, M/s. Sai Krupa, a partnership firm  

of the Managing Director of the respondent No. 1; and at  

the  premises  of  sole  proprietor  of  RTC  and  records  

pertaining to the sale and purchase of the goods lying in  

the offices of these companies, were seized.  It revealed to  

the  searching  officers  that,  in  fact,  the  respondent-

company  had  cleared  jams,  syrup,  sauces,  pickles,  etc.,  

from the factory premises to the above said selling agents  

without payment of duty, but had shown those clearances  

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as that of the sugar, in the invoices and had also cleared  

the branded goods to the dealers/traders.  

9. After completion of the entire process a show cause  

notice was issued to the Company and its Director.  Such  

notices were also issued to the proprietor of M/s. RTC, its  

partner and M/s. Sai Krupa Corporation.  Through notices  

issued,  duty demand was raised from the  company and  

penalty was also proposed to be imposed on the company.  

Reply was filed by the respondents to the aforesaid show  

cause notices.  

10.  The adjudicating authority, namely, the Commissioner  

of  Central  Excise,  Mumbai,  passed  an  order  dated  

27.02.2002,  holding  that  the  respondent  no.  1  with  the  

connivance of  the respondents 2 and 3 have deliberately  

attempted  to  pass  off  excisable  goods  as  non-excisable  

goods  with  an  intent  to  evade  payment  of  excise  duty.  

Consequently,  the  Commissioner  confirmed  the  duty  

demand and ordered confiscation of the seized goods and  

also imposed penalty equivalent to the amount of duty on  

the company and also directed to pay interest on the excise  

duty etc.   

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11. Being aggrieved by the aforesaid order, respondents  

filed appeals  before  the  CEGAT.  The said  appeals  were  

heard  and  Tribunal  passed  the  judgment  and  order  on  

02.08.2002, which is impugned herein.  The Tribunal by its  

order set aside the findings of the Commissioner of Central  

Excise,  Mumbai  holding  that  the  respondents  were  not  

guilty of clandestine removal of excisable goods and also  

that  the  goods  of  respondent  no.  1  were  not  excisable  

inasmuch as they were allegedly not packed in containers  

under a brand name and therefore not required to pay any  

excise duty.   

12. The  present  appeals  are  directed  and  preferred  

against the said judgment and order on which we heard  

learned counsel appearing for the parties.   

13. The learned counsel  appearing  for  the  parties  have  

painstakingly  and  extensively  taken  us  through  the  

relevant documents on record to which reference shall be  

made  during  the  course  of  our  discussion  hereinafter.  

However,  before  we  record  our  findings  and  the  

conclusions on the issues raised, we must also deal with  

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the tariff headings and some of the documents which are  

relevant for our purpose and material available on record.  

14. Admittedly, the years with which we are concerned in  

these appeals are 1996-97, 1997-98 and 1998-99.  So far  

the year of 1996-97 is concerned the relevant entry for our  

purpose is 20.01 and sub-heading 2001.00 under Chapter  

20  of  the  Central  Excise  Tariff  of  India  1996-97  

(incorporating  rates  of  Central  Excise  &  Service  Tax).  

Chapter  20  relates  to  preparations  of  vegetables,  fruits,  

nuts or other parts of plants and it prescribes “Nil” rate of  

duty for the goods mentioned in this sub-heading 2001.00.  

Description of goods in the said sub-heading is as under:

“preparations  of  vegetables,  fruit,  nuts  or  other  parts  of   plants, including jams, fruit jellies, marmalades, fruit or nut   puree  and  fruit  or  nut  pastes,  fruit  juices  and  vegetable   juices,  whether  or  not  containing  added  sugar  or  other   sweetening matter put up in unit containers and bearing a   brand name”  

15. Chapter 20 of the Central Excise Tariff of India 1998-

99 (incorporating rates of Central Excise & Service Tax as  

in operation on 2nd June, 1998) prescribes 8% excise duty  

for  the  goods  mentioned  under  sub  heading  2001.10.  

