2010 (12) TMI 167 - AT - Central Excise

Tribunal denies SSI exemption due to brand name use. Duty liability recalculated, penalties to be decided.

The Tribunal held that M/s. Sunfab and M/s. Alba Equipments were not eligible for SSI exemption from 9/9/2003 due to their use of the 'Sunrise' brand ... SSI Exemption - Brand Name - It is seen from the records that M/s. Sunfab as well as M/s. Sunrise Services, both have given contradictory statements as regards the use of word Sunrise for the clearances made prior to 9/9/2003. Since there is counter claim by both sides as the usage of the brand name prior to 9/9/2003, we are of the view that the official application made by M/s. Sunrise Services to the Trademark authorities, should be considered as the cut off date to indicate that brand Sunrise was sought to be registered by in the name of Sunrise Services with the Trademark authority. Hence, the duty liability, if any, arises on M/s. Sunfab and M/s. Alba Equipments for the use of word Sunrise should be only from 9/9/2003. Since the duty demand is worked out by the Adjudicating Authority in these cases for the period April, 2001 to March, 2005 & December, 2000 to March, 2005, we while upholding that the appellants are not eligible for the benefit of SSI exemption Notification No.8/2001-CE as amended, from 9/9/2003.Penalty - Adjudicating Authority requires re-determining the quantum of demand from 2003 till the date when the goods were affixed with the brand name – Matter remanded to Adjudicating Authority for deciding the quantum of penalty on these appellants – Appeal disposed off Issues Involved:1. Eligibility for SSI exemption under Notification No. 8/2001-CE.2. Use of the brand name 'Sunrise.'3. Calculation of duty liability.4. Imposition of penalties.Detailed Analysis:1. Eligibility for SSI Exemption under Notification No. 8/2001-CE:The primary issue was whether M/s. Sunfab and M/s. Alba Equipments were eligible for the benefit of Notification No. 8/2001-CE for the period in question. The appellants argued that 'Sunrise' was not a brand name but a universal term. However, the Tribunal found that the appellants used 'Sunrise' as a brand name, which belonged to M/s. Sunrise Services. The partners of the firms admitted this in their statements, which were not retracted. The Tribunal concluded that the appellants were not eligible for SSI exemption from 9/9/2003, the date when M/s. Sunrise Services applied for trademark registration.2. Use of the Brand Name 'Sunrise':The appellants contended that 'Sunrise' was a common term and not a brand name. They provided evidence of its use in various industries and relied on multiple judicial decisions to support their claim. However, the Tribunal noted that M/s. Sunrise Services had applied for trademark registration for 'Sunrise' on 9/9/2003, indicating ownership of the brand. The Tribunal held that the appellants could not use 'Sunrise' as a universal name from that date. The contradictory statements from both sides regarding the use of 'Sunrise' prior to 9/9/2003 led the Tribunal to consider the trademark application date as the cut-off.3. Calculation of Duty Liability:The Tribunal upheld that the appellants were not eligible for SSI exemption from 9/9/2003 and remanded the matter back to the Adjudicating Authority to calculate the duty liability from that date onwards. The Tribunal also directed the Adjudicating Authority to examine the appellants' claim that they stopped using the 'Sunrise' brand after the Department's visit on 19/4/2004. If the appellants could provide evidence supporting this claim, the Adjudicating Authority should determine the period for which the brand was used.4. Imposition of Penalties:The appeals also involved the imposition of penalties on the partners of M/s. Sunrise Services and M/s. Sunrise Ironing Equipments. Since the duty liability was to be recalculated, the Tribunal remanded these appeals back to the Adjudicating Authority to decide the quantum of penalties based on the re-determined demand. The Tribunal did not record findings on other submissions made by both sides, as the appeals were disposed of on merits.Conclusion:The Tribunal concluded that M/s. Sunfab and M/s. Alba Equipments were not eligible for SSI exemption from 9/9/2003 due to the use of the 'Sunrise' brand name. The matter was remanded to the Adjudicating Authority for recalculating duty liability and determining penalties based on the revised demand. The appeals were disposed of accordingly.