2005 (9) TMI 367 - AT - Central Excise

Summary

Issues:
Revenue's appeal against dropping proceedings based on allegations of misuse of brand name 'Stay on' on product Label Stock by respondent M/s. Sri Industries.

Analysis:
The appeal before the Appellate Tribunal CESTAT, Bangalore involved the Revenue contesting the dropping of proceedings against M/s. Sri Industries by the adjudicating authority based on allegations of misusing the brand name 'Stay on' on their Label Stock product. The case originated from an investigation by the officers of DGAE, Regional Unit, Hyderabad, regarding the use of 'Stay on' brand name on the product by M/s. Sri Industries. The Revenue contended that M/s. Sri Industries affixed the 'Stay on' brand name belonging to SPPL on their product, thereby disqualifying them from SSI exemption. A Show Cause Notice was issued, leading to confirmation of demand and penalties by the adjudicating authority. Appeals and remand orders followed, ultimately resulting in the impugned order dropping the proceedings against M/s. Sri Industries. The Revenue, aggrieved by this decision, approached the Tribunal seeking relief.

The grounds of appeal raised by the Revenue included discrepancies in the statements provided by M/s. Sri Industries' officials regarding the printing of the 'Stay on' logo on the release paper, as well as contentions regarding the duty demand proposed in the Show Cause Notice. The Revenue argued that the engraved cylinders with the 'Stay on' logo were found in M/s. Sri Industries, indicating their involvement in the printing process, justifying the denial of small-scale exemption and duty demand. Additionally, the Revenue challenged the applicability of certain Tribunal/Supreme Court observations cited by the Commissioner, emphasizing that the raw material did not bear the logo of the manufacturer, and the printing activity was carried out by M/s. Sri Industries themselves.

During the hearing, the Tribunal examined the nature of Label Stock manufacturing, involving the use of Front Paper and Release Paper, the latter being purchased from various suppliers and often printed with the supplier's logo. The central allegation against M/s. Sri Industries was the use of the 'Stay on' brand name, purportedly belonging to SPPL, in their product. However, the Tribunal noted that the respondent procured Release Paper not only from SPPL but also from other suppliers, with a larger quantity sourced from the latter. Samples presented during the hearing showed different brand names on the Release Papers, with no definitive evidence linking M/s. Sri Industries to printing the 'Stay on' logo. The adjudicating authority's decision was influenced by the absence of conclusive proof that the finished product carried the same brand name as the raw material, aligning with the principles established in prior cases like M/s. Vimal Printery & Others v. Collector of Central Excise, Vadodara. Ultimately, the Tribunal upheld the Commissioner's balanced order, emphasizing the importance of factual considerations over mere statements, and dismissed the Revenue's appeal.

In conclusion, the Tribunal's decision highlighted the significance of substantial evidence in establishing allegations of brand name misuse, emphasizing the need for a direct link between the raw material branding and the finished product. The judgment underscored the importance of a thorough assessment of facts and balanced decision-making in such cases, ultimately upholding the adjudicating authority's order and dismissing the Revenue's appeal.