2019 (4) TMI 1258 - AT - Central Excise

Appellant firm denied small scale exemption due to lack of brand ownership. Duty demand reduced, penalties set aside.

The Tribunal held that the appellant firm was not eligible for small scale exemption under Notification No. 1/93-CE as they did not own the brand name ... SSI Exemption - use of Brand name - Clandestine removal - 4054 pieces of GLASSPOLL brand roofings - benefit of Notification No. 1/93-CE - HELD THAT:- The issue now stands settled in terms of decisions of the Hon’ble Supreme Court, the latest of which is CCE, BANGALORE VERSUS M/S. VETCARE ORGANICS PVT LTD [2015 (6) TMI 156 - SUPREME COURT]. It has been held in this case, involving Notification No. 1/93-CE, that permission to use and user on basis of such permission of brand name, does not make the user the owner of such brand name. The appellant firm is not eligible to the benefit of exemption under Notification No. 1/93-CE, as held by the Commissioner in the impugned order. Extended period of limitation - HELD THAT:- During the material period and until the decision of the COMMISSIONER OF CENTRAL EXCISE, CHANDIGARH-I VERSUS MAHAAN DAIRIES [2004 (2) TMI 73 - SUPREME COURT OF INDIA] there were number of decisions of the Tribunal, including the decision of the COMMISSIONER OF CENTRAL EXCISE, CHANDIGARH VERSUS FINE INDUSTRIES [2002 (10) TMI 114 - CEGAT, COURT NO. II, NEW DELHI], which had held that in a case like the instant case, the user of the brand name obtained upon permission, including assignment from the brand owner, was eligible to benefit under the pari materia Notification No. 175/86-CE, unless the specified goods on which the small scale manufacturer used brand name belonging to another person was identical to the goods of such other person and, therefore, the extended period of limitation contained in the Proviso to Section 11A(1) of the Act is not applicable. Clandestine removal - period April, 1998 to September 26, 1998 - HELD THAT:- In the absence of any official translation being brought on record, this dispute cannot be resolved. The employee, Shri Tapan Kumar Bose, is also no longer available as the firm has closed down its business as informed by the appellant’s counsel. Moreover, the matter relates to more than 20 years back. In such circumstances it is not possible to arrive at any conclusive finding on this issue. Appeal disposed off. Issues Involved:1. Eligibility for small scale exemption notification.2. Invocation of the extended period of limitation.3. Alleged clandestine removal of goods.4. Imposition of penalties.Issue-wise Detailed Analysis:1. Eligibility for Small Scale Exemption Notification:The appellant, M/s. Glasspoll, claimed exemption under Notification No. 1/93-CE for goods manufactured under the brand name 'GLASSPOLL,' which was assigned to them by VMT Fibreglass Industries. The Tribunal referred to the Supreme Court decisions in Commissioner of C.Ex. Vs. Stangen Immuno Diagnostics and Commissioner of C.Ex. Vs. Vetcare Organics P. Ltd., which established that permission to use a brand name does not confer ownership of the brand name to the user. Thus, the appellant was not eligible for the exemption as the brand name belonged to another entity. The Tribunal upheld the Commissioner’s decision, denying the exemption.2. Invocation of the Extended Period of Limitation:The appellant argued that during the relevant period, Tribunal decisions, including those of the Larger Bench, allowed the benefit of the exemption if the goods were not identical to those of the brand owner. They cited cases such as CCE Vs. Fine Industries and CCE Vs. Vikshara Trading and Investment Pvt. Ltd., which were affirmed by the Supreme Court. The Tribunal acknowledged that the appellant acted in bona fide belief based on these decisions and concluded that the extended period of limitation under Section 11A(1) of the Act was not applicable. The demand was restricted to the normal period of one year.3. Alleged Clandestine Removal of Goods:The Commissioner confirmed a duty demand of Rs. 8,21,553.25 for alleged clandestine removal of 4054 pieces of GLASSPOLL brand roofings. The appellant contended that there was no clandestine removal and pointed out translation errors in the confessional statement of their employee, Tapan Kumar Bose. The Tribunal found it challenging to resolve the translation dispute due to the unavailability of an official translation and the employee. The appellant agreed to proceed on the alternative contention that the demand could not exceed Rs. 2,39,072/- without the exemption benefit. The Tribunal accepted this contention and modified the demand to Rs. 2,39,072/-.4. Imposition of Penalties:The Tribunal set aside the penalty imposed on the appellant firm under Section 11AC of the Act and Rule 173Q of the Central Excise Rules, 1944, due to the bona fide belief under previous Tribunal decisions. The penalty on appellant no. 2, Shri Dilip Seth, was abated due to his death during the proceedings.Judgment Summary:The Tribunal concluded that the appellant firm was not entitled to the small scale exemption under Notification No. 1/93-CE, confirming the duty demand for the normal period and remanding the case for computation of the demand for the normal period. The demand for clandestine removal was modified to Rs. 2,39,072/-. Penalties on the appellant firm were set aside, and the appeal of the deceased appellant no. 2 was abated. The appeal was disposed of on these terms.