2023 (5) TMI 292 - AT - Central Excise

Tribunal allows appeal, sets aside penalties, upholds denial of exemption & duty recovery, imposes personal penalty.

M/s. Nucor Weld India Pvt Ltd. and Kamalesh N Desai Versus Commissioner of Central Excise, Customs and Service Tax Bangalore-I

M/s. Nucor Weld India Pvt Ltd. and Kamalesh N Desai Versus Commissioner of Central Excise, Customs and Service Tax Bangalore-I - TMI Issues:- Claim of SSI exemption under Notification No.08/99-CE dated 28.2.1999- Allegation of affixing brand names belonging to others- Denial of benefit of exemption and recovery of duty- Upholding of personal penalty under Rule 209AAnalysis:Claim of SSI exemption under Notification No.08/99-CE dated 28.2.1999:The appellants, engaged in manufacturing welding electrodes, claimed the benefit of SSI exemption under Notification No.08/99-CE dated 28.2.1999 due to their total clearances being less than Rs.50 lakhs during a specific period. The dispute arose when a show-cause notice was issued for allegedly affixing brand names, 'NUCOR WELD' and 'KEMTRODE,' belonging to defunct companies, leading to a demand for duty recovery. The Commissioner (A) partially allowed the appeal, setting aside penalties on other companies but upholding the denial of exemption and duty recovery along with personal penalty under Rule 209A on the Managing Director.Allegation of affixing brand names belonging to others:The appellant contended that the brand names were acquired through a Memorandum of Understanding (MOU) and Deed of Assignment from defunct companies, allowing them to use the names pending trademark registration. The appellant argued that since the original companies were defunct and had authorized the use of the brand names, they were entitled to the exemption under Notification No.08/99-CE dated 28.2.1999. The appellant cited legal precedents and presented registration certificates from the Trade Marks Authority to support their claim.Denial of benefit of exemption and recovery of duty:The Revenue argued that the use of brand names belonging to others made the appellants ineligible for the SSI exemption. They contended that even if the original companies were defunct, the use of others' brand names disqualified the appellants from availing the exemption. Legal references were made to support the Revenue's stance.Upholding of personal penalty under Rule 209A:The Tribunal analyzed the meaning and scope of brand names as per Notification No.08/99-CE dated 28.2.1999, emphasizing the need for a connection in the course of trade between specified goods and the person using the brand name. It was noted that the appellants had obtained authorization to use the brand names through legal agreements and subsequent trademark registrations. Relying on legal precedents, the Tribunal concluded that the appellants were not using brand names belonging to others in a manner that would disqualify them from the exemption. As a result, the impugned order was set aside, and the appeals were allowed with consequential relief, if any, as per law.