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Description of goods mentioned in sub-heading 2001.10 is  

as under:

“preparations  of  vegetables,  fruit,  nuts  or  other  parts  of   plants, including jams, fruit jellies, marmalades, fruit or nut   puree  and  fruit  or  nut  pastes,  fruit  juices  and  vegetable   juices,  whether  or  not  containing  added  sugar  or  other   sweetening matter put up in unit containers and bearing a   brand name”.  

What is brand name is also explained in the notes included  

in Chapter 20 to the following effect:

““brand name” means a brand name, whether registered or   not,  that is to say, a name or a mark, such as a symbol,   monogram, label, signature or invented words or any writing   which  is  used in relation  to  a 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 or mark with or without any indication of the identity   of that person”.

16. Chapter 21, of the Central Excise Tariff of India 1998-

99 (incorporating rates of Central Excise & Service Tax as  

in operation on 2nd June, 1998) relates to “Miscellaneous  

Edible Preparations”.   It also prescribes 8% excise duty for  

the  goods  mentioned  under  sub  heading  2103.10.  

Description of goods mentioned in sub-heading 2001.10 is  

as under:

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“Sauces, ketchup and the like and preparations therefore;   fixed condiments and mixed seasonings; mustard flour and   mead and prepared mustard put up in unit containers and   bearing a brand name”

Sub-heading  2108.20  prescribes  18%  excise  duty  for  

“Edible preparations, not elsewhere specified or including  

Sharbat”  under  Chapter  21.   Sub-heading  2203.00  also  

prescribes 18% excise duty for “Vinegar and substitutes for  

vinegar obtained from acetic acid” under Chapter 22.  

17. During  the  search  operation  carried  out  by  the  

appellants several  incriminating articles were found with  

brand name “Kalvert Anchor” or “Kalvert” in assorted forms  

which were manufactured by M/s. Kalvert Foods (I) P. Ltd.  

During the course of investigation statement of Shri Yunus  

A. Kalvert, Managing Director of respondent company was  

recorded under Section 14 of the Central Excise Act, 1944,  

who  inter alia deposed that the respondent company was  

engaged in the manufacture of  P & P food products like  

jams;  pickles;  syrups;  vinegars  etc.  bearing  their  brand  

name “KALVERT ANCHOR” and the other Directors of the  

company viz.  Shri Akbar Ali  Kalvert, his father and Shri  

Irshad Y. Kalvert.   

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18. During  the  course  of  arguments  learned  counsel  

appearing  for  the  respondent  submitted  before  us  that  

although the aforesaid statements of Managing Director of  

the Company and other persons were recorded during the  

course of judicial proceedings but the same were retracted  

statements,  and  therefore,  they  cannot  be  relied  upon.  

However,  the  statements  were  recorded  by  the  Central  

Excise Officers and they were not police officers. Therefore,  

such  statements  made  by  the  Managing  Director  of  the  

Company  and  other  persons  containing  all  the  details  

about the functioning of the company which could be made  

only  with  personal  knowledge  of  the  respondents  and  

therefore could not have been obtained through coercion or  

duress  or  through dictation.  We see  no  reason  why  the  

aforesaid  statements  made  in  the  circumstances  of  the  

case should not be considered, looked into and relied upon.  

19. We are of the considered opinion that it is established  

from the record that the aforesaid statements were given by  

the concerned persons out of their own volition and there is  

no allegation of threat, force, coercion, duress or pressure  

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being  utilized  by  the  officers  to  extract  the  statements  

which  corroborated  each  other.   Besides,  the  Managing  

Director of the Company on his own volition deposited the  

amount  of      Rs.  11  lakhs  towards  excise  duty  and  

therefore in the facts and circumstance of the present case,  

the aforesaid statement of the counsel for the respondents  

cannot be accepted.  This fact clearly proves the conclusion  

that the statements of the concerned persons were of their  

volition and not outcome of any duress.

20. During  the  course  of  arguments  our  attention  was  

also drawn to the statement of Managing Director of the  

Company where he had admitted the  fact  of  clandestine  

clearance of excisable goods and therefore has voluntarily  

come forward to sort out the issue and to pay the Central  

Excise duty liability and that he has paid Central Excise  

duty  voluntarily  under  TR6  Challans  totaling  to  Rs.  

