Exceptions to the use of brand name:
There are however the following exceptions given to the usage of brand name i.e. the benefit of exemption under Notification No. 8/2003 would be available in the following cases even if goods bear the brand name/ trade name of another person:
(a) Manufacturers of component/parts of any machinery/equipment/appliance for use as original equipment in the factory: Where the manufacturer manufactures component/parts of any machinery, equipment or appliance for use as original equipment in the factory even if such components have a trade name or brand name, the exemption would be available by following the procedure laid in the Central Excise (Removal of Goods at Concessional Rate of Duty for Manufacture of Excisable Goods) Rules, 2001. This provision is there to cater to the needs of ancillary units which manufacture components for big industrial units. Such ancillary units used to mark their goods with the name of the large unit and refer to a code number or product number. They were being denied the exemption on the ground that the code number or product number is a brandname. The Madras High Court in BHEL Ancillary Association v. CCE 1990 (49) E.L.T. 33 had held that this code number or product number would not constitute a brand name.
(b) Goods bearing the brand name of KVIC/NSIC/SSIDC etc.: When the goods bear a brand name of Khadi and Village Industries Commission (KVIC) or a State Khadi and Village Industry Board or National Small Industries Corporation (NSIC) or a State Small Industries Development Corporation (SSIDC) or a State Small Industrial Corporation, such goods are entitled to SSI exemption.
(c) House mark in respect of medicinal preparations: The Supreme Court has held in Astra Pharmaceuticals P Ltd. v. CCE 1995 (75) E.L.T. 214 that in respect of medicinal preparations, the mark made by the manufacturers would be called a “house mark” and would not be the brand name. Therefore, the monograph which identifies a manufacturer’s name would not be a brand name.
(d) Assignment of brand name: In the case of CCE v. ESBI Transmission Private Ltd. 1997 (91) E.L.T. 292, the Division Bench of the Calcutta High Court held that if the brand name belonged to the foreign company, but the Indian company was given the exclusive right to use the same being the owner through assignment, then the benefits of the notification cannot be denied. The Tribunal decisions have also held that assignment of brand name is valid for availing the benefit of SSI exemption in the following cases:
(i) Opus India v. CCE 1992 (62) E.L.T. 447 (T)
(ii) Vikshara Trading and Investment P.Ltd. v. CCE 1996 (87) E.L.T. 499 (T)
(iii) CCE v. Bigen Industries 1999 (107) E.L.T. 213 (T)
(e) Raw materials bearing the brand name: When raw materials/inputs received by the SSI unit bear brand name of the manufacturer of raw material , SSI exemption is available as the brand name printed on raw material does not become brand name of the final product manufactured by SSI unit.
(f) Goods manufactured in rural area: When the goods bear the brand name of any person, such goods shall be eligible for SSI exemption if such goods are manufactured in a rural area.
| Rural area means the area comprised in a village as defined in the land revenue records, excluding –
(i) the area under any Municipal Committee, Municipal Corporation, Town Area Committee, Cantonment Board or Notified Area Committee. (ii) any area that may be notified as an urban area by the Central Government or a State Government. |
(g) The Larger Bench of the Tribunal in Intertec v. CCE 2001 (127) E.L.T. 609 (T-LB) has held that if the goods manufactured by the SSI unit fall outside paragraph 1 of the said notification, consequent to their being branded goods, payment of duty on such branded goods will not disentitle the other products from getting the benefits of the Notification.
(h) Account books, registers, writing pads and file folders: Account books, registers, writing pads and file folders falling under heading 4820 or 4821 of the First Schedule of the Central Excise Tariff are entitled to small scale exemption even if they bear a brand name or trade name whether registered or not, of another person.
(i) Packing materials: SSI exemption is available in case the specified goods are in the nature of packing materials and are meant for use as packing material by or on behalf of the person whose brand name they bear even if they bear the brand name of others. For the removal of doubts, it is hereby clarified that “packing material” includes labels of all kinds.
Relevant case law: In the case of CCE, Trichy v. Rukmani Pakkwell Traders 2004 (165) E.L.T 481 (S.C.), it was held by the Supreme Court that if there is more than one registered mark in respect of the same trade mark, then merely because the other person has the same registered mark in some other goods would not preclude one owner from getting benefit of exemption. However, it was also held that the use of even a part of brand name of another person indicating a connection in course of trade would be sufficient to disentitle a claim for SSI exemption.