Tribunal denies SSI exemption for goods cleared under another brand

The Tribunal found that the Respondent, who cleared goods under another person's brand name, was ineligible for the SSI exemption. Despite the Respondent's argument that they used their own brand name, evidence showed otherwise. The Tribunal determined that the goods were indeed cleared under another's brand, making the SSI exemption inapplicable. Additionally, the Tribunal held that the judgment of the Bombay High Court cited by the Respondent was not applicable to the case at hand. The Tribunal upheld the duty demand but reduced the penalty imposed on the Respondent to 25% in accordance with a Delhi High Court judgment.

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Issues:
1. Eligibility of SSI exemption for goods cleared under another person's brand name.
2. Applicability of the judgment of Hon'ble Bombay High Court.
3. Limitation period for the show cause notice.
4. Imposition of penalty under section 11AC.

Eligibility of SSI exemption:
The case involved the Respondent, who manufactured medicines for M/s Soft Pharmaceuticals under their brand names. The Respondent availed SSI exemption but the department contended that clearing goods under another brand name made them ineligible for the exemption. The Commissioner (Appeals) set aside the duty demand, but the Revenue appealed. The Respondent argued they used their own brand name, not M/s Soft Pharmaceuticals'. However, evidence showed the goods bore M/s Soft Pharmaceuticals' logo. The Tribunal found the goods were cleared under another's brand, making SSI exemption inapplicable.

Applicability of Bombay High Court judgment:
The Respondent cited a Bombay High Court judgment regarding brand names affixed on goods. However, the Tribunal determined this case differed as the goods were not distributed by another company, unlike the judgment's scenario. The Respondent's admission of selling goods to other parties under M/s Soft Pharmaceuticals' brand name supported the decision against applying the Bombay High Court's judgment.

Limitation period for show cause notice:
Regarding the limitation period, the Respondent argued no fraud as returns were filed regularly. The Commissioner (Appeals) found the notice time-barred. The Tribunal disagreed, noting the Respondent never disclosed clearing goods under another's brand. Thus, the extended period under section 11A (1) applied, justifying the penalty under section 11AC.

Imposition of penalty under section 11AC:
The Tribunal upheld the duty demand but reduced the penalty to 25% of the demand, following the Delhi High Court's judgment in a similar case. As the duty was paid before the notice, the Tribunal modified the penalty to align with the proviso to section 11AC. Consequently, the impugned order was set aside, and the penalty on the Respondent was reduced.

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