2000 (9) TMI 940 - Commissioner - Central Excise

Court upholds assessee's right to SSI exemption based on use of brand name for product identification

The court ruled in favor of the assessee, M/s. Cyclo Instruments Pvt. Ltd., in a case involving the SSI exemption under Notification No. 1/93-C.E. The ... SSI Exemption - Brand name Issues Involved:1. SSI Exemption under Notification No. 1/93-C.E.2. Alleged use of brand name 'CYCLO' and its implications.3. Calculation of differential Central Excise duty.4. Invocation of extended period under Section 11A of the Central Excise Act, 1944.5. Validity of show cause notice.Detailed Analysis:1. SSI Exemption under Notification No. 1/93-C.E.:The assessee, M/s. Cyclo Instruments Pvt. Ltd., claimed SSI exemption for their engineering goods under Notification No. 1/93-C.E. The department alleged that the goods were branded with 'CYCLO,' making them ineligible for the exemption. The assessee contended that 'CYCLO' was used merely for product identification and not as a brand name. They argued that 'CYCLO' in capital letters was different from the logo of M/s. Cyclo Transmissions Ltd., which included an arrow symbol. The judgment concluded that the use of 'CYCLO' by the assessee did not constitute branding, thus maintaining their eligibility for SSI exemption.2. Alleged Use of Brand Name 'CYCLO':The department's case hinged on the assertion that 'CYCLO' embossed on the assessee's products indicated a brand name, disqualifying them from SSI exemption. The assessee argued that 'CYCLO' was used for identification purposes due to space constraints and was not a logo or brand name. The judgment found that the word 'CYCLO' used by the assessee was distinct from the logo of M/s. Cyclo Transmissions Ltd., supporting the assessee's claim that they did not use a brand name.3. Calculation of Differential Central Excise Duty:The show cause notice demanded differential duty of Rs. 22,80,671/- based on the assumption that all products cleared by the assessee bore the 'CYCLO' monogram. The assessee contested this, stating that not all products were embossed with 'CYCLO.' They provided a list differentiating products with and without the 'CYCLO' mark. The judgment acknowledged the discrepancy and found the department's calculation flawed, as it did not consider the actual embossment on products.4. Invocation of Extended Period under Section 11A of the Central Excise Act, 1944:The department invoked the extended period under Section 11A, alleging suppression of facts by the assessee. The assessee argued that the department was aware of the use of 'CYCLO' and the different brand names used by various companies from the beginning. The judgment found no evidence of suppression or intent to evade duty, thus invalidating the invocation of the extended period.5. Validity of Show Cause Notice:The show cause notice was issued on the grounds of alleged misuse of the brand name and incorrect SSI exemption claims. The assessee provided documentary evidence and case laws to support their contention that 'CYCLO' was used for identification and not as a brand name. The judgment relied on precedents, including the Supreme Court's decision in Astra Pharmaceuticals Pvt. Ltd. v. CCE, which distinguished between product marks and monograms used for identification. The judgment concluded that the show cause notice was unfounded and the demand for differential duty was unjustified.Order:The show cause notice demanding differential Central Excise duty of Rs. 22,80,671/- was dropped, affirming the assessee's eligibility for SSI exemption under Notification No. 1/93-C.E.