Tribunal rejects Department's appeal on excise duty, finds liability with current proprietor.

The Tribunal upheld the Commissioner (Appeals) decision and rejected the Department's appeal. It was found that the liability for central excise duty on air coolers bearing a registered brand name could not be extended to the previous proprietor who had wound up the business before the search. The allegations were established against the current proprietor, but not against the former proprietor. The demand against the current proprietor was confirmed, and the same demand could not be upheld against the former proprietor for the same period and cause.

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Issues Involved:
1. Eligibility for SSI exemption under Notification No. 08/2003-CE.
2. Alleged clandestine removal and wrong availment of SSI exemption.
3. Liability for central excise duty on manufactured air coolers bearing a registered brand name.

Issue-wise Detailed Analysis:

1. Eligibility for SSI Exemption under Notification No. 08/2003-CE:
The Department argued that M/s Zenox Products was not eligible for the SSI exemption since it was manufacturing air coolers bearing the brand name "Zi Zenox," registered to another entity, M/s Zenox India. The Commissioner (Appeals) was criticized for treating the case as one of clandestine removal rather than addressing the alleged misuse of the SSI exemption. The Department emphasized that the affidavits provided by vendors were ignored and that there was sufficient proof of branded goods manufacture by Smt. Tej Kiran Kothari.

2. Alleged Clandestine Removal and Wrong Availment of SSI Exemption:
The Department's intelligence revealed that M/s Zenox Products, under the proprietorship of Smt. Ranjana Chaudhary, was manufacturing air coolers using the "Zi Zenox" brand name without paying the required duty, thus misusing the SSI exemption. The Commissioner (Appeals) was accused of misapplying the defense of job work to Smt. Tej Kiran Kothari, the previous proprietor, and not considering the evidence properly.

3. Liability for Central Excise Duty on Manufactured Air Coolers Bearing a Registered Brand Name:
The search conducted on May 30, 2016, revealed that air coolers bearing the "Zi Zenox" brand were found on the premises of M/s Zenox Products, now under Smt. Ranjana Chaudhary. The Department issued a show cause notice for recovery of central excise duty amounting to Rs. 80,07,442 for the period from 2012-13 to December 2016. The original adjudicating authority confirmed the demand, but the Commissioner (Appeals) set it aside, leading to the current appeal by the Department.

Findings and Conclusion:
The Tribunal observed that the search was conducted much after the transfer of M/s Zenox Products from Smt. Tej Kiran Kothari to Smt. Ranjana Chaudhary. It was noted that all coolers found bore the "Zi Zenox" logo, which was registered to M/s Zenox India. The Tribunal agreed with the Commissioner (Appeals) that the liability could not be extended to Smt. Tej Kiran Kothari, as she had wound up her business and vacated the premises before the search. The Tribunal found no evidence to support the Department's claim that Smt. Tej Kiran Kothari had used the "Zi Zenox" brand during her proprietorship.

The Tribunal upheld the findings of the Commissioner (Appeals) that the statements of Shri Girdhari Singh Kothari and Shri Ramesh Gandhi did not indicate that Smt. Tej Kiran Kothari used the "Zi Zenox" brand. The Review Order's allegations were found to be established against Smt. Ranjana Chaudhary, but not against Smt. Tej Kiran Kothari. The demand against Smt. Ranjana Chaudhary was already confirmed, and the same demand could not be confirmed against another person for the same period and cause.

Order:
The Tribunal upheld the order of the Commissioner (Appeals) and rejected the Department's appeal. The findings were pronounced in open court.

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