2000 (6) TMI 74 - AT - Central Excise

Tribunal grants appeal on embossed brand names, emphasizing trade connection for exemption eligibility.

The Tribunal allowed both appeals, setting aside the impugned order. It concluded that supplying goods with embossed brand names for specific use, not for ... SSI Exemption - Brand name Issues:- Whether the benefit of Notification No. 175/86 is available to the excisable goods manufactured by M/s. S.A. Industries.- Whether the embossing of brand names on goods affects the eligibility for Small Scale exemption under Notification No. 175/86.- Whether the time limit specified in Section 11A of the Central Excise Act applies to the demand for duty.- Whether the imposition of penalty is justified considering the clarity of Notification 175/86 and the alleged suppression of facts by the manufacturer.Analysis:1. Benefit of Notification No. 175/86: The issue revolved around whether M/s. S.A. Industries, manufacturing various plastic articles and supplying goods like T.V. back covers embossed with 'CROMA COLOUR CC,' were eligible for the Small Scale exemption under Notification No. 175/86. The appellant argued that the embossing did not constitute a brand name, and the goods were not traded but supplied to the customer for manufacturing purposes, citing precedents where such use did not amount to using a brand name in the course of trade.2. Embossing of Brand Names: The debate included whether embossing brand names like 'Garden' and 'Honest' on goods affected the eligibility for exemption. The appellant contended that the embossed words did not constitute brand names, and the goods were not traded in the market but used for specific purposes, referencing legal precedents where similar situations were deemed not to be in the course of trade, thus not affecting exemption eligibility.3. Time Limit under Section 11A: The appellant argued that a significant part of the demand was time-barred under Section 11A of the Central Excise Act since the show-cause notice was issued beyond the specified period. It was emphasized that the ambiguity in Notification 175/86, as acknowledged by the Additional Collector, precluded allegations of suppression of facts, drawing on legal precedents where doubts regarding duty liability did not attract Section 11A.4. Imposition of Penalty: The debate considered whether the imposition of penalty was warranted given the alleged suppression of facts by the manufacturer and the clarity of Notification 175/86. The appellant argued that the ambiguity in the notification precluded penalties for non-disclosure, citing legal precedents where doubts regarding duty liability absolved manufacturers from penalties, especially when the notification lacked clarity.5. Judgment: The Tribunal analyzed the provisions of Notification No. 175/86, emphasizing the requirement of a connection in the course of trade between the goods and the brand name to affect exemption eligibility. Relying on legal precedents and clarifications by the Central Board of Excise and Customs, the Tribunal concluded that supplying goods with embossed brand names for specific use, not for trade, did not disqualify from the exemption. Consequently, both appeals were allowed on merits, setting aside the impugned order without delving into the time-barred demand issue.