2005 (12) TMI 439 - AT - Central Excise

Summary

Issues:
- Allegation of suppression of facts regarding manufacture and clearance of ready-made garments bearing the brand name of others.
- Interpretation of Rule 4(3) of Central Excise Rules, 2001 regarding job work manufacturing and liability for duty payment.
- Lack of specificity in the Show Cause Notice regarding brand names and ownership, impacting the sustainability of the demand for duty, penalty, and interest.

Analysis:
The appeals were filed against Orders-in-Appeal passed by the Commissioner of Central Excise (Appeals-II), Bangalore, concerning the alleged suppression of information related to the manufacture and clearance of ready-made garments bearing others' brand names. The appellant contended that they did not suppress any information and that they manufactured garments on a job work basis for M/s. Topstitch, using brand names belonging to the principal. The appellant argued that as per Rule 4(3) of the Central Excise Rules, 2001, M/s. Topstitch should be considered the manufacturers of the garments bearing their brand names, not the appellants. Additionally, the appellant mentioned exporting garments as per overseas buyers' specifications, with rejected or leftover goods sold domestically under the belief of exemption up to Rupees one crore.

Upon reviewing the case records and the Show Cause Notice's contents, the Tribunal noted the lack of specific details regarding the brand names and their ownership alleged to have been used by the appellants. The Tribunal highlighted Rule 4(3) of the Central Excise Rules, 2001, emphasizing that if the appellants manufactured goods on job work for M/s. Topstitch, then M/s. Topstitch should be considered the manufacturers. Consequently, if the goods were cleared to M/s. Topstitch, the appellants would not be liable for duty under Rule 4(3). The Tribunal found the Show Cause Notice vague and lacking clarity on the brand names marked on the rejected export goods cleared domestically. Due to these deficiencies and the failure of the Revenue to present a strong case against the appellants, the Tribunal allowed the appeals and provided consequential relief, if any.

In conclusion, the judgment focused on the interpretation of Rule 4(3) of the Central Excise Rules, 2001, to determine liability for duty payment in job work manufacturing scenarios. The lack of specificity in the Show Cause Notice regarding brand names and ownership proved detrimental to sustaining the demand for duty, penalty, and interest. The Tribunal's decision was in favor of the appellants due to the insufficiency of evidence and clarity in the allegations presented by the Revenue.