2023 (10) TMI 730 - AT - Central Excise

Tribunal Overturns Denial of SSI Exemption for M/s Kalki Industries Under Notification 8/2003-CE; Demand Nullified

The Tribunal overturned the decisions of the original and first appellate authorities, which had denied M/s Kalki Industries the SSI exemption under ... Crossing of SSI Exemption - use of brand name of others - HELD THAT:- As the very basis of the finding of non-eligibility by the original authority, endorsed in the impugned order, has thus been discarded by the Tribunal and it is not the case of the central excise authorities that the appellant had crossed the exemption threshold, nothing remains of the demand. The impugned order is set aside and appeal allowed. Issues Involved:1. Eligibility for Small Scale Industry (SSI) exemption under Notification No. 8/2003-CE.2. Validity of the assignment of the brand name 'KALKI.'3. Basis for issuing a show cause notice based on a judicial decision.Summary:1. Eligibility for Small Scale Industry (SSI) exemption under Notification No. 8/2003-CE:The appellant, M/s Kalki Industries, was found ineligible for the SSI exemption under Notification No. 8/2003-CE due to the breach of the condition in paragraph 3(b) of the notification. The goods were branded as 'KALKI,' belonging to Mohanlal Gosaria and Hemlata Gosrani, while the appellant is a sole proprietorship of Shri Chandrakant G Gosaria. The original authority and the first appellate authority upheld the liability to duties of central excise amounting to Rs. 9,73,258, along with interest and a penalty of like amount under sections 11A, 11AA, and 11AC of the Central Excise Act, 1944.2. Validity of the assignment of the brand name 'KALKI':The Tribunal found that the brand name 'KALKI' was registered in the name of Shri Chandrakant Gosrani from 01.07.2009, as evidenced by the certificate of registration. The Commissioner's reliance on a 2011 affidavit to deny the SSI exemption was contrary to the facts, as the trade mark had been duly assigned to Shri Chandrakant Gosrani and notified to the Trade Marks Registrar. The Tribunal cited precedents, including Arco Whitney Ltd. and Vankatesh Yedidha, supporting the appellant's right to use the brand name and avail the SSI exemption.3. Basis for issuing a show cause notice based on a judicial decision:The Tribunal criticized the lower authorities for assuming that a judicial decision could be the ground for issuing a notice for recovery against another assessee. Notices should address breaches of law as legislated and notified, not rely on judicial decisions as precedents for other cases. The Tribunal noted that the original authority had merely followed an existing adjudication order without independent examination, and the first appellate authority did not find fault with this approach.Conclusion:The Tribunal set aside the impugned order, noting that the very basis of the original authority's finding of non-eligibility had been discarded. As it was not the case of the central excise authorities that the appellant had crossed the exemption threshold, the demand was nullified. The appeal was allowed, and the order was pronounced in the open court on 11/10/2023.