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Issues: (i) Whether the appellant was entitled to small scale exemption under Notification No. 8/2003-C.E. notwithstanding use of another person's brand name on the plastic containers manufactured as packing material; (ii) Whether the redemption fine imposed on confiscated goods was excessive and required reduction.
Issue (i): Whether the appellant was entitled to small scale exemption under Notification No. 8/2003-C.E. notwithstanding use of another person's brand name on the plastic containers manufactured as packing material.
Analysis: The amendment to the notification with effect from 29.04.2010 excluded branded packing material from the bar only where the packing material bore the brand name of another person and was used as packing material by or on behalf of that person. On the facts, the brand name was affixed on the packing material itself, and the appellant manufactured branded containers for the client's use in marketing the packed goods. The exception for packing material was therefore not attracted.
Conclusion: The appellant was not entitled to the small scale exemption and the denial of exemption was upheld.
Issue (ii): Whether the redemption fine imposed on confiscated goods was excessive and required reduction.
Analysis: The confiscated goods were valued at Rs. 7,02,329/-, and the redemption fine had been fixed at the same amount. The fine was found to be disproportionate, and the usual practice of imposing a substantially lower fine was applied.
Conclusion: The redemption fine was reduced to Rs. 1,00,000/-.
Final Conclusion: The denial of the exemption and the consequential demand were sustained, while the redemption fine was modified downward.
Ratio Decidendi: The packing material exception in the SSI exemption applies only when the branded packing material is used for packing branded goods by or on behalf of the brand owner, and not when the brand name is on the packing material itself as the goods manufactured for the client.
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