2025 (1) TMI 534 - AT - Central Excise

Manufacturer gets SSI exemption despite using 'SaBari' brand name, penalties set aside under Notification 8/2003-CE

M/s. Sabari Kitchen Services (P) Ltd. and Mr. M. Thangavelu, Managing Director Versus Commissioner of GST and Central Excise, Coimbatore

M/s. Sabari Kitchen Services (P) Ltd. and Mr. M. Thangavelu, Managing Director Versus Commissioner of GST and Central Excise, Coimbatore - TMI 1. ISSUES PRESENTED and CONSIDEREDThe core legal questions considered in this judgment are:Whether the Appellant A1 is entitled to Small Scale Industry (SSI) exemption under Notification No. 8/2003-CE when using a brand name allegedly belonging to others.Whether the duty demand is affected by the limitation period.2. ISSUE-WISE DETAILED ANALYSISIssue 1: Entitlement to SSI ExemptionRelevant legal framework and precedents: The SSI exemption under Notification No. 8/2003-CE is applicable to small-scale industries up to a certain turnover, provided they do not use the brand name of another person. The definition of a brand name includes any mark that indicates a connection in the course of trade with a person using the name.Court's interpretation and reasoning: The court examined whether the Appellant's use of the brand name 'SaBari' indicated a connection with another entity. It was argued that the brand name was used since 2004 without objection, and the registration of the brand name was pending during the investigation period.Key evidence and findings: The court considered the continuous use of the brand name by the Appellant, the lack of objections from other parties, and the eventual registration of the brand name in 2017.Application of law to facts: The court applied the legal test from previous judgments, including Bhalla Enterprises and Hisaria Electronics, which focused on the intention to indicate a connection with another's goods. The Appellant's use was deemed fortuitous without such intention.Treatment of competing arguments: The Department argued that the brand name belonged to others, but the court found no evidence of an intention to indicate a connection with another's goods.Conclusions: The court concluded that the Appellant was entitled to the SSI exemption as the use of the brand name did not indicate a connection with another entity.Issue 2: Limitation PeriodRelevant legal framework and precedents: The demand for duty is subject to a limitation period unless there is evidence of suppression of facts or intent to evade duty.Court's interpretation and reasoning: The court evaluated whether the extended period for demand was justified based on the Appellant's actions and disclosures.Key evidence and findings: The Appellant had disclosed the use of the brand name and had no objections from others, indicating no intent to suppress information.Application of law to facts: The court found that the Appellant's belief in their eligibility for the exemption was genuine and that there was no suppression of facts.Treatment of competing arguments: The Department's claim of intent to evade duty was not supported by evidence, according to the court.Conclusions: The court held that the demand for duty was not justified beyond the normal limitation period.3. SIGNIFICANT HOLDINGSPreserve verbatim quotes of crucial legal reasoning: 'The Assessee must satisfy the Authorities that there was no intention to disclose any business connection or that the use of the brand name was entirely co-incidental or fortuitous.'Core principles established: The entitlement to SSI exemption hinges on the absence of intent to indicate a connection with another's goods through the use of a brand name. The burden is on the Department to prove such intent.Final determinations on each issue: The Appellant was entitled to the SSI exemption, and the demand for duty was limited to the normal period, with penalties set aside.The judgment ultimately remanded the case for re-computation of duty payable, allowing the SSI exemption for the normal period and setting aside penalties imposed on the Appellants.