1996 (11) TMI 200 - AT - Central Excise

Tribunal rules against appellants for misusing brand name, upholds penalty.

The Tribunal held that the appellants were ineligible for the benefits of Notification 175/86 due to their misuse of a brand name belonging to another ... SSI Exemption - Brand name - Demand - Limitation Issues:Demand of duty based on eligibility for benefit of Notification 175/86 for P & P medicines manufactured by appellants using a brand name belonging to another person.Analysis:The appeal concerns the demand of duty from the appellants due to their alleged ineligibility for the benefit of Notification 175/86 in relation to P & P medicines they manufactured under a brand name owned by another entity. The appellants argued that they produced goods both independently and through job workers under the same brand name, albeit in different forms (liquid and capsule). They claimed to have a lease agreement with the brand name owners, asserting ownership rights through this agreement. The appellants contended that the brand name usage was distinct for their own products and those manufactured via job work. However, they failed to declare the brand name in their classification list, leading to the department's discovery during an investigation. The Tribunal noted that the lease agreement did not involve royalty payments to the brand name owners, raising questions about the necessity and authenticity of the agreement. The Tribunal concluded that the lease agreement served as a cover for the appellants to exploit the brand name for their benefit under Notification 175/86, indicating an intent to evade duty payment.The Tribunal acknowledged that departmental officers obtained knowledge of the brand name usage on 26-9-1991 from the Production Manager's statement, attributing this date as the point from which the authorities were aware of the appellants' actions. Consequently, the Tribunal held that any demand made after this date would be time-barred. The authorities were criticized for not acting promptly within the six-month limitation period post the mentioned date. The Tribunal emphasized that the appellants' use of the brand name, owned by an ineligible party, disqualified them from availing the benefits of Notification 175/86 before 26-9-1991.Regarding the penalty imposed on the appellants amounting to Rs. 20,000, the Tribunal deemed it appropriate given the circumstances and upheld the penalty. However, apart from this modification, the appeal was rejected in favor of the respondent, emphasizing the appellants' ineligibility for the Notification benefits due to the misuse of the brand name belonging to another entity.