M/S. RDB TEXTILES LTD. versus COMMISSIONER OF CENTRAL EXCISE AND SERVICE TAX, KOLKATA-IV COMMISSIONERATE on 13 February 2018

[2018] 1 S.C.R. 1007

M/S. RDB TEXTILES LTD.

v.

COMMISSIONER OF CENTRAL EXCISE AND SERVICE TAX, KOLKATA-IV COMMISSIONERATE

(Civil Appeal No. 8534 of 2015)

FEBRUARY 13, 2018

[R. F. NARIMAN AND NAVIN SINHA, JJ.]

Central Excise Act, 1944 – Exemption Notification no.12/2011-CE dated 1.3.2011 and Notification no.30/2004 dated9.7.2004 – Brand name of another unit – Jute bags manufacturedby appellants and supplied to the PSUs, various State Governmentsand Governmental agencies for use in packing of foods grains soldthrough the PDS – Exemption under Notification no.30/2004 dated9.7.2004 denied on the ground that affixing the name, logo andparticulars of buyers like FCI and the State Governments amountedto affixing on the jute bags a “brand name” – Held: In the instantcase, what was in fact affixed to the jute bags was the name of theprocurer agency in question such as the FCI, the State Governmentof Punjab and so on, the crop year, the name of the jute millconcerned, its BIS certification number and the statement that thefood grains are manufactured in India – Such markings were madeunder compulsion of law, which are meant for identification,monitoring and control by Governmental agencies involved in thePDS – Such markings do not enhance the value of the jute bags inany manner nor is it the intention of the appellants to so enhancethe value of jute bags, which is necessary if excise duty is to beimposed – Markings on the jute bags are not for the purpose ofindicating a connection in the course of trade between the jute bagand some person using such name or mark – This being the case, itis obvious that there is no “brand name” involved in the facts of theinstant cases – Appellant was entitled to the benefit of exemption –Jute Packaging Materials (Compulsory Use in PackingCommodities) Act, 1987 – Essential Commodities Act, 1955 – Juteand Jute Textiles Control Order, 2000 – Notification no.12/2011-CE dated 1.3.2011 – Notification no.30/2004 dated 9.7.2004.

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ACirculars/Government Orders/Notification: Circulars –Binding effect of – Held: The circulars that are issued by the Ministryof Finance are binding on the Department of Central Excise.

Allowing the appeals, the Court

HELD: 1. A reading of letter dated 18.3.2011 written byBthe Jute Commissioner to the Commissioner (Central Excise)and circular dated 21.6.2011 issued by the Ministry of Financewould show that merely because the name of an institution isprinted or embroidered on articles would not mean that theywould become branded products. A brand name, in addition toCthe name or logo, would have to be given in order to attract exciseduty. Also, mere affixing of the name of a manufacturer wouldnot constitute a brand name. [Para 12] [1016-D-E]

2.1 A typical requisition order issued by the Directorate ofSupplies and Disposals required the emblem of the purchaserDand excise duty payable by the purchaser to be printed on thejute bags manufactured by the appellants. [Para 13] [1016-F]

2.2 A typical supply order placed by the Jute Commissioneralso required, as a matter of law, that the purchaser’s name beput together with the name of the manufacturer’s mill as well asEthe BIS certification for purposes of identification of the jute bagsto be used in the PDS. [Para 13] [1017-A]

3. In the instant case, what was in fact affixed to the jutebags was the name of the procurer agency in question such asthe FCI, the State Government of Punjab and so on, the cropFyear, the name of the jute mill concerned, its BIS certificationnumber and the statement that the food grains are manufacturedin India. It is clear that all these markings have, on the pain ofpenalty, to be done by the manufacturers of the jute bags, giventhe Jute Control Order and the requisition orders madethereunder. Obviously, such markings are made by compulsionGof law, which are meant for identification, monitoring and controlby Governmental agencies involved in the PDS. Neither do suchmarkings enhance the value of the jute bags in any manner nor isit the intention of the appellants to so enhance the value of jutebags, which is necessary if excise duty is to be imposed. This H

flows from the expression “…for the purpose of indicating, or soas to indicate, a connection in the course of trade between theproduct and some person using such name or mark…”. In thepresent case, the markings on the jute bags are not for thepurpose of indicating a connection in the course of trade betweenthe jute bag and some person using such name or mark. Themarkings are by compulsion of law only in order thatGovernmental authorities involved in the PDS may identify andsegregate the aforesaid jute bags. This being the case, it is obviousthat there is no “brand name” involved in the facts of the presentcases. [Para 18] [1020-F-H; 1021-A-B]

Kohinoor Elastics (P) Ltd. v. CCE (2005) 7 SCC 528 –distinguished.

