COMMISSIONER OF CENTRAL EXCISE, CHANDIGARH versus M/S KHANNA INDUSTRIES AND ORS.

Citation: [2006] SUPP. 9 S.C.R. 725 · Decided: 28-11-2006 · Supreme Court of India · Bench: ARIJIT PASAYAT · Disposal: Case Partly allowed

Judgment (excerpt)

COMMISSIONER OF CENTRAL EXCISE, CHANDIGARH 
A 
v. 
MIS KHANNA INDUSTRIES AND ORS. 
NOVEMBER 28, 2006 
[ ARIJIT PASAYA T AND S.H. KAPADIA, JJ.] 
Central Excise Tariff Act, 1985; Sub-headings 8481.80 and 8481.99; 
Notific_ation No. 175186-CE: 
B 
Exemption Notification-Applicability of-Assessees manufacturing C 
brass sanitary fittings affixing thereon label printing brand name of another 
firm and availing exemption under a Notification-Denying the exemption, 
Revenue demanded differential amount of duty-On appeal, CEGA T remanded 
the matter to Revenue for de novo decision-Revenue confirmed demand of 
duty-Reversed by Appellate Authority-Affirmed by CEGAT-On appeal, D 
Held: Notification in question is goods specific-Manufacturer claiming 
exemption must be eligible in respect of the specified goods in question in 
terms of the Notification-Since emphasis is on specific goods, order of 
CEGAT indefensible-Assessees uses brand name of a trader and not that of 
a manufacturer of brass sanitary fittings-Intention of legislature is clear as 
indicated in the Notification-Hence, assessees cannot claim benefit under E 
the Notification-Interpretation of Statutes. 
Extended period of limitation-Applicability of-Held: Since the issue 
was not considered by CEGAT, the matter remanded for consideration of the 
issue afresh by CEGAT. 
F 
Respondents manufact11re Brass Sanitary Bathroom fittings falling 
under Sub-heading 8481.80 and 8481.99 of the Schedule to the Central Excise 
Tariff Act, 1985. They were using brand name "ARK" of Mis. Arkson Pvt. 
Ltd. on the product. All the respondents were availing exemption under 
Notification No.175/86-CE. Proceedings were initiated against them for G 
demand of differential amount of duty as brand name of another firm was used 
by them. The matter was decided by the Revenue holding that the respondents 
were affixing on specified goods the brand name of another firm, thus, not 
eligible for grant of exemption under the Notification and also there was 
725 
H 
726 
SUPREME COURT REPORTS (2006] SUPP. 9 S.C.[l. 
A suppression on the part of the respondents. On appeal filed by the Assessees, 
CEGAT remanded the matter for de novo decision after arriving at a finding 
in regard to the eligibility to claim exemption under the Notification. The 
Tribunal, however, gave specific finding that stylised "ARK" is a trade name 
of Mis. Arkson within the meaning ofrele"\'ant para of Notification No.175/ 
86-CE. On remand, Revenue confirmed the demand of duty and imposed penalty 
B on all the respondents/assessees. Revenue gave findings to the effect that the 
respondents had started amxing stylised brand name "ARK" w.e.f. September, 
1991 and not from April, 1992 as contended and extended period oflimitation 
was invokable as the fact regarding manufacture of the goods affixed with 
brand name of another firm was never brought to the knowledge of the Revenue. 
C Aggrieved, the respondents filed appeals which were allowed by the Appellate 
Authority. Revenue preferred appeals before the CEGA T which endorsed the· 
view of the Appellate Authority, but did not record any finding on the question 
of extended period of limitation. Hence the present appeals. 
Revenue contended that the goods were cleared by the respondents who 
D are manufacturers and the brand owner is a trader. Even ifthe brand owner 
is a manufacturer he is required to be manufacturer of specified goods; that 
CEGAT erred in holding that if the brand owner is a manufacturer; he is not 
required to be manufacturer of the specified goods; and that the small scale 
industry is not manufacturer of specified goods, and as such is not en~itled to 
E any exemption. 
F 
Assessee submitted that the extended period of limitation is not 
applieableand that question has not been decided by CEGAT. 
Partly allowing the appeals, the Court 
HELD:l.1. Notification in question is 'goods specific'. What is required 
is that a person, who may be a manufacturer, must be eligible for exemption 
under the Notification in respect of the specified goods. Any other 
interpretation would render the purpose for which the notification has been 
issued redundant. The notification is 'goods specific'. The emphasis is on 
G 'specified goods'. That being so, the impugned judgment of the CEGAT is 
indefensible. (731-G-H; 732-A) 
1.2. In the present case, the issue relates to manufacture of brass 
sanitary bathroom fittings. Mis Arkson Engg. Co. manufactures C.I. casting

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