2002 (2) TMI 618 - AT - Central Excise

Summary

Issues Involved:
1. Entitlement to the benefit of small scale exemption Notification No. 1/93 and Notification No. 16/97.
2. Invocation of the extended period of limitation under Section 11A(1) of the Central Excise Act.
3. Legality of joint penalty imposed under Section 11AC, Rule 173Q, and erstwhile Rule 9(2).

Detailed Analysis:

1. Entitlement to the benefit of small scale exemption Notification No. 1/93 and Notification No. 16/97:
The appellants were engaged in manufacturing textile printing adhesive and were using the foreign brand name ATR. The Tribunal had previously determined that the appellants were not entitled to the benefit of small scale exemption Notification No. 1/93 and Notification No. 16/97 because they used the brand name of another person. This finding was based on the fact that the appellants had a technical collaboration with M/s. TR St. Moritz AG, Switzerland, and were affixing labels bearing the foreign brand name ATR on their products. The appellants' contention that they did not use another's brand name was rejected, and the Tribunal's decision was pending appeal before the Supreme Court without a stay on its operation.

2. Invocation of the extended period of limitation under Section 11A(1) of the Central Excise Act:
The appellants argued that the longer period of limitation could not be invoked as the excise department had full knowledge of their activities since 1983. They cited various instances where the department had verified their claims and issued demand notices. However, the Tribunal found that the appellants had suppressed the fact of using another's brand name in their classification lists, RT-12 returns, and other declarations. The Tribunal held that the suppression of this material fact justified the invocation of the extended period of limitation. The Tribunal referred to the larger bench decision in Nizam Sugar Factory v. CCE, Hyderabad, which stated that the department's knowledge did not preclude the extended period of limitation when there was suppression, fraud, or collusion by the assessee.

3. Legality of joint penalty imposed under Section 11AC, Rule 173Q, and erstwhile Rule 9(2):
The appellants contended that joint penalty under these provisions was not permissible. However, the Tribunal upheld the penalty, stating that it was mainly imposed under Section 11AC, which could be read with Rule 173Q and erstwhile Rule 9(2). The Tribunal found that for the period starting from September 1996 onwards, when Section 11AC came into force, and for the earlier period, the penalty could be imposed under the relevant section and rules. The Tribunal dismissed the appellants' argument by citing the cases of Punjab Recorder Ltd. v. CCE, Chandigarh, and M/s. Monica Electronics Limited & Ors. v. CCE, New Delhi, which were not applicable to the appellants' case.

Conclusion:
The Tribunal upheld the adjudicating authority's order, affirming the duty demand and penalty against the appellants. The Tribunal found no illegality in the impugned order and dismissed the appeal, reiterating that the appellants were not entitled to the benefit of the small scale exemption notifications due to their use of another's brand name and that the extended period of limitation was rightly invoked due to suppression of material facts. The penalty imposed under Section 11AC, Rule 173Q, and erstwhile Rule 9(2) was also upheld.