2006 (5) TMI 213 - AT - Central Excise

Summary

Issues:
Classification of goods under Chapter Heading 5401.20 or 5403.41, eligibility for small scale exemption under Notification No. 1/93, brand name usage, applicability of Notification No. 35/95.

Classification of Goods:
The appellants claimed their product, embroidery thread, should be classified as yarn under Chapter Heading 5403.41, eligible for small scale exemption. They argued that a letter from the Jurisdictional Superintendent supported their classification. However, the department contended that the thread was rightly classified under Chapter Heading 5401.20 as sewing thread. The Tribunal found that the appellants failed to establish a prima facie case for their classification, directing them to pre-deposit a sum towards duty.

Small Scale Exemption:
The appellants were availing small scale exemption under Notification No. 1/93 due to their clearance being below the exemption limit. However, the department seized goods and held that the exemption was inadmissible as the goods were being cleared under a brand name belonging to another entity. The Tribunal noted that the plea regarding the assignment of the brand name was not prima facie tenable based on written submissions by the brand name owner, M/s. Hari Thread Works.

Brand Name Usage:
An alternative plea was made by the appellants regarding the brand name usage, stating that a deed of retirement was executed transferring the brand name to an individual. They argued that this transfer entitled them to exemption under the brand name. The department, however, contended that the brand name was not permitted for use by the appellants. The Tribunal found the brand name usage plea not tenable based on the submissions by the brand name owner.

Applicability of Notification No. 35/95:
The appellants also argued for exemption under Notification No. 35/95, claiming that the yarn purchased from the market was to be treated as duty paid. However, the department submitted that the benefit under the notification was not available for sewing thread. The Tribunal noted that the Notification specifically excluded sewing thread from its purview, and the appellants failed to establish the applicability of the Notification.

In conclusion, the Tribunal directed the appellants to pre-deposit a specified amount towards duty within a given timeframe, with the balance amount of duty and penalty waived upon compliance. Failure to comply would result in the dismissal of the appeal without further notice.