2002 (8) TMI 478 - AT - Central Excise

Issues Involved:
1. Availability of small scale exemption to goods manufactured by the appellant.
2. Whether the goods manufactured were branded goods.
3. Applicability of Board's Circular No. 71/71/94-CX.
4. Relevance of the decisions in Prakash Industries and SA Industries cases.
5. Invocation of extended period of limitation.
6. Imposition of penalty under Section 11AC of the Central Excise Act.

Detailed Analysis:

1. Availability of Small Scale Exemption:
The primary issue was whether the benefit of small scale exemption under Notification No. 1/93-C.E., dated 28-2-93, and subsequent notifications, was available to the appellant for the goods they manufactured. The appellant argued that they manufactured MDF Cable assembly for M/s. Fujitsu India Telecom Ltd. according to their technical specifications and that the cable assembly was used as original equipment in the manufacture of Digital Switching System by Fujitsu India. The appellant contended that they did not affix any trade mark or brand name on the cable assembly and used connectors bearing the "FUJITSU" mark supplied by Fujitsu India.

2. Whether the Goods Manufactured were Branded Goods:
The Commissioner denied the small scale exemption benefit on the grounds that the goods were branded, as they bore the "FUJITSU" mark on the connectors. The appellant countered that "FUJITSU" was not a brand name or trade mark but a house mark of Fujitsu India, and the cable assembly was not sold under the brand name "Fujitsu" but under the brand name "FEEX - 150."

3. Applicability of Board's Circular No. 71/71/94-CX:
The appellant referred to the Board's Circular dated 27-10-94, which provided that the brand name provisions would not apply if there was no trade of such goods and if the goods were sold to industrial consumers for use as original equipment. The appellant argued that the cable assembly was sold to Fujitsu India for further use and not traded in the market, thus qualifying for the small scale exemption.

4. Relevance of the Decisions in Prakash Industries and SA Industries Cases:
The appellant cited the Tribunal's decision in Prakash Industries, which held that branded goods supplied to customers and not traded in the market would not be denied small scale exemption. Similarly, in SA Industries, it was held that the use of a brand name was not in the course of trade if the branded goods were supplied to the owner of the brand name who did not trade them in the market. The Tribunal found that these decisions were applicable to the present case, as the goods were not traded in the market but supplied to Fujitsu India for their own use.

5. Invocation of Extended Period of Limitation:
The appellant argued that the extended period of limitation could not be invoked as there was no suppression or mis-statement on their part. They regularly submitted gate passes/invoices and RT 12 returns to the Department, and the fact of supply to Fujitsu India was well within the Department's knowledge.

6. Imposition of Penalty under Section 11AC of the Central Excise Act:
The appellant contended that the penalty under Section 11AC could not be imposed as there was no suppression or mis-statement of fact. They also argued that Section 11AC came into force on 28-9-96 without retrospective effect, and penalties could not be imposed for transactions before this date. The Tribunal agreed, citing the Supreme Court's decision in CCE, Coimbatore v. Elgi Equipment Ltd. and the Larger Bench decision in Gomti Carbon Dioxide v. CCE, Kanpur.

Conclusion:
The Tribunal concluded that the goods manufactured by the appellant did not bear the brand name as defined in Explanation IX to the Notification, and thus, the benefit of the small scale exemption could not be denied. The Tribunal allowed the appeal on merits without addressing the issue of the extended period of limitation. The Tribunal also found that the Board's Circular dated 27-10-94 and the decisions in Prakash Industries and SA Industries were applicable, supporting the appellant's claim for small scale exemption.

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