11,00,000/- on various dates.  Similarly statement of Miss  

Vinita M. Khanolkar – proprietor of RTC was also recorded  

under  Section 14 of  the  Central  Excise  Act,  1944 along  

with Shri  Shekhar  Mogaviera –  Production Supervisor  of  

M/s.  Kalvert Foods India Pvt. Ltd.  Statements of various  

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other persons were also recorded under Section 14 of the  

Central Excise Act.   

21. Our  attention  was  also  drawn  by  the  counsel  

appearing for the appellant to the findings recorded by the  

adjudicating  authority  to  the  fact  that  there  have  been  

recovery of  unaccounted finished excisable goods from 8  

different  dealers  in  and  around  Mumbai  and  that  there  

have  been  creation  of  firms  dealing  in  similar  products  

from the same premises by the same persons having no  

capital or machinery and also that there have been only  

one tempo invariably used for delivery of excisable goods  

from  factory  to  the  buyers  though  some  invoices  were  

issued by the firms other than M/s. Kalvert Foods India  

Pvt. Ltd. and that there have been use of parallel sets of  

invoices of the same serial numbers supported by recovery  

of  a  serially  numbering  machine  and  blank  invoices  

without any printed serial numbers.   

22. On  the  basis  of  the  aforesaid  material  discussed  

hereinbefore  the  adjudicating  authority  came  to  the  

conclusion that the respondent no. 1 with the connivance  

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of  respondent  nos.  2  and  3  have  been  deliberately  

clandestinely  removing  excisable  goods  as  non-excisable  

goods  with  intent  to  evade  payment  of  excise  duty.  

However, the aforesaid judgment and order passed by the  

adjudicating  authority,  namely,  the  Commissioner  of  

Central  Excise,  Mumbai,  was  set  aside  by  the  Tribunal  

holding  that  neither  the  tempo  nor  the  goods  loaded  

therein could be legally seized and confiscated when the  

relevant documents were shown to the officers at the spot.  

It was also observed by the Tribunal that it could not be  

said that an attempt was being made to clear those goods  

in  tempo  in  a  clandestine  manner,  when  the  company  

representative  produced  the  invoices  and  other  relevant  

documents in respect thereof.  These findings were arrived  

at by the Tribunal apparently ignoring the materials which  

are considered hereinbefore and referred to.   

23. There  is  no  reference  about  the  statement  of  Miss  

Vinita M. Khanolkar -  sole proprietor of M/s. RTC, in the  

judgment of order passed by the Tribunal, when she was  

examined under Section 14 of the Central Excise Act, she  

had  clearly  stated  that  her  company  bought  large  

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quantities of excisable goods from the respondent company  

and  in  turn  sold  them  to  its  distributors.  She  also  

confirmed the documents seized from her residence which  

included  correspondence  with  their  customers  regarding  

promotion of the “Kalvert brand” products.   

24. The Tribunal also failed to consider and discuss the  

specific allegation of the appellant that respondent no. 1  

maintained two sets of computerized commercial invoices,  

one for excisable products like jams, sauce, syrup etc and  

the other for non-excisable goods such as salt, sugar and  

pepper which were marked as L series.   It has also come  

on evidence that L series sales for the period 1996-1999  

was only made to RTC in huge quantities and that in the  

guise of selling salt, sugar and pepper, the respondent No.  

1 was in fact selling excisable goods to RTC. These facts  

have  been found  and  taken note  of  by  the  adjudicating  

authority but  the  same  were  totally  ignored  by  the  

Tribunal.   

25. Due to the aforesaid reasons and on the basis of the  

materials available on record it is clear that the Company  

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was  guilty  of  clandestine  removal  of  excisable  goods  as  

non-excisable goods in order to evade excise duty.  It  is  

proved from the fact that the Managing Director voluntarily  

came forward to sort out the issue and to pay the Excise  

duty and paid Excise duty to the extent of Rs. 11,00,000/-  

on different dates.  The aforesaid act of the respondent no.  

1 was very material and relevant but the same was also  

ignored  by  the  Tribunal  while  arriving  at  a  wrong  

conclusion.   

