sitemapHome | Registration | Job Portal for CA's | Expert Exchange | Currency Converter | Post Matrimonial Ads | Post Property Ads
News shortcuts: From the Courts | News Headlines | VAT (Value Added Tax) | Placements & Empanelment | Various Acts & Rules | Latest Circulars | New Forms | Forex | Auditing | Direct Tax | Customs and Excise | ICAI | Corporate Law | Markets | Students | General | Mergers and Acquisitions | Continuing Prof. Edu. | Budget Extravaganza | Transfer Pricing | GST - Goods and Services Tax
Latest Expert Exchange
л Budget Extravaganza »
 How Union Budget 2018 impacts individual taxpayers
  How Budget 2018 will be different due to GST
 This is how Budget 2018 announcements may help you save tax
 Here's why the government advanced the Budget date
 Will Budget 2018 Reduce Your Income Tax? 10 Expectations
 How Budget 2018 will be different due to GST
 Will Budget 2018 cut tax on switch from dividend to growth option in mutual funds?
 Startup eco-system looks forward to the budget for addressing tax dilemma
 High time to prioritise non-tax revenue in the Budget
 Govt may abolish dividend distribution tax in budget
 Budget making in the GST era: paradigm shift

Budget should clear the air on similarity of brand names
January, 16th 2012

Small Scale exemption for Central Excise Duty has been there for long but in 1994-budget and thereafter restrictions have been imposed on availing the exemption. The effect is if a small scale firm uses the brand name of another company, the exemption meant for small scale will not be admissible. This was done mainly to curtail the usage at that time by big firms to outsource their supplies through small scale and together muster a very huge amount of goods for further sale without paying duty at any stage.

However, this amendment brought in its wake several controversies, which still persist in spite of several court judgements. I am discussing here the latest one and also some important ones.

In one of the latest judgements in the case of CCE vs. Ace Auto Company Ltd. -2011(263)ELT3(SC), the issue was that the auto company, a small scale firm, used for its own products the brand name TATA Ace. These goods were supplied to TATA. It claimed that TATA Ace is different from TATA and, therefore, it cannot be held that it was using the brand name of TATA. Revenue held that TATA Ace obviously brings the connection with TATA and, therefore, the small scale exemption cannot be admissible. The Supreme Court held that in order to avail of the benefit of the exemption, the assessee must establish that his product is not associated with some other person. To put it differently, if it has to be shown that the assessee has not affixed the brand name of another person on his goods with the intention of indicating a connection between his goods and the goods of another person . The Supreme Court clarified that if the assessee is able to satisfy the Adjudicating Authority that there was no such intention, or that the user of the brand name was entirely fortuitous, it would be entitled to the benefit of the exemption.

The same view has been earlier expressed in another judgement CCE, Trichy vs. Grasim Industries Ltd. - 2005(183)ELT123(SC), where the Supreme Court observed that ....Even the name of some other company, if it is used for the purpose of indicating a connection between the product and that company, would be sufficient. It is not necessary that the name or the writing must always be a brand name or a trade name in the sense that it is normally understood. The exemption is only to such parties who do not associate their products with some other person.

In some other cases of brand name the issues were as below:

One of such issues is whether the exemption is admissible to a small firm which purchases the right to manufacture another product along with the brand name of the product from another company which company thereafter does not use that brand name any more. The Supreme Court ruled in such a case,namely CCE, vs. Vikshara Trading & Invest Ltd. 2003 (157) ELT 4 (SC), that when there was an assignment of trade mark or name in favour of another person, the benefit of the small scale exemption cannot be denied even if the trade mark is not registered. In a similar matter before the Tribunal in the case of Arco Whitney Ltd. vs. CCE, Pune 2006 (193) ELT 217 (Tri-Mumbai) ,the Tribunal ruled that the correct legal position is that a brand name being purchasable, it becomes the purchasers brand name and it does entitle the purchaser to small-scale exemption.

The conclusion that emerges from all the various judgements on the issue is that the denial of the small-scale exemption cannot be on the ground that the brand name was with somebody else earlier, or that it was not registered or that the brand name was obtained wrongly. So long as the small-scale firm continues to be the legal owner, it is entitled to the exemption.

If any brand name is similar, it is still to be construed as using a brand name of another when it is clear that the intention was to use the other person's brand name. The next Budget should clearly contain this provision.

Home | About Us | Terms and Conditions | Contact Us
Copyright 2018 CAinINDIA All Right Reserved.
Designed and Developed by Binarysoft Technologies Pvt. Ltd.
Enterprise Resource Planning Solutions ERP Solutions Enterprise Resource Planning Software Solutions ERP Software Solutions Supply Chain Management Solutions SCM Solutions Supply Chain Management Software Solutions SCM Software Solutions Enterprise Resource Planning Solutions India ERP Solutions India Enterprise Resource Planning Software Solutions India ERP Software Solutions India Supply Chain Management Solutions India SCM Solutions India Supply Chain Management Software Solutions India SCM Software Solutions India

Transfer Pricing | International Taxation | Business Consulting | Corporate Compliance and Consulting | Assurance and Risk Advisory | Indirect Taxes | Direct Taxes | Transaction Advisory | Regular Compliance and Reporting | Tax Assessments | International Taxation Advisory | Capital Structuring | Withholding tax advisory | Expatriate Tax Reporting | Litigation | Badges | Club Badges | Seals | Military Insignias | Emblems | Family Crest | Software Development India | Software Development Company | SEO Company | Web Application Development | MLM Software | MLM Solutions