By TIOL News Service

NEW DELHI, JUNE 04, 2015: THE appellant is a Small Scale Industrial Unit (SSI Unit) and is manufacturing Aerated Water under various brand names using the trade mark with the "Kalimark"/ 'M/s.Kali Aerated Water Works'. It sought exemption from payment of excise duty in terms of Notification 1/93-CE dated 28.2.1993 for the aforesaid goods manufactured in its factory. This has, however, been denied to the assessee by the Department on the ground that the brand name "Kalimark" has been used on the goods which belong to Shri K.P.R.Shakthivel and since the assessee is using the aforesaid brand name of the third party, by virtue of para 4 of the aforesaid Notification the exemption would not be allowed to the respondent. This stand taken by the respondent department has been accepted by the CESTAT in its impugned judgment.

The Tribunal has noted the fact that business of manufacture and sale of Aerated water was started in the name of 'Kalimark Aerated Water Works' by the HUF of which Shri P.V.S . K.Palaniappa Nadar was the Karta. Later on it was converted into a joint family business of Sh. Palaniappa Nadar and his three sons and a daughter. At some point of time the parties/partners fell apart and entered into a family settlement which is contained in Deed of Mutual Agreement dated 12.3.1993. The Tribunal has recorded that in terms of this Mutual Agreement signed between the parties the ownership of the aforesaid trademark/brand name 'Kalimark' no longer remained with the appellant assessee and it belongs to the other party. On this basis it arrived at the finding that the appellant has been using the trade mark/brand name of the third party.

Supreme Court found that the aforesaid observation is against the record and contrary to the Deed of Mutual Agreement which has been entered into between the erstwhile partners. It is clear from the records that the trade name ' Kalimark Aerated Water Works' and trade mark mentioned in the said agreement would remain vested in all the parties including the appellant and the appellant was also allowed to use the same. The agreement further provides that the user of this trade mark , therefore, shall not make any payment of royalty or remuneration to any other party. This very fact was correctly appreciated by the Commissioner who decided the appeal in favour of the appellant.

The Supreme Court found that the appellant has been using its own brand name 'Kalimark' and it belongs to the appellant. In view thereof, the case of the appellant is squarely covered in its favour by the judgment of this Court in CCE , Hyderabad IV vs. Stangen Immuno Diagnostics reported in 2015-TIOL-133-SC-CX.

(See 2015-TIOL-136-SC-CX)