1996 (6) TMI 218 - AT - Central Excise

Appellants penalized for wrongful benefit claim under Notification No. 175/86.

The Tribunal found that the appellants willfully suppressed the fact that the brand name owner was ineligible for the exemption under Notification No. ... SSI Exemption - Brand name of a trader Issues:1. Demand of duty for goods manufactured with another brand name2. Invocation of longer period of limitation3. Eligibility for benefit of Notification No. 175/864. Affixing of brand name on the product5. Applicability of penaltyAnalysis:1. The appeal concerned the demand of duty for goods manufactured by the appellants with a brand name belonging to another entity. The appellants had availed exemption under Notification No. 175/86 for certain products. However, it was found that the brand name owner was a trading concern without a factory, rendering them ineligible for the exemption. The central issue was whether the appellants willfully suppressed this fact to evade duty payment.2. The invocation of a longer period of limitation was contested by the appellants, arguing that the brand name owner need not be a manufacturer to avail the exemption. They also claimed that the brand name was not affixed to the product directly. The appellants asserted that they believed in good faith that the brand name owner was eligible for the benefit of the notification, emphasizing the onus on the department to verify the status of the brand name owner.3. The Tribunal analyzed whether the goods in question were eligible for the benefit of Notification No. 175/86. It was established that the brand name on the wrapper of the confectionery fell within the definition provided in the notification. The Tribunal clarified that the brand name owner being a trader did not affect the application of the notification's provisions, as long as the owner was eligible for the benefit.4. Regarding the affixing of the brand name, the Tribunal held that it being on the wrapper sufficed for the product to be considered branded. The Tribunal emphasized that the eligibility for the notification was contingent on manufacturing parameters, which the brand name owner did not meet. Therefore, the brand name owner was deemed ineligible for the benefit of the notification.5. The Tribunal concluded that the appellants had willfully suppressed the fact that the brand name owner was a trader without a factory, leading to the wrongful availing of the notification's benefit. Consequently, the duty demand was upheld. A penalty was imposed on the appellants, which was reduced upon considering the circumstances. The appeal was rejected, except for the modification in the penalty amount.