2006 (3) TMI 474 - AT - Central Excise

Summary

Issues:
1. Admissibility of concessional rate of duty for chocolates under notification 16/97-CE.
2. Applicability of extended period of limitation.

Analysis:
1. The main issue in this appeal was whether the concessional rate of duty under notification 16/97-CE was applicable to chocolates cleared by the appellants from March to July 1997. The appellants were denied the benefit of the Small Scale Industries (SSI) exemption as the chocolates bore the brand name "ASSORTED TAJ CHOCOLATES" owned by a different company, Indian Group of Hotels Co. Ltd. The extended period of limitation was invoked due to the appellants' claim of exemption in their classification declaration, leading to the suppression of vital facts from the Revenue authorities.

2. The Tribunal considered the evidence presented, including statements from the chief executive and production in-charge of the assessee and the accounts manager. They confirmed that "ASSORTED TAJ CHOCOLATES" was indeed the brand name of another entity, not owned by the appellants. The Tribunal found this evidence to be sufficient to establish that the chocolates in question bore a brand name not belonging to the assessees, thereby disentitling them from the SSI notification benefit. The argument that the burden of proof was not discharged by the Revenue as the brand name owner did not confirm the ownership was rejected.

3. Furthermore, the Tribunal addressed the argument that since the chocolates were not sold by Indian Hotels Co. Ltd., there was no connection in the course of trade between the goods and the brand owner. However, based on the evidence provided, including the labeling on the cartons and a recent Supreme Court judgment, the Tribunal held that the SSI exemption was not available for goods bearing a brand name of another person, even if manufactured for captive consumption. The Tribunal emphasized that the exemption is lost if goods bear a brand name or trade name of another person, irrespective of the sales channel.

4. The Tribunal also discussed the invocation of the proviso to Section 11A(1) of the Central Excise Act due to the misdeclaration by the appellants regarding the brand name usage. The deliberate misdeclaration regarding the non-usage of another person's brand name indicated an intention to evade duty payment. Despite reducing the penalty, the Tribunal upheld the duty demand based on the misdeclaration and suppression of facts.

5. In conclusion, the Tribunal partly allowed the appeal by upholding the duty demand but reducing the penalty imposed on the appellants. The judgment emphasized the importance of accurate declarations and adherence to excise duty regulations to avoid penalties and ensure compliance with the law.