By TIOL News Service

CHENNAI, APRIL 27, 2016: THE appellant is a manufacturer of jewellery under the brands "Tanishq" and "GoldPlus". Service Tax on branded jewellery was introduced in 2005. After paying duty for some time, the appellant discontinued marking the jewellery with 'Tanishq" and "GoldPlus" and started using the letters "Q" and "I" respectively. The appellant also intimated the department that they discontinued affixing the brand name and therefore excise duty is not attracted. Department issued Show Cause Notices demanding duty and confirmed the demands with penalties. Aggrieved by the same, the assessee is now in appeal before the CESTAT.

The appellant contended that once they decided not to affix their brand name they are not liable for excise duty. Whereas in the impugned order duty has been demanded on the ground that the letters "Q" and "I" embossed on the reverse of the jewellery have to be treated as brand name. The general practice in the jewellery trade is that jewellery will have identification mark to indicate the name of the person who made the jewellery, name of the job worker. As per the CBEC Circular dated 29.12.2005, if there is any doubt whether a particular jewellery is branded or not, he should refer the matter to the Board, but the Commissioner passed the impugned order without making any such reference.

After hearing both sides, the Tribunal held:

+ On the preliminary issue raised by the appellant that the adjudicating authority not followed the directions of Board's circular dt. 29.12.2005 and decided the issue without referring to the Board, in the present case, the adjudicating authority had no doubt on the issue and there was no seizure and regular show cause notices were issued and the charges/allegations were brought out in the said notices for demanding excise duty on branded jewellery. Therefore, there is no merit in the appellant's plea.

+ The Government has clarified that excise duty is leviable on articles of jewellery where brand name or trade name is indelibly affixed or embossed on the articles of jewellery and duty is not leviable on any jewellery which do not themselves bear any marking of trade name or brand name. The appellants, in the present case, embossed the mark or symbol or letter "Q" and "I" on the jewellery and it is in connection with sale of goods indicating the goods belonged to the appellant. The very fact that the goods bear the markings "Q" & "I" which were earlier cleared as "Tanishq" and "GoldPlus" logo clearly conforms to the definition of brand name stipulated in Note 12 to Chapter 71 and Explanationto the Notification 4/2005.

+ The appellant clearly admitted before the adjudicating authority that articles of jewellery which was earlier cleared under the brand name of "Tanishq" has now changed to letter "Q" and the logo "GoldPlus" is replaced by letter "I" and the product line is also maintained separately from the manufacture stage till the clearance and sale. The appellant's plea that letters "Q" and "I" are embossed only for the purpose of identification and not for the purpose of brand name is beyond acceptance as the appellants are one of the reputed branded jewellery manufactures in India manufactured and cleared branded jewellery under their brand name "Tanishq" & "GoldPlus" in the past and all of a sudden decided not to use the brand name/logo of "Tanishq" and "GoldPlus" instead they have started embossing mark i.e. "Q" and "I' and this act is nothing but replacement of one logo with other mark on the same product. Therefore the appellants relying Illustration II of Board's circular that they have only used these letters "Q" and "I" only for the purpose of identification is not justified and not applicable to the appellant's case.

+ The Apex Court in the case of CCE Trichy Vs Grasim Industries Ltd - 2005-TIOL-69-SC-CX-LB. and held laid down the principle which clearly held that a name or writing need not be a brand name or trade name in a sense it is normally understood. Even ordinary mark or letter is sufficient to indicate a connection between the product and the company.

+ The use of "Q" & "I" on the jewellery is to show the product is from Titan Industries and it established the intention to show the connection between the jewellery and M/s.Titan Industries. In addition to mark "Q" and "I", the appellant also embossed the mark "AEI" and "AE" which are marks to indicate persons who manufactured the jewellery. The jewellery manufactured and cleared by the appellant embossed with the mark of "Q" & "I" clearly satisfies the definition of branded jewellery defined in Chapter Note 12 of Chapter 71 of CET and the Explanation to the notification No.4/2005 and chargeable to excise duty. The demand of the differential duty confirmed by the adjudicating authority in the impugned order is liable to be upheld.

(See 2016-TIOL-1003-CESTAT-MAD)