CCE v. Stangen Immuno Diagnostics [2015] 4 SCR528 : (2015) 11 SCC 761 ; CCE v. Sanghi Threads(2015) 14 SCC 701 – relied on.

4. The circulars that are issued by the Ministry of Financeare binding on the department of Central Excise. [Para 19] [1021-B]

CIT v. Trans Asian Shipping Services (P) Ltd. [2016] 3SCR 337 : (2016) 8 SCC 604 – relied on.

CIVIL APPELLATE JURISDICTION : Civil Appeal No. 8534of 2015.

From the Order dated 30.06.2015 of the Customs, Excise andService Tax Appellate Tribunal, East Zonal Branch, Kolkata in AppealNo. Excise Appeal – 75676 of 2014

WITH

C. A. Nos. 8703, 8725-8726, 8769, 8565, 9153, 8894-8895, 8896-8897, 13331, 9242-9243, 9087, 9249, 9144, 8885-8886, 8890-8891, 13330,8706, 8743, 9146-9147, 8759-8760 of 2015.

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S. K. Bagaria, Niraj Kishan Kaun, Sr. Adv, Amit Agarwalla,Saurav Agarwal, Sourabh Bagaria, Kapil Rustagi, Ajit Singh, SanyatLodha, Vivek B., Ms. Aakriti Dawar, Sushal Tewari, T. R. B. Sivakumar,Adv for the Appellant.

K. Radhakrishnan, Sr. Adv, Rupesh Kumar, Ms. Nisha Bagchi,BMs. Sunita Rani Singh, Ms. Pooja Sharma and B. Krishna Prasad, Advsfor the Respondents.

The Judgment of the Court was delivered by

R. F. NARIMAN, J. 1. The present appeals arise out of aCjudgment dated 30.6.2015, passed by the Customs, Excise and ServiceTax Appellate Tribunal (CESTAT), in which the CESTAT has deniedexemption under excise notifications, referred to hereinafter, in respectof jute bags manufactured by the appellants and supplied to the FoodCorporation of India (FCI), various State Governments and GovernmentalDagencies for use in packing of food grains sold through the PublicDistribution System (PDS). The said exemption has been denied for aperiod of two years by holding that affixing the name, logo and particularsof buyers like the FCI and State Governments amounts to affixing onthe jute bags a “brand name”.

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2. In exercise of powers conferred by Section 3(1) of the JutePackaging Materials (Compulsory Use in Packing Commodities) Act,1987 (hereinafter referred to as the “Jute Act”), the Central Governmenthas issued orders, from time to time, directing the minimum percentageof food grains required to be packed, from raw jute produced in India, inFjute bags manufactured in India to protect the jute industry.

3. At the same time, in exercise of powers conferred by Section 3of the Essential Commodities Act, 1955, the Central Government hasmade the Jute and Jute Textiles Control Order, 2000. In exercise ofpowers conferred by the Jute & Jute Textiles Control Order, the JuteGCommissioner issues specific orders, from time to time, to jute millsrequiring them to produce specified categories and stated quantities ofjute bags, to sell the same to such persons as may be specified by theDirector (Supplies and Disposals), who issues requisition orders, whereinthe names of the persons to whom supply is to take place, prices of jute H

bags and other particulars are given. Such prices are exclusive of exciseduty. The aforesaid requisition orders are then followed by the issuanceof supply orders wherein, inter alia, further details of the prices, deliveryperiod, terms of delivery and markings are mentioned.

