Tribunal: Exemption not for goods with foreign brands. Decision supports small Indian manufacturers.

NAMTECH SYSTEMS LTD. Versus COMMISSIONER OF CENTRAL EXCISE, NEW DELHI

NAMTECH SYSTEMS LTD. Versus COMMISSIONER OF CENTRAL EXCISE, NEW DELHI - 2000 (115) E.L.T. 238 (Tribunal) Issues Involved:
1. Availability of small scale exemption under Notification No. 175/86-C.E. and Notification No. 1/93-C.E. for goods affixed with the brand name/trade name of a non-Indian or non-manufacturer.

Summary:

Issue 1: Availability of Small Scale Exemption for Goods Affixed with Foreign Brand Names
- The Larger Bench was tasked with determining whether small scale exemption under Notification No. 175/86-C.E. and Notification No. 1/93-C.E. was available when specified excisable goods were affixed with a brand name or trade name of a person who was not Indian or a non-manufacturer.
- The South Regional Bench at Madras referred the matter to a Larger Bench based on conflicting interpretations of the exemption notifications, particularly in the context of foreign brand names.
- The Assistant Collector of Central Excise, Bangalore, and the Collector of Central Excise (Appeals), Bangalore, had previously denied the exemption to M/s Sharp Business Machines Pvt. Ltd. for using foreign brand names 'Canon', 'Richo', and 'Nashua'.

Legal Provisions and Interpretations:
- Notification No. 175/86-C.E. and Notification No. 1/93-C.E. provided exemptions to small scale manufacturers under specific conditions, including restrictions on using brand names of ineligible persons.
- The term 'another person who is not eligible for the grant of exemption under this notification' was central to the dispute, with different interpretations leading to conflicting decisions.

Judgment:
- The Tribunal analyzed various cases and legal provisions, concluding that the benefit of small scale exemption was not available to specified goods affixed with the brand name or trade name of a foreign person or a non-manufacturing trader.
- The Tribunal held that the term 'person' in the notifications was intended to include manufacturers of excisable goods in India and that foreign brand names could not be placed in a more advantageous position than Indian brand names.
- The Tribunal emphasized that the exemption's purpose was to support small manufacturers in India, and using foreign brand names undermined this objective.

Separate Judgments:
- Member (Judicial) G.A. Brahma Deva disagreed with the majority view, arguing that the eligibility criterion should not extend to persons not liable to pay duty under excise law. He contended that the exemption should not be denied to small scale units using foreign brand names or brand names of non-manufacturing traders.
- Member (Judicial) P.G. Chacko concurred with G.A. Brahma Deva, emphasizing that the term 'another person who is not eligible for the grant of exemption' should be interpreted to mean manufacturers of excisable goods in India.

Final Order:
- By majority, it was held that the benefit of small scale exemption under Notification No. 175/86-C.E. and Notification No. 1/93-C.E. was not available to specified goods where the manufacturer affixes the goods with the brand name or trade name of a foreign person or a non-manufacturing trader.