2023 (8) TMI 1134 - AT - Central Excise

Tribunal denies SSI exemption for bracelets, cites failure to clear branded goods properly.

The Tribunal held that the appellant was not eligible for the SSI exemption under Notification No. 08/2003-CE as the bracelets manufactured were not ... SSI exemption Notification No. 08/2003- CE dated 01.03.2003 - affixation of brand name of another person - whether the goods namely bracelet manufactured by the appellant bearing the brand name of customer i.e. Timex, Titan and Sonata is eligible for exemption Notification No 08/2003 –CE? HELD THAT:- The exemption Notification shall not apply to specified goods bearing the brand name or trade name that were registered or not of another person. In the present case there is no dispute that the goods namely bracelet manufactured by the appellant bears the brand name namely Timex, Titan and Sonata which are owned by another person namely M/s. Timex Groups India Ltd and M/s. Titan Industry Limited, therefore, the appellant in terms of para 4 is not eligible for exemption Notification No. 08/2003 –CE. However, there is an exception provided in the notification under clause (a) of para 4 according to which if the goods is in the nature of component or part of any machinery or equipment or appliances and the same is cleared as original equipment in manufacture of the said machinery or equipment or appliances by following the procedure laid down in the Central Excise (Removal of Goods at Concessional Rate of Duty for Manufacture of Excisable Goods) Rules, 2001 than even though the goods bears the brand name or trade name of another person, the same shall be eligible for exemption. Firstly the bracelet cannot be said to be a component or part of wrist watches to be used as original equipment in the manufacture of wrist watches. Secondly, it is an admitted fact that for supply of branded bracelets the procedure laid down in the Central Excise (Removal of Goods at Concessional Rate of Duty for Manufacture of Excisable Goods) Rules, 2001 has not been complied with. Hence, the condition for exception provided for branded goods for extending SSI exemption 08/2003- CE has not been complied with. Therefore, the appellant is not entitled for SSI exemption Notification No. 08/2003- CE. In the case of COMMISSIONER OF CENTRAL EXCISE, BANGALORE VERSUS M/S. OTTO BILZ (INDIA) PVT. LTD. [2015 (10) TMI 2149 - SUPREME COURT] the goods bearing the brand name of a foreign company were extended benefit of SSI exemption on the ground that the foreign company has assigned the brand name BILZ in favour of the assessee. In that case once the brand name is assigned, the assignee becomes the owner, then it cannot be said that the assessee is using the brand name of another person. Therefore, the ratio of judgment in the Otto Bilz case is not applicable. Penalty imposed on co- appellant Shri Arvindbhai M Limbasiya - HELD THAT:- The issue is of pure interpretation of notification and the goods have been cleared under the cover of invoices to organized companies. Therefore, there is no mala fide intention of any individual. Accordingly, in the facts and circumstances of the case, the penalty imposed on Shri Arvindbhai M Limbasiya under Rule 26 is not sustainable. Hence, penalty is set aside. The appeal of Sonic Chain Pvt Ltd is dismissed and appeal filed by Shri Arvindbhai M Limbasiya is allowed. Issues involved:The issue involves whether the appellant is eligible for SSI exemption under Notification No. 08/2003-CE when manufacturing bracelets for wristwatches bearing the brand names of other companies.Details of the judgment:Issue 1: Eligibility for SSI exemptionThe appellant argued that the bracelets manufactured by them, although bearing brand names of other companies, are supplied as part of wristwatches to be used by the brand name owner, making them eligible for exemption under Para 4(a) of the notification. The appellant cited various judgments in support of their argument.Issue 2: Revenue's contentionThe revenue contended that the bracelets are not components of machinery or equipment and the appellant did not follow the required procedure for clearance of branded goods, thus making them ineligible for the exemption under Para 4(a) of Notification No. 08/2003-CE.Judgment on Issue 1:The Tribunal noted that the exemption does not apply to specified goods bearing the brand names of other persons unless they are components of machinery or equipment used as original equipment in manufacturing. In this case, the bracelets were found to not meet the criteria for exemption as they were not used as original equipment and the required procedure was not followed. Therefore, the appellant was deemed ineligible for the SSI exemption.Judgment on Issue 2:The Tribunal highlighted that the exception for branded goods was intended for cases where the goods are components of machinery or equipment, not sold under the brand name of another person. Since the bracelets were sold as standalone products without following the required procedure, the appellant was not eligible for the exemption.Relevance of cited judgments:The Tribunal differentiated the present case from the cases cited by the appellant, noting that the facts and issues were distinct. The judgments cited did not apply to the specific circumstances of the appellant's case.Penalty imposed:The penalty imposed on the co-appellant was set aside due to the interpretation of the notification and the absence of malicious intent in the clearance of goods to organized companies.Final decision:The appeal of Sonic Chain Pvt Ltd was dismissed, while the appeal filed by the co-appellant was allowed.This summary provides a detailed overview of the judgment, highlighting the arguments presented by both parties and the Tribunal's reasoning for the decision on the eligibility for SSI exemption.