4. Shri S.K. Bagaria and Shri Neeraj Kaul, learned senior counselappearing on behalf of the appellants, referred us to the demands thathave been made based, on the amended exemption notifications, andhave painstakingly taken us through the record, including theCommissioner’s order dated 7.3.2014 and the impugned judgment of theCESTAT. According to learned counsel, the exemption that was grantedqua jute bags under the Central Excise Act, 1944 was lifted for a periodof two years, from 1.3.2011 till 1.3.2013, only if goods which weremanufactured bore a brand name or were sold under a brand name. Ifthe definition of “brand name” is to be seen, according to learned counsel,it will be clear that a “brand name” is a name or a mark which is used inrelation to a product for the purpose of indicating a connection in thecourse of trade between the product and some person using such nameor mark. According to learned counsel, using the name of the buyer/procurer of food grains is obviously not a brand name that results inindicating a connection in the course of trade between the jute bag andthe said buyer. They argued that the show cause notices proceeded onthe footing that using the name of the manufacturer and an emblem ofthe manufacturer resulted in the use of a brand name, but that theCESTAT, realizing that this could not be so, founded its judgment on thebasis of using the name of the buyer/procurer of food grains and thatthis would be beyond the show cause notices and also, therefore, theCESTAT decision should be set aside. They also argued, relying uponseveral judgments, that, in the present case, there is no “brand name”,as defined, at all, and that, therefore, the show cause notice, theCommissioner’s order as well as the CESTAT’s order are all incorrect.They further relied upon a letter dated 18.3.2011 and a Ministry of Financecircular dated 21.6.2011 to buttress their submissions. According tothem, the Commissioner has not referred to these documents at all andthe CESTAT merely brushes away the aforesaid documents, which goto the root of these cases. They also cited decisions on how such circularsare binding on the department. According to them, the CESTAT grosslyerred in relying heavily upon the judgment in Kohinoor Elastics (P)Ltd. v. CCE, (2005) 7 SCC 528, as that judgment dealt with a specific A

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Aexemption notification and held that as a brand name was assumed tohave been used, on the facts of that case, no argument was addressedas to whether the particular mark used was a brand name as defined.Further, they said that the judgment was clearly distinguishable, in that,in the exemption notification in that case, the brand name had to be usedby small scale units and could not be used by a third party, which wasBfound to be the case on the facts of that case. According to them,therefore, the CESTAT was wholly incorrect in its finding that a “brandname” had been used on the facts in these cases.

5. Shri Radhakrishnan, learned senior counsel appearing on behalfCof the Revenue, has placed before us various Sections of the Jute Actand Section 5A of the Central Excise Act. It is his submission that theJute Act cannot control Section 5A of the Central Excise Act andexemption notifications issued thereunder. He went on to read thedefinition of brand name and stated that there was no need to show thata brand name was being used for monetary advantage, so long as it was,Din fact, being used, which is clear on the facts of these cases. He thenargued that what was, in fact, printed on the jute bags, as per the buyer’sspecification, was, inter alia, the name of the manufacturer as well asstrips of different colours, thereby indicating that not only was themanufacturer’s name disclosed, but that the colour strip would be aE“mark”, leading to the fact that there is a “brand name” in these cases.According to him, a literal interpretation of the definition of brand namewould show that the CESTAT is correct. Also, according to learnedcounsel, the CESTAT correctly relied upon the judgment in KohinoorElastics (supra) to arrive at a conclusion, based on the same definitionof brand name, that there is a name or mark used, in the facts of theseFcases, and which shows not only the manufacturer’s name, but thebuyer’s name or procurer’s name as well.

6. Before dealing with the facts of these cases in some detail, it isimportant to first set out the exemption provided under Notification 30/2004 dated 9.7.2004. This notification, issued under Section 5A of theGCentral Excise Act, exempts excisable goods mentioned thereunder inpublic interest. Item 16 of the aforesaid notification exempts all goodsfalling within Central Excise Tariff Entry 63, except goods falling within6307.10. The Central Excise Tariff, with which we are concerned, is H

M/S. RDB TEXTILES LTD. v. COMMR. OF CENTRALEXCISE AND SERVICE TAX, KOLKATA-IV [R.F.NARIMAN, J.]

6305, and in particular, 63051030 and 63051040, where the rate of dutyis 10%. Thus, upto 1.3.2011, it is clear that all the goods mentioned inCentral Excise Tariff Entry 63 were exempt from payment of exciseduty. However, by notification 12/2011 dated 1.3.2011, Item 16 wassubstituted, in which what was exempted was “all goods, other thanthose bearing a brand name or sold under a brand name”.

7. Brand name, for the purpose of Chapter 63, is defined as follows:

“(iv). In relation to products of this Chapter, “brand name” meansa brand name, whether registered or not, that is to say, a name ora mark, such as a symbol, monogram, label, signature or inventedwords or any writing which is used in relation to a product, for thepurpose of indicating, or so as to indicate, a connection in thecourse of trade between the product and some person using suchname or mark with or without any indication of the identity of thatperson.”

