2001 (8) TMI 770 - AT - Central Excise

Summary

Issues Involved:
1. Availability of exemption under Notification No. 175/86-CE for goods manufactured by M/s. L.M.S. Tool Room.
2. Relationship between M/s. L.M.S. Tool Room and M/s. L.M.S. Marketing Pvt. Ltd.
3. Chargeability of duty on Dyes sent for minor repair by M/s. L.M.S. Tool Room.
4. Determination of related person status between M/s. L.M.S. Tool Room and M/s. L.M.S. Marketing Pvt. Ltd.

Issue 1: Availability of Exemption under Notification No. 175/86-CE
The appeal questioned if the goods manufactured by M/s. L.M.S. Tool Room were eligible for exemption under Notification No. 175/86-CE. The Appellant argued that despite affixing the Brand Name "SHAH TRUMPELT," they were entitled to the exemption as per their arrangement with M/s. Shah Engineering Works and M/s. Narendra Machine Works Pvt. Ltd. The Appellant cited a previous case to support their claim, emphasizing the ownership of the brand name and their entitlement to the exemption.

Issue 2: Relationship between M/s. L.M.S. Tool Room and M/s. L.M.S. Marketing Pvt. Ltd.
The debate revolved around the relationship between M/s. L.M.S. Tool Room and M/s. L.M.S. Marketing Pvt. Ltd. The Appellant contended that despite common directors and business transactions, the marketing company should not be considered a related person. They argued against the flow back of profits and suppression of facts, asserting the absence of mutuality of interest between the two entities.

Issue 3: Chargeability of Duty on Dyes Sent for Repair
Regarding the demand of duty on Dyes sent for minor repair by M/s. L.M.S. Tool Room, the Appellant clarified that the Dyes were returned to customers after repair without any change in name, use, or character. They argued against the duty charge, highlighting the nature of the repair activities undertaken by them.

Issue 4: Determination of Related Person Status
The determination of related person status between M/s. L.M.S. Tool Room and M/s. L.M.S. Marketing Pvt. Ltd. was crucial. The Department contended that the entities were related persons based on common directors, financial transactions, and shared expenses. The Department emphasized the need for full disclosure and invoked the extended period of limitation for duty demand.

Judgment Summary:
The Tribunal analyzed each issue comprehensively. It upheld that the Appellant was not eligible for exemption under Notification No. 175/86-CE due to the use of the brand name "LMS." The Tribunal considered the definition of a brand name and ruled that even an abbreviated form could constitute a brand name, leading to the denial of the exemption. Additionally, the Tribunal affirmed the related person status between M/s. L.M.S. Tool Room and M/s. L.M.S. Marketing Pvt. Ltd., based on common directors and financial interactions, upholding the duty demand. The matter concerning duty on Dyes was remanded for further examination, with a penalty imposed for goods cleared with an ineligible brand name. The penalty amount was reduced considering the acceptance of the plea regarding the "SHAH TRUMPELT" brand name.

This detailed analysis provides a comprehensive overview of the legal judgment, addressing all the issues involved and the Tribunal's findings on each aspect of the case.