"Page 1\nJUDGMENT\n1\nREPORTABLE\nIN THE SUPREME COURT OF INDIA\nCIVIL APPELLATE JURISDICTION\nCIVIL APPEAL NO. 3594 OF 2005\nKali Aerated Water Works, Salem\nAppellant(s)\nVERSUS\nCommnr. Of Central Excise, Madurai\nRespondent(s)\nWITH\nCIVIL APPEAL NO. 3611 AND 4387-4392 OF 2005\nJ U D G M E N T\nA.K.SIKRI,J.\nIt is not in dispute that the appellant herein is a\nSmall Scale Industrial Unit (hereinafter referred to SSI\nUnit) and is manufacturing Aerated Water under various brand\nnames using the trade mark with the “Kalimark” / M/s.Kali\nAerated Water Works” It sought exemption from payment of\nexcise duty in terms of Notification 1/93-CE dated 28.2.1993\n(as amended vide Notification No.59/94-CE dated 1.3.1994)\nfor the aforesaid goods manufactured in its factory. This\nhas, however, been denied to the assessee by the Department\non the ground that the brand name “Kalimark” has been used\non the goods which belong to M/s. Shri K.P.R.Shakthivel and\nsince the assessee is using the aforesaid brand name of the\nthird party, by virtue of para 4 of the aforesaid\n\nPage 2\nJUDGMENT\n2\nNotification the exemption would not be allowed to the\nrespondent. This stand taken by the respondent department\nhas been accepted by the CESTAT in its impugned judgment.\nThe Tribunal has noted the fact that business of\nmanufacture and sale of Aerated water was started in the\nname of `Kalimark Aerated Water Works' by the HUF of which\nM/s. Shri P.V.S. K.Palaniappa Nadar was the Karta. Later on\nit was converted into a joint family business of Sh.\nPalaniappa Nadar and his three sons and a daughter. At some\npoint of time the parties/partners fell apart and entered\ninto a family settlement which is contained in Deed of\nMutual Agreement dated 12.3.1993. The Tribunal has recorded\nthat in terms of this Mutual Agreement signed between the\nparties the ownership of the aforesaid trademark/brand name\n`Kalimark' no longer remained with the appellant assessee\nand it belongs to the other party. On this basis it arrived\nat the finding that the appellant has been using the trade\nmark/brand name of the third party. \nWe find that the aforesaid observation is against the\nrecord and contrary to the Deed of Mutual Agreement which\nhas been entered into between the earstwhile partners. Para\n9 of the recital to this family arrangement is as under:\n“Since all the parties herein have\nmutually intend to carry forward the\nreputation and well established Trade Mark\n`KALI MARK' in future also thus carrying\nout to the future generations, a meeting\nwas held among the parties herein, who are\nthe direct male lineal decedents and users\n\nPage 3\nJUDGMENT\n3\nof established abovesaid Trade marks and\nwho at present have interest in various\nfactories being run in the name of Kali\nAerated Water Works in various parts of\nTamil Nadu and discussed the pros and cons\nand also to preserve the established Trade\nName and Trade Marks throughout the future\ngeneration and agreed on certain terms and\nconditions and all the parties herein have\nagreed to abide by them and hence this\nDeed of Mutual Agreement.\nThereafter, this aspect is dealt with in Paras L.M. and N\nthereof, which read as under:\nL) If any party comes to know about any\ninfringement and passing of use of any\ndeceptively similar mark on any imitation\nby any person in the market, then the party\nin whose area the said imitation,\ninfringement or passing off takes place\nshall take immediate legal steps against\nsuch erring persons at his cost, under the\nprovisions of Trade and Merchandise Mark\nAct, 1958 or any other common law in which\nsuitable an effective remedies are\nprovided.\nM) In any party falls to initiate legal\naction against such erring persons in order\nto protect the Trade Mark and Trade name,\nthen any other party can take action\nagainst such defaulting parties as well as\nagainst the person committing such\ninfringement, passing off or imitation for\nsuitable remedy.\nN) For removal of doubts, it is clarified\nspecifically that the right to use the\nTrade name M/s. Kali Aerated Water Works\nand Trade Marks mentioned above are solely\nvested with the parties 2 to 10 herein who\nare the direct male lineal descendents and\nsubject to clause `G' herein the parties\nherein cannot and shall not permit or give\ntheir existing rights to any female\ndescendents or any third person, nor the\nparties 2 to 10 herein have right to\n\nPage 4\nJUDGMENT\n4\ntransfer/sell for consideration or without\nconsideration to third parties. If any\nparty herein or their respective male\ndescendents wants to close down the\nbusiness they shall have to either sell\ntheir rights of Trade name and Trade Marks\nto other remaining parties or to their male\nlineal descendents only. Such parties\nshall acquire the rights subject to the\nterms and conditions of this Agreement and\nare liable to exercise their rights within\nthe terms of this Mutual Agreement.