Brand name bar and clandestine removal sustained, while part of the duty demand and some penalties were altered.

Small-scale exemption under Notification No. 1/93-C.E. was denied where goods bore the brand name of another person; registration of the mark was not required for the bar to apply. Allegations of clandestine clearance were largely supported by employee statements, parallel invoices and diary entries, so the duty demand was substantially sustained, though the portion tied to diary entries already used against another concern was excluded for reconsideration. Penalties were treated separately: Section 11AC could not apply retrospectively, the firm's composite penalty was remanded under Rule 173Q, the proprietress's penalty was set aside for want of notice under Rule 209A, and the penalty on the controlling person was upheld.

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Issues: (i) Whether use of the brand name "Thermoking" disentitled the unit from the small-scale exemption under Notification No. 1/93-C.E.; (ii) whether the demand based on alleged clandestine clearances, parallel invoices, and diary entries could be sustained; and (iii) whether penalties under Section 11AC of the Central Excise Act, 1944, Rule 173Q and Rule 209A of the Central Excise Rules, 1944 were sustainable.

Issue (i): Whether use of the brand name "Thermoking" disentitled the unit from the small-scale exemption under Notification No. 1/93-C.E.

Analysis: The exemption denied benefit where the specified goods bore a brand name or trade name of another person, whether registered or not. The plea that only a registered brand name could attract the bar was rejected. The record showed that the mark was associated with another proprietary concern and there was no material showing that the electrical appliance trade followed any general practice comparable to the lock industry circular relied upon by the assessee.

Conclusion: The denial of small-scale exemption was upheld and the finding was against the assessee.

Issue (ii): Whether the demand based on alleged clandestine clearances, parallel invoices, and diary entries could be sustained.

Analysis: The statements of employees and the documentary material supported the finding that goods were cleared without proper declaration and that parallel invoices had been maintained. The plea that the activity was only trading, or that returned goods should be excluded, was rejected. However, where the same diary entries had already formed the basis of demand against another concern and had been settled under a statutory scheme, the department could not again recover duty on the same entries from the appellant. That limited portion required fresh examination by the adjudicating authority.

Conclusion: The duty demand was substantially upheld, but the demand relatable to the diary entries was excluded from the present demand and left for reconsideration.

Issue (iii): Whether penalties under Section 11AC of the Central Excise Act, 1944, Rule 173Q and Rule 209A of the Central Excise Rules, 1944 were sustainable.

Analysis: Section 11AC could not be invoked for a period entirely anterior to its insertion. Since the adjudicating authority had imposed a composite penalty under Section 11AC and Rule 173Q, the penalty on the firm was set aside and the matter was remanded for consideration under Rule 173Q after complying with natural justice. The penalty on the proprietress was set aside because the show-cause notice had not proposed such penalty under Rule 209A. The penalty on the person found to be controlling the affairs of the concern was sustained on the basis of his active role in the business and his own statement.

Conclusion: The penalty on the firm was remanded, the penalty on the proprietress was set aside, and the penalty on the controlling person was upheld.

Final Conclusion: The demand and exemption issues were decided largely against the assessee, but the duplicate-demand portion was excluded, the firm's penalty matter was remanded, and one personal penalty was deleted while another was sustained.

Ratio Decidendi: A brand name need not be registered to attract the bar under a small-scale exemption notification if it belongs to another person; duty once attracted on clandestine removal is not displaced by later return of goods; and a composite penalty cannot be sustained under a provision not in force for the relevant period.

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