2007 (9) TMI 508 - AT - Central Excise

Summary

Issues involved:
The issues involved in the judgment are the demand of duty under Section 11A(1) of the Central Excise Act, imposition of penalty under Rule 173Q of the Central Excise Rules, 1944, denial of SSI benefit under Notification No. 175/86-CE, and the use of brandname on goods cleared by a subsidiary company.

Demand of Duty and Penalty:
The appeal was filed against an order demanding duty of over Rs. 15.9 lakhs from a company under Section 11A(1) of the Central Excise Act and imposing a penalty of Rs. 16 lakhs under Rule 173Q of the Central Excise Rules, 1944. The demand and penalty were based on the company's alleged use of the brandname of its holding company on goods cleared during a specific period. The Commissioner found that the company had willfully suppressed facts and invoked the extended period of limitation for demanding duty and imposed a penalty. However, the Tribunal noted that the company did not have a case on the brandname-related issue based on a Supreme Court ruling and allowed the appeal by setting aside the demand of duty and penalty.

Denial of SSI Benefit:
The impugned order denied SSI benefit to the company under Notification No. 175/86-CE for a specific period. The denial was based on two grounds: the total turnover of the company exceeded the specified limit under the notification, and the company used the name of its holding company on products, which was considered as using the brandname of the holding company. The Commissioner rejected the proposal to deny exemption based on the company's status as a subsidiary but upheld the denial of benefit on the brandname-related issue. The Tribunal noted that the company did not have a case on the brandname issue based on a Supreme Court ruling and allowed the appeal by setting aside the demand of duty and penalty.

Use of Brandname on Goods:
The company used the name of its holding company on goods cleared during a specific period, which was considered as using the brandname of the holding company. The Commissioner found willful suppression on the part of the company and invoked the extended period of limitation for demanding duty. The Tribunal noted that the company did not have a case on the brandname issue based on a Supreme Court ruling and allowed the appeal by setting aside the demand of duty and penalty. The Tribunal held that the company's use of the brandname was not known to be problematic during the relevant period and upheld the company's plea of bona fide belief.

Separate Judgement:
The judgment was delivered by S/Shri P.G. Chacko and P. Karthikeyan, JJ. The appeal was allowed by setting aside the demand of duty and penalty based on the company's use of the brandname on goods cleared during a specific period.