2005 (1) TMI 443 - AT - Central Excise

Summary

Issues:
Manufacture and clearance of goods with a brand name, Small scale exemption notification, Independence of manufacturers, Confiscation of goods without duty payment.

Analysis:
The case involved the manufacturing and clearance of forging of bolts, nuts, and studs by one company, availing the small scale exemption notification, to another company with a different brand name. A demand was raised against the manufacturing company for clearing goods with the brand name of the other company, leading to penalties and confiscation of goods. The appellant argued that they were only manufacturing forging, and the brand name was on the dye of forging, with the complete nuts and bolts coming into existence at the hands of the other company. They relied on a Board's Circular to support their claim that the benefit of the exemption cannot be denied in such cases.

The Revenue contended that both companies were the same entity and hence not entitled to the small scale exemption. However, the Commissioner of Central Excise had previously determined that the companies were independent manufacturers, dropping the duty demand. The Tribunal found that the forging company was indeed manufacturing forgings bearing the brand name of the other company, which was in the dye. The Tribunal referred to the Board's Circular, stating that items bearing a brand name for further manufacturing processes are eligible for the small scale exemption. Since the forgings were cleared to the other company for further processing into nuts and bolts, the benefit of the exemption could not be denied to the forging company.

Consequently, the Tribunal held that the demand for duty and penalties was not sustainable and set them aside. Additionally, since the goods were not considered branded, the confiscation of goods for allegedly being cleared without duty payment was also deemed unsustainable and set aside. Therefore, the appeals were allowed in favor of the appellant company.