By TIOL News Service

MUMBAI, FEB 15, 2017: THE appellant is engaged in the manufacture of venetian blinds, vertical blinds, roller binds. The case of the department is that these goods were manufactured under registered trade mark "Sunflex" belonging to M/s Hunter Douglas India Pvt. Ltd. and, therefore, the appellant was not entitled for the SSI exemption Notification No. 8/2003-CE.

The CE duty demand was confirmed by the original authority and upheld by the Commissioner (Appeals).

Aggrieved, the appellant is before the CESTAT.

The claim of the appellant is that the goods manufactured and sold by them do not bear the brand name of "Sunflex"; that it is only mentioned on the invoice and not affixed on the product; that the exemption can be denied only when the goods bear the brand name of another person and merely because the brand name is mentioned on the invoice, the appellant cannot be debarred from the eligibility of the exemption notification.

The AR submitted that the appellant had entered into an agreement with the brand name owner and as per clause 3(g) of the said agreement, the appellant was under obligation to use the trade mark on the products manufactured and supplied by them; that during search, sticker of "sunflex" brand was found in the factory of the appellant, which indicated that the said sticker was being used for affixing on the products. The AR also adverted to the statements of various customers wherein they admitted that they have purchased the "sunflex" range of venetian blinds, vertical blinds and roller blinds. It is further emphasized that even if it is assumed that the product is not bearing the brand name of "sunflex" then also since the identity of the goods with the brand name is used for trading the product and the buyer is purchasing only because it is "sunflex" range of goods, the transaction should be considered as sale of branded goods and SSI exemption is not admissible. Reliance is placed on the following decisions –

-  Australian Foods India (P) Ltd. – 2013-TIOL-03-SC-CX

-  Tubes &Structurals – 2015-TIOL-34-SC-CX

-  Grasim Industries Ltd.- 2005-TIOL-69-SC-CX-LB

-  Dempto Engineering Works ltd. – 2015-TIOL-85-SC-CX

-  Special Tools (P) Ltd. – 2015-TIOL-2157-HC-ALL-CX

After considering the submissions, the Bench observed –

++ As per the documents available it is clear that the appellant was a franchisee manufacturer of the company M/s Hunter Douglas India Pvt. Ltd. for the manufacture of "sunflex" brand venetian blinds, vertical blinds roller blinds. It is beyond imagination that after having franchisee arrangements the appellant will not use the brand name of "sunflex".

++ If it is so, the entire franchisee arrangements will be of no use for the reason that the buyers in the market purchase the goods only if the product bear the brand name of reputed organization. Therefore, it cannot be accepted that after having a franchisee arrangements with M/s. Hunter Douglas India Pvt. Ltd., the appellants have not used the brand name.

++ It is an admitted fact that the appellants have given description of the goods in the invoices which included the brand name. Therefore, unless until the brand name is affixed on the product, there is no purpose of mentioning the brand on the invoice. The invoice itself is an evidence that "sunflex" branded goods were being manufactured and sold by the appellants. It is not only the invoice which bear the description of "sunflex" brand goods but also the customers, in their statements, accepted that they were purchasing "sunflex" range of products that again shows that the customers were buying the products i.e. "sunflex" brand venetian blinds, vertical blinds, roller blinds. Otherwise there is no reason for the customers to mention "sunflex" brand.

Thereafter, the Bench adverted and examined the clauses of the agreement entered by the appellant with M/s. Hunter Douglas India Pvt. Ltd and observed –

+ From the above clauses, particularly clause 3(g) it is clear that the appellant was under obligation to prominently identify the products trademarks. With all these evidences, it is clear that the product manufactured and cleared by them, the appellant, bore the "sunflex" brand. Accordingly, as per para 4 of the Notification No. 8/2003 dated 01/03/2003, the appellant is not entitled for SSI exemption.

+ We find that even if brand is not affixed on the product but the product is sold by using the identity of brand, then also SSI exemption is not available. In the present case as per the customer's acceptance agreement, mention of brand on invoice clearly establishes that the goods with the identity of sunflex brand were being sold.

In fine, the impugned order was upheld and the appeals were dismissed.

In passing :  See Tidland Web Accessories 2017-TIOL-201-CESTAT-MUM.

(See 2017-TIOL-444-CESTAT-MUM)