2017 (8) TMI 1047 - AT - Central Excise

Appellant wins appeal: Ruling on ingots' eligibility for SSI Exemption

Aar Aar Metal Refinery Versus Commissioner of Central Excise, Chennai

The Tribunal ruled in favor of the appellant, holding that the clearances of ingots with the R K I marking did not render them ineligible for the SSI ... SSI exemption - Use of brand name of others - whether clearances of ingots with the marking R K I will attract the mischief of brand name of another person and in consequence rendering said clearances ineligible for the benefit of SSI N/N. 8/2001-CE dt. 1.3.2001? - Held that: - A combined reading of para 3 (b) and para-4 of the notification brings out that clearances bearing the brand name or trade name, whether registered or not, of another person, are ineligible for the grant of exemption under the notification - In the case before us, no doubt, appellant was manufacturing ingots from the moulds obtained from RKMI whose proprietrix is wife of the proprietor of the appellant. Interestingly, however, as per facts on record, RKMI themselves were not availing any SSI exemption. From the records, we are not able to locate any evidences unearthed by the department to show that although the ingots were made by the appellant, the invoices were issued in the name of RKMI or for that matter, ingots were sold only to the customers of the latter and on their instructions. There is no allegation that the appellant was a dummy unit or a unit set up only to sell goods of RKMI under their trade mark. Nor have the appellants sold the ingots as representing the production or sales of RKMI. There is also no evidence by way of statements of customers or any other corroborative evidence to indicate that there is any connection perceived in the trade, or, amongst the buyers, between ingots sold by the appellant, to RKMI. The use of the moulds by appellant bearing the mark R K I is only on account of the fact that these moulds were obtained from RKMI. This being so, the impugned clearances cannot be treated as clearances bearing a brand name / trade name for the purpose of indicating a connection in the course of trade between the said goods and RKMI - appeal allowed - decided in favor of appellant. Issues:1. Whether the clearances of ingots bearing the marking R K I would render the appellant ineligible for the SSI Exemption.2. Whether the marking on the ingots constitutes a brand name or trade name as per the SSI Notification.3. Whether the connection in the course of trade between the ingots and another person is established.4. Whether the appellant's use of moulds from another entity affects the eligibility for SSI Exemption.Analysis:1. The appellant, engaged in manufacturing Aluminium and Aluminium Alloy Ingots availing SSI Exemption, faced a duty demand due to ingots bearing the marking R K I, associated with another entity. The issue was whether this branding rendered them ineligible for the exemption. The lower authorities upheld the duty demand, penalty, and interest. The appellant contended that the marking was not a brand or trade name, and the ingots were not for trade but for further consumption by customers.2. The SSI Notification No.8/2001-CE was pivotal in determining eligibility for the exemption. The notification stated that clearances bearing another person's brand name or trade name would be ineligible. The explanation provided a detailed definition of brand name or trade name, emphasizing the indication of a connection in the course of trade between the goods and the person using the name or mark.3. The Tribunal analyzed whether the ingots' marking constituted a brand name or trade name, indicating a connection in trade with another person. Despite the relationship between the appellant and the entity owning the moulds, no evidence suggested that the ingots were sold under the other entity's brand or trade name. Customer statements confirmed the ingots were used as raw materials, not due to any brand value.4. The Tribunal found that the use of moulds bearing the R K I mark was due to obtaining them from the other entity, not to establish a trade connection. Certificates from customers and the lack of ownership claim over the mark by the other entity supported the appellant's stance. Relying on a precedent, the Tribunal concluded that the impugned clearances did not bear a brand name or trade name, allowing the appeal and setting aside the previous order.In conclusion, the Tribunal ruled in favor of the appellant, holding that the clearances of ingots with the R K I marking did not render them ineligible for the SSI Exemption. The decision highlighted the absence of evidence establishing a trade connection through the marking, ultimately allowing the appeal with consequential benefits as per law.