2023 (7) TMI 822 - AT - Central Excise

Appellants' Jewelry Branding Recognized, Penalties Set Aside

M/s. Abharan Jewellers, M/s. C. Krishnaiah Chetty & Sons Private Limited, Shri Pratap Kamath, CEO Versus Commissioner of Central Excise Karnataka

M/s. Abharan Jewellers, M/s. C. Krishnaiah Chetty & Sons Private Limited, Shri Pratap Kamath, CEO Versus Commissioner of Central Excise Karnataka - TMI Issues Involved:1. Whether the appellants are manufacturers of branded jewellery.2. Whether the use of abbreviations like 'CKC' or 'ABJ' constitutes a brand name or trade name.3. Whether the demand for duty is barred by limitation under Section 11A of the Central Excise Act, 1944.4. Whether the penalties imposed under Section 11AC and Rule 25 are sustainable.Summary:1. Manufacturer Status:The appellants argued that they are not manufacturers but that the goldsmiths and job workers are. The Tribunal, however, noted that the appellants supply raw materials and receive finished products, which are then marketed and sold under their names. Rule 12AA of the Central Excise Rules, 2002, specifies that the person who gets the articles manufactured on a job work basis is considered the manufacturer. Thus, the Tribunal held that the appellants are indeed manufacturers.2. Brand Name or Trade Name:The Tribunal examined whether the use of abbreviations like 'CKC' or 'ABJ' on jewellery constitutes a brand name or trade name. The Tribunal referred to the Larger Bench's decision and various precedents, concluding that these abbreviations create a connection between the product and the manufacturer, thus qualifying as a brand name. The Tribunal emphasized the appellants' extensive advertising and marketing efforts, which further established their brand in the market.3. Limitation under Section 11A:The appellants contended that a substantial part of the demand is barred by limitation. The Tribunal noted that there was confusion regarding the excisability of branded jewellery, as evidenced by various Board circulars. The Tribunal found no evidence of willful suppression or intent to evade duty by the appellants. Consequently, the Tribunal held that the extended period of limitation under Section 11A is not applicable, and the demand is restricted to the normal period.4. Penalties under Section 11AC and Rule 25:Given the finding that there was no willful suppression or intent to evade duty, the Tribunal set aside the penalties imposed under Section 11AC and Rule 25. The Tribunal also set aside the personal penalties on the partners and directors of the appellant companies.Conclusion:The appeals were partially allowed. The demand for duty was restricted to the normal period, and the penalties were set aside. The cases were remanded to the original authorities for re-quantification of the demands for the normal period along with interest.