2006 (12) TMI 252 - AT - Central Excise

Summary

Issues:
Duty demand on goods manufactured under a disputed brand name/logo; Dispute over ownership of brand name affecting eligibility for small scale exemption; Imposition of penalty and confiscation based on duty demand within normal period specified under Section 11A.

Analysis:
The judgment by the Appellate Tribunal CESTAT, New Delhi dealt with the duty demand on goods, including Syrups and Wafers, manufactured by the appellant under the brand name/logo of "HALDIRAM BHUJIAWALA." Central Excise Officers visiting the appellant's unit noted certain stocks, leading to duty demand on those items due to the use of another person's brand name, rendering the goods ineligible for small scale exemption.

The appellant argued that the duty demand had already been discharged, citing an interim injunction from the Delhi High Court against the use of the brand name. They contended that since the ownership of the brand name was under dispute in the High Court, penalties and confiscation were unjustified. The appellant claimed that the duty liability arose from a family dispute over the actual ownership of the brand name, not from any intentional wrongdoing.

The Tribunal acknowledged the merit in the appellant's argument regarding confiscation and penalty. They noted that the High Court's judgment confirmed the ownership dispute over the brand name. As the duty demand was related to stocks found during the visit and fell within the normal period specified under Section 11A, the Tribunal concluded that confiscation and penalty were unwarranted when non-payment stemmed from a genuine dispute rather than willful non-compliance.

In the final decision, the Tribunal partially allowed the appeal by overturning the confiscation and penalty while confirming the duty demand. The judgment emphasized that when duty demand arises from a bona fide dispute, especially within the normal period, confiscation and penalties may not be justified, as was the case with the appellant's situation.