8. The aforesaid situation carried on for two years till 1.3.2013,when notification No.11/2013 reinstated the previous entry, withoutexcepting goods bearing or sold under a brand name and, thus, revertedto the position that existed between 2004 and 2011, which is that jutebags, with or without brand names, were completely exempt from exciseduty.

9. The facts of Civil Appeal No.8534 of 2015 will now be referredto. On 7.3.2011, pursuant to the amended notification of 1.3.2011, theSuperintendent (Central Excise) sent a notice to the appellant that asthey were selling goods which bore a brand name, excise duty, at therate of 10%, would be imposed on the aforesaid goods.

10. A letter dated 18.3.2011 was then written, by the JuteCommissioner to the Commissioner (Central Excise), in which it wasstated:

“2. It may be mentioned in this connection that jute mills printcertain items on jute bags as per the requirements of the buyersand directions of the Jute Commissioner. The items printed onjute bags and the reasons for such printing are stated below:

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3. The jute mills have to print the items on the bags as per therequirements of the buyers and the Notification No. S.O. 698(E)dated 04.07.2002 issued by the Jute Commissioner.

4. Reasons for printing the bags are given below:

Item no. 1&2.

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The Notification No. S.O. 698(E) dated 04.07.2002 (copyenclosed) issued by the Jute Commissioner is to distinguish betweenIndian jute products and imported jute products and securecompliance of the stipulation of the order issued under JPM Act,1987. These orders, inter alia, stipulate that “percentage of totalFproduction of certain commodities or class or commodities requiredto be packed in jute packaging material manufactured in Indiafrom raw jute produced in India.” A copy of the latest order dated27.08.2010 and JPM Act, 1987 are enclosed.

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These are printed on bags so that buyers can identify their productsand the year when food grains or other material is packed. If abuyer prefers jute products as per BIS standard, jute mill has tomanufacture bags conforming to BIS standard and it is provedBIS standard only when it is marked BIS with licence number.

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5. Thus jute bags printed with above items by jute mills are part ofspecifications and so where bearing any brand name of the millcompany, may not be treated as branded bags in the context oflevies of duties. By printing the items on bags, jute mills are notgetting any kind of extra mileage in promoting their products.

6. In view of the above, it is requested that the Notice dated08.03.2011 served by the Office of the Superintendents of CentralExcise under the Division of Kol-IV to various jute mills forpayment of 10% Adv. Duty may be withdrawn.”

11. This was followed by a circular dated 21.6.2011 issued by theMinistry of Finance which stated:

“Subject: Clarification on issues pertaining to the levy ofexcise duty on branded readymade garments and made-uparticles of textiles–Regarding.

Board has received representations from trade and industry seekingclarification on certain issues pertaining to the levy of excise dutyon readymade garments/made–ups that either bear or are soldunder a brand name. These issues are:-

(i) Applicability of the mandatory levy of excise duty on schooluniforms, uniforms for private security guards, companies, hotels,airlines etc. and made–ups such as linens, towels etc. bearing thename or logo of a hotel, restaurant or airlines etc; and

(ii) Applicability of mandatory levy of excise duty on made-upssuch as blankets bearing the name of the manufacturer and suppliedto the Ministry of Defence or its organizations.

2. The matter has been examined. On the issue of applicability ofexcise duty on uniforms or made-up articles like quilt, blankets,towels, linen etc. bearing the name or logo of a school, securityagency, company, hotel or airline etc, it is clarified that suchproducts would not merit treatment as “branded” products merelybecause the name of the school, institution or company or theirlogo is either printed, embroidered or etched on them. This isequally true of made ups such as towels, linen etc. bearing thename of the hotel, restaurant or airlines. In all these cases, thereis no nexus between such a name or logo & the product at the A

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Atime of its sale which is essential ingredient in the definition of theterm “brand name”. Unless such garments/made–ups also bear abrand name in addition to the name or logo of the school, securityagency, hotels, airlines and company, such goods would not attractthe excise duty. It is also gathered that in some cases, apart fromthe name or logo of such organizations, the name of the tailor orBmanufacturer is affixed on such garments. However, mere affixingof name of the tailor or manufacturer would not constitute a brandname. Another related issue is the applicability of the mandatoryexcise duty to blankets which are supplied to the defenceestablishment, armed forces, police forces etc. against tendersCthat stipulate that the name of the manufacturer should be clearlyindicated or marked on the product. As pointed out above, affixingthe name of the manufacturer on such goods would not, by itself,bring them within the ambit of branded goods.”