\nIt is clear from the above that the trade name\n`Kalimark Aerated Water Works' and trade mark mentioned in\nthe said agreement would remain vested in all the parties\nincluding the appellant and the appellant was also allowed\nto use the same. The agreement further provides that the\nuser of this trade mark, therefore, shall not make any\npayment of royalty or remuneration to any other party. This\nvery fact was correctly appreciated by the Commissioner who\ndecided the appeal in favour of the appellant. The\ndiscussion in the order of the Commissioner, on this aspect,\nreads as under:\n23: During the personal hearing Shri Rathina\nAsohan drew my attention to the certificates\nissued by the Trade Mark Registry from the\nyear 1948 to 1985 which were filed before the\nlower authority. I find the Appellant's name\nalso figures in the certificates issued in\nthe year 1962 and 1970 when he became one of\nthe partner of the erstwhile HUF Firm. The\nappellant have been marketing his products\nonly within his own marketing area. It is not\nthe case of the Revenue that any other person\nis using the same Brand names in the same\narea. Similarly the appellant is not selling\nhis goods outside his marketing area. So far\nhis business is concerned the appellant\n\nPage 5\nJUDGMENT\n5\nappears to be the only legal owner of the\nTrade Mark within his marketing area. This\nhas been clearly brought out in the Mutual\nAgreement dated 12.3.1993 which has been duly\npresented\n \non\n \n12.3.1993\n \nitself\n \nfor\nregistration\n \nwhereas\n \nthe\n \nimpugned\nNotification No.59/94 came into effect only\nfrom 1.4.1994 and hence no motive can be\nattributed against the appellant in respect\nof the Mutual Agreement. I have read the\nentie contents of Mutual Agreement. I find\nthat Mr. K.P.R. Sakthivel is also a party to\nthe said Mutual Agreement and no royalty is\nalso payable to the said K.P.R. Sakthivel.\nEven Mr. K.P.R.Sakthivel has specifically\nagreed that he cannot use the brand name in\nthe marketing area of the appellant. Thus\nthere seems to be recognition of individual\nproprietary rights over the brand names\nwithin the respective specified marketing\narea. The nature of succession of the\nproprietary rights of the brand names have\nalso been clearly dealt with. It clearly\nestablishes that the appellant and the male\ndescendants are alone are entitled to succeed\nover the ownership of the brand name within\ntheir marketing area. It is not the case of\nthe Revenue that the appellant is marketing\nhis products outside his marketing area.\n24. I find that the appellant is the legal\nowner of the trade Marks used in his product\nin his own marketing area, the Trade Mark\ncertificates produced before me clearly\nestablish that the appellant had been having\nthe right of ownership over the Brand names\nin the year 1962 itself when he became the\ncoparcener in the HUF firm. The appellant has\nhad his exclusive ownership rights even prior\nto the said impugned notification. Hence the\nsubsequent notification cannot take away the\nownership right of the appellant over the\nbrand names 'KaliMark' `Bovonto' and\n`Frutang' and other brand names and applying\nthe same to the specified goods manufactured\nby the appellant and marketing the same\nwithin his own marketing area in exclusion of\nothers. \n On perusing the trade mark\ncertificates, Decree of the Civil Court,\nMutual Agreement dated 12.3.1993 and also\nconsidering the above contentions, I find\nthat the appellant is the legal owner of the\nbrand names within his marketing area.”\n\nPage 6\nJUDGMENT\n6\nIt is thus manifest that the appellant has been using\nits own brand name `Kalimark' and it belongs to the\nappellant. In view thereof, the case of the appellant is\nsquarely covered in its favour by the judgment of this Court\nin Civil Appeal No.9157 of 2003 titled CCE, Hyderabad IV vs.\nStangen Immuno Diagnostics decided on 19.3.2015.\nAll the appeals are disposed of accordingly.\n….....................J.\n(A.K.SIKRI)\n…......................J.\n(ROHINTON FALI NARIMAN)\nNew Delhi;\nDate: 13.5.2015.\n"