2007 (11) TMI 466 - AT - Customs

Summary

Issues involved:
The issues involved in the judgment are related to the eligibility of the appellants for Small Scale Industry (SSI) exemption under Notification No. 175/86-C.E. and Notification No. 1/93-C.E. for the period 1989-92 and March 1993 to December 1994. The main contention was whether the appellants were entitled to the exemption considering the use of the brand name 'Goldhofer' on their product labels.

Details of the Judgment:

Issue 1: Eligibility for SSI exemption under Notification No. 175/86-C.E. and Notification No. 1/93-C.E.
The appellants, engaged in manufacturing trailers and transport equipment, had entered into a collaboration agreement with a German company. The dispute arose due to the use of the brand name 'Goldhofer' on their product labels, which the department argued made them ineligible for SSI benefit under the notifications. Show-cause notices were issued for duty recovery, and penalties were imposed by the Collector of Central Excise. The appellate Commissioner affirmed the orders based on previous decisions. The Collector held that the appellants were not entitled to the exemption as the brand name 'Goldhofer' belonged to the foreign company. However, the Tribunal disagreed, stating that the use of 'Goldhofer' did not necessarily indicate a connection with the German company. The Tribunal referred to previous cases where similar inscriptions did not amount to using the brand name of the foreign collaborator. Therefore, the Tribunal held that the appellants were eligible for the SSI exemption under the notifications for the disputed periods.

Issue 2: Interpretation of brand name/trade name and collaboration agreement
The Tribunal analyzed the collaboration agreement between the appellants and the German company, which required affixing a label stating the products were manufactured under license from the foreign company. The Tribunal noted that the intention was to indicate collaboration and not necessarily a brand association. The Tribunal also referred to case law where inscriptions indicating technical collaboration did not constitute the use of a brand name. By examining the definitions of brand name/trade name under the notifications, the Tribunal concluded that the appellants' use of 'Goldhofer' did not disqualify them from the SSI exemption.

Conclusion:
The Tribunal allowed the appeals on merits, setting aside the impugned orders and holding that the appellants were eligible for the exemption under Notifications 175/86-CE and 1/93-CE for the disputed periods. The time-bar issue was not addressed as the appeals were allowed based on the eligibility for SSI exemption.

*(Operative part of the order was pronounced in open Court on 7-11-2007)*