2008 (7) TMI 435 - HC - Central Excise

Denial of Exemption Upheld for Use of Brand Names

The Tribunal upheld the denial of exemption under Notification No. 1/93-C.E. for the appellants due to their use of brand names owned by another entity. ... Whether the Hon. CESTAT, Ah'bad is correct in confirming the demand of ₹ 4,18,620/- holding that the benefit of Notification No. 1/93-C.E., dated 28-2-93 or 16/97-C.E., dated 1-3-97 or 8/98-C.E., dated 2-6-98 as amended is not available since the goods bare brand name belonging to others? Held that:- It is apparent that the Tribunal has recorded findings of fact after appreciating the evidence on record. The Tribunal has found as a matter of fact that the manufacturing activity of branded goods was willfully suppressed from the department with an intention to evade duty of excise leviable on such goods. It has further been found by the Tribunal that some of the goods have been cleared without invoice or under a bogus/duplicate invoice. It is in this context that the findings of evasion of duty by the adjudicating authority and Commissioner (Appeals) have been confirmed by the Tribunal. Hence, in absence of any error of law having been committed by the Tribunal, the impugned order does not merit interference. None of the questions, as proposed or otherwise, can be termed to be a question of law, much less a substantial question of law so as to entertain the appeal. Issues:1. Interpretation of Notification No. 1/93-C.E. and subsequent notifications for exemption eligibility based on brand name ownership.2. Consideration of previous decisions by Hon. CESTAT, Delhi in similar cases.3. Clubbing of clearances of multiple concerns under one proprietorship for exemption eligibility.4. Allegations of evasion of excise duty through suppression of manufacturing activity and clearance without proper documentation.5. Assessment of penalties and confiscation of goods based on the findings.Issue 1 - Interpretation of Notification No. 1/93-C.E. and subsequent notifications for exemption eligibility based on brand name ownership:The primary contention in the case revolved around the eligibility of the appellants for exemption under Notification No. 1/93-C.E. and subsequent notifications due to the use of brand names 'Priya' and 'Raj' belonging to M/s. Sramdeep Industries. The Tribunal upheld the denial of exemption, citing that the brand names were owned by M/s. Sramdeep Industries, thereby making the appellants ineligible for the exemption. The Tribunal also noted willful suppression of manufacturing activity and evasion of excise duty, leading to the confirmation of duty demands and penalties.Issue 2 - Consideration of previous decisions by Hon. CESTAT, Delhi in similar cases:The appellants argued for the application of previous decisions by Hon. CESTAT, Delhi in cases like Quality Steel Industries and Supreme Engineering Works to support their claim for exemption. However, the Tribunal found the circumstances of the present case to be different, emphasizing the willful suppression of manufacturing activity and evasion of duty, which were not present in the cases cited by the appellants.Issue 3 - Clubbing of clearances of multiple concerns under one proprietorship for exemption eligibility:The appellants sought to club the clearances of M/s. Priya Manufacturer and M/s. Raj Engineers under M/s. Sramdeep Industries, arguing that Shri Babubhai Patel, the proprietor, oversaw the affairs of all three concerns and utilized the brand names. However, the Tribunal rejected this argument, maintaining that the brand names belonged to M/s. Sramdeep Industries, thereby denying the exemption to the other concerns.Issue 4 - Allegations of evasion of excise duty through suppression of manufacturing activity and clearance without proper documentation:The Tribunal found evidence of evasion of excise duty through willful suppression of manufacturing activity and clearance of goods without proper documentation, such as invoices or on bogus/duplicate invoices. These findings led to the confirmation of duty demands, penalties, and confiscation of seized goods, albeit with some leniency in the penalty amount.Issue 5 - Assessment of penalties and confiscation of goods based on the findings:In light of the confirmed evasion of excise duty and suppression of manufacturing activity, the Tribunal upheld the duty demands, penalties, and confiscation of goods. The penalties imposed on M/s. Priya Manufacturer and M/s. Raj Engineers were confirmed, albeit with a reduction in the redemption fine and some adjustments in penalty amounts. The penalties on Shri Babubhai Patel were also modified.In conclusion, the appeals were dismissed, and the Tribunal's findings regarding the denial of exemption, evasion of excise duty, and penalties were upheld based on the evidence and legal interpretations presented in the case.