26. Therefore, according to us the issue with regard to the  

clandestine  removal  of  excisable  goods  as  non-excisable  

goods by the respondent from their premises and selling to  

its  dealers  and  distributors  is  clearly  proved  from  the  

materials on record.

27. In view of the aforesaid position and since there was  

clandestine  removal  of  excisable  goods,  the  period  of  

limitation in the present case would have to be computed  

from the date of their knowledge, arrived at upon raids on  

the premises.  In the present case therefore the extended  

period  of  limitation  would  be  available  as  there  was  

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suppression of facts by the respondents with the intention  

to evade the central excise duty inasmuch as they did not  

account  for  the  manufactured  goods  in  the  prescribed  

record.   

28. The  Tribunal  has  also  recorded  a  finding  that  the  

respondents never cleared the goods in question under any  

brand name and being unbranded they were chargeable to  

NIL rate of duty.

29. The  aforesaid  finding  is  also  unacceptable.   The  

Managing Director of the respondent company has himself  

stated that they have been selling their products under the  

brand  name  “Kalvert”  and  on  the  basis  of  the  said  

statement and other record found on the articles sold by  

the  respondent  company  the  aforesaid  finding  of  the  

Tribunal is wrong and perverse.   

30. The Tribunal has also held that because the brand  

name “Kalvert” was not registered in their name therefore it  

cannot be held that respondents were using ‘brand name’.  

The  Tribunal  further  held  that  the  name  on  the  goods  

manufactured and cleared by the respondent in the market  

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could at best be termed as “House mark” and not brand  

name/trade name.   

31. In our considered opinion, the aforesaid findings are  

also totally wrong and recorded in violation of the law of  

Trade  Marks.   During  the  course  of  arguments,  our  

attention was drawn to a Judgment of this Court in the  

case  of  TARAI  FOOD  LTD.  V.  COMMISSIONER  OF  

CENTRAL EXCISE, MEERUT-II, reported in 2007(8) S.T.R.  

442 (S.C.).  While placing reliance on the said Judgment,  

the counsel appearing for the respondents submitted that  

what is a ‘Brand name’ is as stated in paragraph 4 of the  

said Judgment.  He relied on the said definition of ‘Brand  

name’ and then submitted that the phrase “New Improved  

Quick Frozen French Fries” was not  held to be a brand  

name, and therefore, according to him the brand name of  

the respondent company “Kalvert” being a “House Name”  

could not be termed as “Brand Name”.    

32. In our considered opinion, the aforesaid brand name  

“New Improved Quick Frozen French Fries” is a descriptive  

word and the same could not have been termed and coined  

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either  as a “house name” or  a “brand name” under  any  

circumstances.  There  can  be  no  dispute  therefore  with  

regard to the proposition of law laid down by this Court in  

the  aforesaid  decision.   We  may  also  refer  to  another  

decision of this Court in Astra Pharmaceutical Pvt. Ltd.  

V.  Collector of Central Excise, Chandigarh, reported in  

[1995  (75)  E.L.T.  214  (S.C.)].   That  was  a  case  of  

Pharmaceutical  product.  In  the  said  decision  also  the  

manner  and  scope  of  “Brand  name”  and  distinction  

between  ‘House  mark’  and  “Product  mark/Brand  name”  

has been brought out. It was stated therein by this Court  

that “House mark” which is usually a device in the form of  

an  emblem,  word  or  both  is  an  identification  of  the  

manufacturer which is compulsory under the Drug Rules.  

On  the  other  hand,  product  mark  or  brand  name  is  

invariably a word or a combination of a word and letter or  

numeral by which the product is identified and asked for.  

In paragraph 6 of the said Judgment, Narayanan’s Book  

on Trade Marks and Passing-Off was also referred to and  

since  the  same  may  have  a  bearing  to  the  facts  of  the  

present case, it is extracted herein below:

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“677A. House mark and Product mark (or Brand name).

