2005 (2) TMI 647 - AT - Central Excise

Summary

Issues:
- Interpretation of SSI exemption under Notification No. 175/86
- Use of brand name owned by another entity on products
- Transfer of ownership rights of brand name through assignment
- Eligibility for SSI exemption based on ownership of brand name

Analysis:
The appeal before the Appellate Tribunal CESTAT, New Delhi involved a dispute over the eligibility of the respondents for the Small Scale Industry (SSI) exemption under Notification No. 175/86 despite using a brand name owned by another entity on their products, detergent powder, and cake. The Revenue challenged the order-in-appeal that allowed the benefit of the exemption to the respondents. The Tribunal had earlier upheld the order-in-appeal, but the matter was remanded by the Apex Court for a fresh decision specifically concerning the respondents.

Upon hearing both sides, the learned SDR argued that since the respondents used the brand name 'Skylark' owned by M/s. CMC India Pvt. Ltd., who was not eligible for the SSI exemption, the respondents could not claim the benefit of the notification. Reference was made to a relevant judgment by the Apex Court in a similar context. On the contrary, the Counsel for the respondents contended that as assignees of the brand name from M/s. CMC (I) Pvt. Ltd., they were entitled to the SSI exemption benefit under the notification, especially when the original owner was eligible for the exemption.

After a thorough examination of the facts and arguments presented, the Tribunal agreed with the contention raised by the learned SDR. It was established from the records that the brand name 'Skylark' originally belonged to M/s. CMC (I) Pvt. Ltd., which later assigned it to M/s. Vikshara Trading Co. Ltd. The respondents obtained permission to use the brand name through an agreement with M/s. Vikshara Trading & Investment Co. However, the ownership of the brand name remained with M/s. CMC India Pvt. Ltd., who was not eligible for the SSI exemption. The Tribunal emphasized that ownership rights in the brand name were not transferred to the respondents, and therefore, they could not claim the benefit of the notification.

Furthermore, the Tribunal highlighted that the manufacturing of different goods by the owner of the brand name did not impact the eligibility for the SSI exemption. Citing a recent judgment by the Apex Court, it was clarified that even in such scenarios, the exemption would not be available. Consequently, the impugned order granting the benefit of the exemption to the respondents was set aside, and the appeal of the Revenue was allowed with any consequential relief deemed necessary.