2017 (3) TMI 1495 - AT - Central Excise

Appellant granted exemption as 'TIDLAND' not on goods, only on docs. Brand name invoicing not disqualifying.

The Tribunal held that the appellant was eligible for the small-scale exemption under the relevant notifications as the brand name 'TIDLAND' was not ... SSI exemption - brand name - denial on the ground that assessee had been using an ineligible brand on the products cleared by them and the amount due was computed as the duty short-paid by ineligible availment of the exemption - Held that: - it is the goods that must be affixed with the ineligible brand name for the exclusion to take effect. There is no allegation that this is so - the exemption notification is not intended to govern the use or restrict eligibility arising from use of the ineligible brand name on any documentation. The agreement confers exclusive rights to the appellant-assessee to use the ‘trademark’ and, from this, it would appear that the impugned mark is no longer that of the overseas collaborator for the purpose of the specified territory but is that of the appellant-assessee. Appeal allowed - benefit allowed - decided in favor of assessee. Issues Involved:1. Eligibility for small-scale exemption under various notifications.2. Use of ineligible brand name on products.3. Interpretation of exemption notification clauses.4. Limitation period for raising the demand.Detailed Analysis:1. Eligibility for Small-Scale Exemption:The primary issue revolves around the eligibility of the appellant to avail the small-scale exemption under notification no. 8/1998-CE and its successors. The appellant had been availing this exemption for their products, 'air shaft' and 'air chucks', which were manufactured under an exclusive license from M/s Tidland Corporation, USA. The dispute arose when the Commissioner of Central Excise & Customs Belapur denied this exemption, alleging that the appellant used an ineligible brand name on their products.2. Use of Ineligible Brand Name:The adjudicating authority's main contention was that the appellant used the brand name 'TIDLAND' on their products, making them ineligible for the small-scale exemption. The Commissioner argued that the brand name was affixed on sale documents, and the original product number of the overseas collaborator was used on the finished product, which was sufficient to deny the exemption. However, the appellant contended that the brand 'TIDLAND' was not affixed on the products themselves but only appeared on letter-heads, clearance invoices, and catalogues, which should not disqualify them from the exemption.3. Interpretation of Exemption Notification Clauses:The Tribunal examined the relevant clauses of the exemption notifications. The fourth paragraph of one such notification explicitly states that the exemption does not apply to goods bearing a brand name or trade name of another person. However, it provides an exception for goods used as components or parts of machinery or equipment, provided specific procedures are followed. The Tribunal found no allegation that the ineligible brand name was affixed on the goods themselves. Citing the Supreme Court's decision in Commissioner of Central Excise, Jamshedpur v. Superex Industries, the Tribunal emphasized that mere invoicing under another's brand name does not disqualify the goods from the exemption if the brand name is not affixed on the goods.4. Limitation Period for Raising the Demand:The appellant also argued that a substantial portion of the demand was time-barred. The Tribunal did not explicitly address this issue in the judgment, focusing instead on the primary contention regarding the use of the brand name and the interpretation of the exemption notification.Conclusion:The Tribunal concluded that the exemption notification's intent was not to govern the use of the ineligible brand name on documentation but on the goods themselves. The Tribunal also noted that the appellant had exclusive rights to use the 'TIDLAND' trademark in India, making it their brand name rather than that of another person. Therefore, the impugned order denying the exemption was flawed. The appeals were allowed, and the impugned order was set aside.