12. A reading of the aforesaid letter and circular would show thatDmerely because the name of an institution is printed or embroidered onarticles would not mean that they would become branded products. Abrand name, in addition to the name or logo, would have to be given inorder to attract excise duty. Also, mere affixing of the name of amanufacturer would not constitute a brand name. Given the aforesaidtwo documents, the Superintendent (Central Excise) did not go aheadEwith the notice dated 7.3.2011.

13. A typical requisition order issued by the Directorate of Suppliesand Disposals required the emblem of the purchaser and excise dutypayable by the purchaser to be printed on the jute bags manufactured bythe appellants. Also, what was required by the aforesaid requisition orderFwas the following:

“Branding: Every bag shall be screen printed in dark navy bluecolour (darkest possible) with the emblems as per clause 8 with thefollowing:Ga) Identification of procurement agency (containing insignia andname or short name or both as advised by the procurement agency).

b) Rabi 2013-14

c) Short name of mill in capitals and CM/L No.

d) “MANUFACTURED IN INDIA”

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M/S. RDB TEXTILES LTD. v. COMMR. OF CENTRALEXCISE AND SERVICE TAX, KOLKATA-IV [R.F.NARIMAN, J.]

A typical supply order placed by the Jute Commissioner alsorequired, as a matter of law, that the purchaser’s name be put togetherwith the name of the manufacturer’s mill as well as the BIS certificationfor purposes of identification of the jute bags to be used in the PDS.

14. Long after the exemption notification of 1.3.2013, by whichall jute bags were exempt whether branded or not, a show cause noticewas issued on 17.12.2013 for the period from 1.3.2011 to 31.7.2013demanding a sum of Rs.30,49,72,784/- by way of excise duty.

15. The learned Commissioner, by its order dated 7.3.2014,confirmed the show cause notice, even for the period beyond 1.3.2013,as follows:

“4.7 On taking note of such arguments advanced by the saidassessee, I find that the said assessee have erred in fundamentalaspects of definition of “brand name” under Chapter Note 5 ofChapter 63. When goods are bought and sold that would constitutea market. In the instant case, the said assessee sold the jute bagsto their customers, and such goods, allegedly being branded ones,it cannot be contended that the said branded goods were not soldin the market. Further, as per definition of “brand name” underChapter Note 5 of Chapter 63, “brand name” may not benecessarily a name, as wrongly contended by them, but any writing,mark, invented words may constitute “brand name” under thesaid definition. Here, the printings/writings on the jute bags satisfythe definition of “brand name” under Chapter Note 5 of Chapter63, as rightly alleged in the impugned Show Cause Notice.

4.8 On perusal of copy of notification no. nil dated 04.07.02 issuedby the Jute Commissioner and further clarification given by thesaid authority vide his letter dated 18.03.11, I find that some of theprintings/writings contained in the body of jute bags as perrequirement of the said Textile Ministry’s Notification, as opinedby the Jute Commissioner, and such goods cannot be treated asbranded goods as viewed by him. In this context, I find thatpersuasive value of the Jute Commissioner’s views in the mattermay not be ruled out or brushed aside at one stroke, but as aquasi-judicial revenue authority, I am to go by the settled principlesof law that nothing can be imported in the wordings of the statutoryprovisions, and for that matter, Chapter Notes require to be readin its stricter terms. Since the ingredients of the definition of “brand A

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1018SUPREME COURT REPORTS

Aname” are present in the impugned jute bags, I am inclined to holdthat such goods bear brand name to consider them as brandedgoods, for the purpose of levy of Central Excise duty for the restperiod i.e. March, 2011 to February, 2013 is also sustainable.”

16. The CESTAT, by the impugned order, set aside the penaltyBthat was imposed and stated that the longer period of limitation couldnot be availed in the facts of these cases. However, relying stronglyupon this Court’s judgment in Kohinoor Elastics (supra), it came tothe conclusion that since the jute bags had a brand name, the exemptioncontained in the amended notification of 1.3.2011 would not apply to theappellants. In dealing with the Finance Ministry circular dated 21.6.2011,Cthe CESTAT brushed aside the same stating:

“Further, we find that the circular bearing no. 947/8/2011-CX dated21.06.2011 referred to by the Appellant in the context of levy ofexcise duty on garments and also it is not binding on theinterpretations advanced by the courts as has been held by theDHon’ble Supreme Court in the case of CCE, Bolpur vs. RatanMelting and Wire Industries, 2008 (231) ELT 22 (SC).”

