Tribunal overturns duty demand & penalties due to lack of evidence in branding dispute

The Tribunal set aside the duty demand and penalties imposed on both appellants as the Revenue failed to prove that they affixed another person's brand name on the goods manufactured by them. The Commissioner (Appeals) found flaws in the confiscation of goods and upheld the duty demand and penalty against Appellant No. 1 but set aside the confiscation for Appellant No. 2. The Tribunal emphasized the lack of substantial evidence beyond statements and machinery details to support the allegations, leading to the allowance of both appeals due to insufficient proof of branding infringement.

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Issues: Whether the appellants were affixing the brand name of another person on the goods manufactured by them.

Analysis:
In these two appeals, the issue revolved around whether M/s. Banwari Lal and Sons and M/s. Golden Engineering Works affixed the brand name of another person on the goods they manufactured. The Central Excise Officer seized motor vehicle parts bearing the brand name "KAY PEE" from the premises of the appellants. Show cause notices were issued for confiscation of these parts, demanding Central Excise duty, and imposing penalties. The Additional Commissioner confirmed the duty demand and penalties against both appellants. On appeal, the Commissioner (Appeals) made various determinations:
- Found infirmities in the confiscation of goods seized from the premises of the appellants and M/s. Khosla Automotive Pvt. Ltd.
- Confirmed the duty demand and penalty against Appellant No. 1 for manufacturing and clearing branded goods.
- Set aside the confiscation of goods seized from the premises of Khosla Automotive Pvt. Ltd. in the case of Appellant No. 2.
- Confirmed the duty demand and penalty against Appellant No. 2.

The appellants argued that the Adjudication order violated principles of natural justice as they were not provided the opportunity for cross-examination. They contested the authenticity of statements and lack of evidence supporting the allegations. The appellants emphasized that once the seized goods were released, the charge of affixing another person's brand name should not stand. The Department's evidence relied heavily on statements, lacking corroborative evidence or material such as machinery details or statements from relevant individuals.

The learned Advocate for Appellant No. 2 contended that the demand was based on a statement that did not implicate them in supplying branded goods, lacking further supporting evidence. The Departmental Representative reiterated the findings in the original orders.

Upon review, the Tribunal noted that the Commissioner (Appeals) had set aside the confiscation of goods seized from Appellant No. 1's premises, leaving the Revenue with insufficient evidence to prove the manufacture and clearance of goods bearing another person's brand name. Similarly, in the case of Appellant No. 2, no seized goods bore another person's brand name, and the Department lacked substantial evidence beyond statements. The Tribunal emphasized that to deny small-scale exemption, it must be proven that goods were cleared bearing another person's brand name, a burden the Revenue did not meet. Consequently, the impugned order was set aside, and both appeals were allowed.

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