SSI exemption and extended limitation turned on proof of brand ownership and full disclosure to the department

SSI exemption cannot be denied unless the Revenue proves that the brand name used on the goods belongs to another person. On the record, the alleged owner had withdrawn the trademark application, had not completed registration, and had filed an affidavit disclaiming ownership, so the denial of exemption was unsustainable. Extended limitation also could not be invoked where the assessee had disclosed the marketing arrangement and label use in its declaration to the department, so suppression was not established and the demand was time-barred.

---

---

Issues: (i) Whether the assessee was disentitled to small scale industry exemption on the ground that the goods were manufactured and cleared under the brand name of another person; (ii) Whether the demand was time-barred for want of suppression and therefore the extended period was unavailable.

Issue (i): Whether the assessee was disentitled to small scale industry exemption on the ground that the goods were manufactured and cleared under the brand name of another person.

Analysis: The exemption could be denied only if the Revenue established that the brand name belonged to another person. The record showed that the alleged owner had withdrawn the trademark application, had not completed the registration process, and had filed an affidavit disclaiming ownership. The drug licence also reflected manufacture under the disputed brand. On these facts, the allegation that the brand name belonged to FCF was not proved.

Conclusion: The assessee was entitled to the exemption and the denial of SSI benefit was unsustainable.

Issue (ii): Whether the demand was time-barred for want of suppression and therefore the extended period was unavailable.

Analysis: The assessee had disclosed the marketing arrangement and the use of labels in the declaration filed with the department under Rule 173C(3A) of the Central Excise Rules, 1944. Since the relevant facts were disclosed, suppression could not be alleged and invocation of the extended period was not justified.

Conclusion: The demand raised by invoking the extended period was unsustainable.

Final Conclusion: The order denying exemption and sustaining duty, interest, and penalty was set aside, and the appeal succeeded with consequential relief.

Ratio Decidendi: SSI exemption cannot be denied unless the Revenue proves that the brand name used on the goods belongs to another person, and extended limitation cannot be invoked when the relevant facts were already disclosed to the department.

---