17. The very definition of “brand name”, which has been referredto hereinabove, has come up for consideration in several judgments ofthis Court. In CCE v. Stangen Immuno Diagnostics, (2015) 11 SCCE761 at 763, this Court, in paragraph 3, set out the definition of brandname, which is the same as the definition in the present case. This Courtthen went on to hold:

“12. The central idea contained in the aforesaid definition is thatthe mark is used with the purpose to show connection of the saidFgoods with some person who is using the name or mark. Therefore,in order to qualify as “brand name” or “trade name” it has to beestablished that such a mark, symbol, design or name, etc. hasacquired the reputation of the nature that one is able to associatethe said mark, etc. with the manufacturer. We are supported inGthis view by series of judgments of this Court in Tarai Food Ltd.v. CCE [Tarai Food Ltd. v. CCE, (2007) 12 SCC 721] theexpression “brand name” was explained in the following terms:(SCC p. 723, paras 7 & 9)

“7. The words brand name connotes such a mark, symbol, designor name which is unique to the particular manufacture which when H

used on a particular product would establish a connection betweenthe product and the manufacturer.

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9. Furthermore the definition of the words ‘brand name’ showsthat it has to be a name or a mark or a monogram, etc. which isused in relation to a particular product and which establishes aconnection between the product and the person. This name ormark, etc. cannot, therefore, be the identity of a person itself. Ithas to be something else which is appended to the product andwhich established the link.”

xxx xxx xxx

16. We would also like to reproduce the following observationfrom CCE v. Bhalla Enterprises [CCE v. Bhalla Enterprises,(2005) 8 SCC 308] : (SCC p. 311, para 6)

“6. The apprehension of the assessees that they may be deniedthe exemption merely because some other traders even in a remotearea of the country had used the trade mark earlier is unfounded.The notification clearly indicates that the assessee will be debarredonly if it uses on the goods in respect of which exemption is sought,the same/similar brand name with the intention of indicating aconnection with the assessees’ goods and such other person oruses the name in such a manner that it would indicate suchconnection. Therefore, if the assessee is able to satisfy theassessing authorities that there was no such intention or that theuser of the brand name was entirely fortuitous and could not on afair appraisal of the marks indicate any such connection, it wouldbe entitled to the benefit of exemption. An assessee would alsobe entitled to the benefit of the exemption if the brand name belongsto the assessee himself although someone else may be equallyentitled to such name.”

17. These observations bring out two significant aspects, namely:

(1) As per the notification, the assessee would be debarred only ifit uses on the goods in respect of which exemption is sought, thesame/similar brand name with the intention of indicating aconnection with the assessees’ goods and such other person oruses the name in such a manner that it would indicate such A

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Aconnection. If there is no such intention or that the user of thebrand name was entirely fortuitous and could not on a fair appraisalof the marks indicate any such connection, it would be entitled tothe benefit of exemption.

(2) The assessee would also be entitled to the benefit of exemptionBif the brand name belongs to the assessee himself although someoneelse may be equally entitled to such name.”

(at pages 766, 767-768)

To similar effect is the judgment of this Court in CCE v. SanghiThreads, (2015) 14 SCC 701 at 702, wherein it was held that:C

“3. Challenging the order of CESTAT, the present appeal ispreferred. We find from the narration of the aforesaid facts that itis held that the monogram used by the respondent is nothing butits own house-mark and is used for identification of the Groupand not a brand name for the identification of the product. WhatDis emphasised is that the monogram does not belong to any thirdparty but that belongs to the Sanghi Group and is therefore, in-house monogram. On these facts, we are of the opinion that thecase is squarely covered by the judgment of this Court in CCE v.Stangen Immuno Diagnostics [(2015) 11 SCC 761 : (2015) 318EELT 585] decided on 19-3-2015.”

