2006 (7) TMI 206 - SC - Central Excise

Tribunal Denies Exemption Due to Brand Issue, Demands Upheld

REIZ ELECTROCONTROLS PVT. LTD. Versus COMMISSIONER OF C. EX., DELHI-I

The Tribunal upheld the denial of small scale exemption to REPL and RE due to the brand name ownership issue. Demands of duty, penalty, and interest were ... Whether the authorities had rightly denied small scale exemption to Reiz Electrocontrols Pvt. Ltd. (in short the 'REPL') and Reiz Enterprises (in short the 'RE')? Held that:- It makes no difference whether the goods on which the trade name or mark is used are the same in respect of which the trade mark is registered. Even if the goods are different so long as the trade name or brand name of some other Company is used the benefit of the Notification would not be available. Further, in our view, once a trade name or brand name is used then mere use of additional words would not enable the party to claim the benefit of Notification. Therefore, the main contention of the learned counsel for the appellant about eligibility for exemption is sans merit. Issues Involved:1. Denial of small scale exemption to REPL and RE.2. Demands of duty, penalty, and interest under the Central Excise Act and Rules.3. Eligibility for exemption under Notification No. 1/93.4. Alleged suppression of facts and extended period for demand under Section 11A of the Act.5. Relevance of trade mark registration under the Trade Marks Act, 1999.6. Limitation period for raising demands.Issue-wise Detailed Analysis:1. Denial of Small Scale Exemption to REPL and RE:The Tribunal upheld the denial of small scale exemption to Reiz Electrocontrols Pvt. Ltd. (REPL) and Reiz Enterprises (RE). The Tribunal concluded that the authorities were correct in their decision, citing that the goods manufactured under the brand name 'REIZ' by REPL were ineligible for the exemption as the brand name belonged to another entity (RE) until its transfer in 2000. The Tribunal's decision was based on the specific condition under Notification No. 1/93, which states that goods manufactured under the brand name of another person are not eligible for exemption.2. Demands of Duty, Penalty, and Interest:The Tribunal found no infirmity in the demands of duty, penalty, and interest levied under the Central Excise Act, 1944, and Central Excise Rules, 1944. However, the case was remanded to the jurisdictional Commissioner for re-computing the duty demands and re-determining the penalty. The penalties imposed on individuals under Rule 209A were set aside.3. Eligibility for Exemption under Notification No. 1/93:The Tribunal noted that REPL was ineligible for small scale exemption for manufacturing electronic transformers under the brand name 'REIZ', which belonged to RE until its transfer in 2000. The Tribunal emphasized that the registration of the brand name 'REIZ' by Atul Agarwal in 1993 made RE the owner of the brand name for electronic transformers, thus disqualifying REPL from the exemption.4. Alleged Suppression of Facts and Extended Period for Demand:The demands were raised under the extended period permitted by the proviso to Section 11A of the Act, citing suppression of facts with the intention to evade payment of duty. The appellants contended that there was no suppression of facts as both manufacturers had filed declarations stating that the goods were manufactured under their brand name. The Tribunal did not accept this contention.5. Relevance of Trade Mark Registration under the Trade Marks Act, 1999:The appellants argued that they had obtained a certificate under the Trade Marks Act, 1999, which covered the period in question. The Supreme Court noted that this plea needed factual adjudication, which had not been done by the Tribunal. The Court referenced its previous judgments, stating that the Tribunal must consider the relevance of the trade mark registration.6. Limitation Period for Raising Demands:The Supreme Court highlighted the need to consider the limitation period for raising demands if the trade mark registration was found to be relevant. If the registration had no relevance, the question of limitation would need to be decided based on the factual scenario. The Court remanded the matter to the Tribunal for rehearing on both the issue of limitation and the relevance of the trade mark registration.Conclusion:The appeal was disposed of with no orders as to costs. The case was remanded to the Tribunal for further consideration of the relevance of the trade mark registration and the limitation period for raising demands. The Tribunal's previous findings on the denial of small scale exemption and the validity of demands, penalties, and interest were upheld, subject to re-computation and re-determination by the jurisdictional Commissioner.