2003 (6) TMI 243 - AT - Central Excise

Summary

Issues: Classification of goods under Central Excise Tariff, Benefit of Small Scale Exemption Notification

The judgment involves an appeal filed against the order passed by the Commissioner (Appeals) concerning the classification of goods under the Central Excise Tariff and the entitlement to the Small Scale Exemption Notification. The appellants, engaged in manufacturing caps and bags with customer logos, were issued a show cause notice for misclassification and denial of exemption. The adjudicating authority upheld the proposed classification, denied the exemption, ordered confiscation of goods, and imposed penalties.

Regarding the classification of goods, the appellants contended that caps should be classified under Heading 6101.00 or alternatively under Heading 6102.00 of the Central Excise Tariff. However, the Revenue classified caps under Heading 6501.80, arguing that as headgear covers the head, caps fall under this category. Additionally, the bags were claimed to be clothing accessories under Chapter heading 61 or 62, but the Revenue specified that socks and bags are covered under Heading 6305.00. Consequently, the bags were classified under Heading 6305.00 of the Central Excise Tariff.

The primary issue in the appeal was the entitlement to the Small Scale Exemption Notification. The lower authorities rejected the claim due to the goods being cleared with the brand names of others. The appellants argued that the goods were used as advertising material only, citing various brand names like Pepsi, Nike, and others. Relying on precedents, the appellants contended that the use of brand names for goods not traded in the market should not disqualify them from the exemption. The Tribunal agreed that goods cleared to customers not trading in such items were eligible for the exemption.

Regarding goods cleared with the Nike brand, the appellants acknowledged ineligibility for the exemption, but sought abatement of duty based on a Supreme Court decision. The Tribunal found that while goods cleared with the Nike brand were not exempt, abatement of duty was applicable as per the Supreme Court ruling. Consequently, the appellants were entitled to the exemption for most goods, leading to the setting aside of confiscation and penalties imposed. The appeal was disposed of accordingly.