In  the  pharmaceutical  business  a  distinction  is   made  between  a House  mark  and  a  Product  mark.   The   former is used on all the products of the manufacturer. It is   usually a device in the form of an emblem, word or both.   For each product a separate mark known as a product mark   or a brand name is used which is invariably a word or a   combination of a word and letter or numeral by which the   product is identified and asked for. In respect of all products   both the Product mark and House mark will appear side by   side on all the labels, cartons etc.  Goods are ordered only   by  the  product  mark  or  Brand  name.  The  House  mark   serves  as  an  emblem  of  the  manufacturer  projecting  the   image of the manufacturer generally.”

33. In  the  book  of  “Trade  Marks”  by  Sarkar,  the  

distinction  between  the  expressions  “House  mark”  and  

“Product mark” or “Brand name” has been clearly brought  

out  by  way  of  reference  to  the  decision  in  Astra  

Pharmaceutical  Pvt.  Ltd.  (supra).   It  is  stated  therein  

that  “House  mark”  is  used  on  all  the  products  of  the  

manufacturer and that it is usually a device or a form of  

emblem of words or both.  It was also pointed out that for  

each product a separate mark known as a “Product mark”  

or  “Brand  name”  is  used  which  is  invariably  a  word  or  

combination of word and letter or numeral by which the  

product is identified and asked for.  It was also stated that  

in respect of  all  products both the “Product mark”  and  

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“Brand name” would appear side by side on all the labels,  

cartons etc.  and that the “House mark”  is used generally  

as an emblem of the manufacturer projecting the image of  

the manufacturer,   whereas “Brand name” is  a name or  

trade mark either unregistered or registered under the Act.  

34. Therefore,  it  is  not  necessary  that  “Brand  name”  

should be compulsorily registered.  A person can carry on  

his  trade  by  using  a  “Brand  name”  which  is  not  even  

registered.   But  in  violation/infringement  of  trade mark,  

remedy  available  would  be  distinctly  different  to  an  

unregistered brand name from that of remedy available to a  

registered brand name.   

35. Unfortunately,  the  Tribunal  did  not  consider  and  

properly appreciate  the  apparent distinction between the  

two  distinct  expressions  i.e.  “House  mark”   and  “Brand  

name” and thereby proceeded to set aside the well-written  

Judgment passed by the Commissioner of Central Excise,  

Mumbai who has recorded his reasons giving cogent basis  

for his reasoning.  

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36. In  the  book  of  “Law  of  Trade  Marks”  by  K.C.  

Kailasam and Ramu Vedaraman the distinction between  

‘Product  mark’  and  ‘House  mark’  has  been  beautifully  

delineated, which is as under:

“It  is  possible  that  the  proprietor  may  use  several  trade   marks  in  respect  of  his  goods  (known  as  Product  mark),   besides using a common mark in all his products to indicate   the origin of the goods from the enterprise (known as House   mark).   This  practice  is  more  predominant  in  the   pharmaceutical  trade.   Though both  are  trade  marks and   are registrable as such, each has its own distinct function.   While the House mark represents the image of the enterprise   from which  the  goods  emanate,  the  Product  mark  is  the   means by which goods are identified and purchased in the   market  place  and  it  the  focal  point  of  presentation  and   advertisement.”

37. In view of above discussion, it is clear that what was  

being  used  by  the  respondent  under  the  expression  

“Kalvert” was a “Brand name” and not a “House mark” as  

sought  to  be  alleged  by  the  respondent  and  has  been  

wrongly accepted by the Tribunal.  Therefore, the articles of  

assorted  jams,  pickles,  squashes,  cooking  sauces,  

chutneys,  syrups,  synthetic  vinegars  etc.  manufactured  

and sold by the respondent company under a brand name  

“Kalvert” were liable to be charged for excise duty at the  

rate prescribed in the Excise Law.

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38. The Tribunal committed manifest error in coming to  

its  conclusion  and  therefore  the  order  passed  by  the  

Tribunal  is  set  aside  and  the  order  dated  27.02.2002  

passed by the Commissioner of Central Excise, Mumbai is  

restored.   

39. The appeals are allowed to the aforesaid extent but  

leaving the parties to bear their own costs.

...............................................J                 (Dr.  MUKUNDAKAM  

SHARMA)

...............................................J                         (ANIL R. DAVE)

NEW DELHI, AUGUST  09, 2011.

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