18. It is obvious that, on the facts of these cases, what is in factaffixed to the jute bags is the name of the procurer agency in questionsuch as the FCI, the State Government of Punjab and so on, the cropyear, the name of the jute mill concerned, its BIS certification numberand the statement that the food grains are manufactured in India. It isFclear that all the aforesaid markings have, on the pain of penalty, to bedone by the manufacturers of the jute bags, given the Jute Control Orderand the requisition orders made thereunder. Obviously, such markingsare made by compulsion of law, which are meant for identification,monitoring and control by Governmental agencies involved in the PDS.GNeither do such markings enhance the value of the jute bags in anymanner nor is it the intention of the appellants to so enhance the value ofjute bags, which is necessary if excise duty is to be imposed. This flowsfrom the expression “…for the purpose of indicating, or so as to indicate,a connection in the course of trade between the product and some personusing such name or mark…”. In the present case, the markings on theH

jute bags are not for the purpose of indicating a connection in the courseof trade between the jute bag and some person using such name ormark. The markings are by compulsion of law only in order thatGovernmental authorities involved in the PDS may identify and segregatethe aforesaid jute bags. This being the case, it is obvious that there is no“brand name” involved in the facts of the present cases.

19. Equally, it is clear that circulars that are issued by the Ministryof Finance are binding on the department of Central Excise, there beingno judgment by this Court laying down the law contrary to such circulars.This is a well settled proposition as laid down in paragraph 30 of CIT v.Trans Asian Shipping Services (P) Ltd., (2016) 8 SCC 604 at 621.

20. However, since heavy reliance was placed on the judgmentof this Court in Kohinoor Elastics (supra) by the CESTAT, it has becomenecessary for us to deal with the aforesaid judgment. The exemptionnotification, which was involved on the facts of that case, was a notificationdated 28.2.1993. The relevant portion of the notification, with which theCourt was concerned, is set out in paragraph 4 as follows:

“The exemption contained in this notification shall not apply to thespecified goods, bearing a brand name or trade name (registeredor not) of another person:

Provided that nothing contained in this paragraph shall be applicableto the specified goods which are component parts of anymachinery or equipment or appliances and cleared from a factoryfor use as original equipment in the manufacture of the saidmachinery or equipment or appliances and the procedure set outin Chapter X of the said Rules is followed:

Explanation IX.—‘Brand name’ or trade name’ shall mean abrand name or trade name, whether registered or not, that is tosay a name or a mark [Code number, design number, drawingnumber, symbol, monogram, label], signature or invented word orwriting which is used in relation to such specified goods for thepurpose of indicating, or so as to indicate a connection in the courseof trade between such specified goods and some person usingsuch name or mark with or without any indication of the identityof that person.”

(at page 530)

21. The judgment of this Court turned on the fact that the exemptioncontained in the notification shall not apply to specific goods which bear A

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Aa brand name of another person. It may first be noticed that there wasno argument that the particular brand name concerned, on the facts ofthat case, could not be said to be a “brand name” at all, which is whathas been argued before us. Further, it was held, on the facts of thatcase, that:

B“It is an admitted position that the appellants are affixing the brand/trade name of their customers on the elastics. They are being soaffixed because the appellants and/or the customer wants toindicate that the “goods (elastic)” have a connection with thatcustomer. This is clear from the fact that the elastics on whichbrand/trade name of ‘A’ is affixed will not and cannot be used byCany person other than the person using that brand/trade name. Asset out hereinabove once a brand/trade name is used in the courseof trade of the manufacturer, who is indicating a connectionbetween the “goods” manufactured by him and the person usingthe brand/trade name, the exemption is lost. In any case it cannotDbe forgotten that the customer wants his brand/trade name affixedon the product not for his own knowledge or interest. The elasticsupplied by the appellants is becoming part and parcel of theundergarment. The customer is getting the brand/trade nameaffixed because he wants the ultimate customer to know thatthere is a connection between the product and him.E

(at page 532-533)

22. The facts of these cases are far from the facts in KohinoorElastics (supra). In Kohinoor Elastics (supra), it was found that, asa matter of fact, the customer wanted the brand name affixed on theproduct because he wanted the consumer to know that there is aFconnection between the product and him. This is very far from the factsof the present case, in that, as has been held by us above, it is clear thatthe markings required on the jute bags are compulsory, being requiredby the Jute Commissioner, and are not for the purpose of enhancing thevalue of the jute bags by indicating a connection in the course of tradeGbetween the aforesaid products and the manufacturer of those products.23. This being the case, the appeals are, therefore, allowed andthe judgment of the CESTAT is aside.

H

Devika Gujral

Appeals allowed.