2016 (12) TMI 1454 - AT - Central Excise

Tribunal Upholds Denial of SSI Exemption for Brand Use, Emphasizes Compliance and Transparency

Dhandapani Power Systems (P) Ltd. Versus Commissioner of Central Excise Bangalore

The tribunal upheld the denial of Small Scale Industries (SSI) exemption to the appellants for using another company's brand name and logo, finding that ... SSI exemption - use of brand name and the logo belonging to K. Dhandapani and Co., who were claimed to be traders and not manufacturers, by appellant - Held that: - the appellants have used the brand name and the logo belonging to K. Dhandapani and Co. and they have not declared the same in their classification and therefore they have concealed the factual information from the department and therefore they are not entitle to SSI exemption. Imposition of penalty - as per the provisions of law if the interest and penalty is deposited within 30 days from the date of the order then the proceedings shall stand concluded and the appellant is not required to pay the equal penalty - the appellant has deposited 14,17,640.28 before the issue of show-cause notice and the same was appropriated by the Order-in-Original and the learned Additional Commissioner has given them the opportunity to deposit the penalty of 25% along with interest within 30 days and the appellant has deposited the same within the stipulated period and therefore penalty not imposed. Appeal disposed off - decided partly in favor of appellant. Issues:1. Denial of SSI exemption for using another company's brand name and logo.2. Allegations of willful suppression of material information to evade duty payment.3. Imposition of equal penalty under Section 11AC and interest under Section 11AB.Analysis:Issue 1: Denial of SSI exemption for using another company's brand name and logoThe case involved the appellants, engaged in manufacturing electrical capacitors, using the brand name and logo of another company, which led to a denial of the Small Scale Industries (SSI) exemption. The appellant argued that they were permitted to use the brand name of the other company, which should be considered as an assignment of the brand name in their favor. They contended that since the other company was not involved in capacitor manufacturing but only trading, the denial of SSI exemption was unjust. The appellant claimed they had no intention to suppress information to evade duty payment, as they believed they were not using another brand name. However, the tribunal found that the appellants did use the brand name and logo without declaring it, leading to the concealment of material information and rendering them ineligible for the SSI exemption.Issue 2: Allegations of willful suppression of material information to evade duty paymentThe Revenue argued that the appellants willfully suppressed the fact of using another company's brand name and logo in their classification submitted to the department. The Revenue contended that the appellants enjoyed the benefit of SSI exemption by utilizing a brand name that did not belong to them, thereby misleading customers. The tribunal agreed with the Revenue's stance, emphasizing that the appellants concealed crucial information from the department, indicating an intent to evade duty payment.Issue 3: Imposition of equal penalty under Section 11AC and interest under Section 11ABRegarding the imposition of an equal penalty under Section 11AC and interest under Section 11AB, the tribunal noted that the appellants had deposited a significant amount before the show-cause notice was issued. The Additional Commissioner allowed the appellants to pay a reduced penalty of 25% along with interest within 30 days, which the appellants complied with. The tribunal found that the appellants fully met the requirements of the Additional Commissioner's order within the stipulated period. Consequently, the tribunal held that the imposition of an equal penalty by the Commissioner (Appeals) was unwarranted, as the appellants had already fulfilled their obligations. The tribunal modified the Commissioner's order, stating that the duty, interest, and penalty deposited by the appellants were sufficient to discharge their liabilities, leading to the dismissal of the appellant's appeal.In conclusion, the tribunal upheld the impugned order with modifications, emphasizing the importance of complying with statutory requirements and the consequences of concealing material information in tax matters.