2009 (1) TMI 568 - AT - Central Excise

Summary

Issues:
Claim of SSI exemption by manufacturers of paints under Chapter 32 of CETA, 1985; Allegation of affixing goods with brand names belonging to a trading firm; Demand for duty payment and penalties under Central Excise Act, 1944 and Central Excise Rules; Appeal against demands and penalties imposed by Additional Commissioner; Commissioner (Appeals) decision in favor of manufacturers; Revenue's appeal against Commissioner (Appeals) decision.

Analysis:

The case involved two manufacturers of paints falling under Chapter 32 of the Central Excise Tariff Act, 1985, who cleared excisable goods to a trading firm without paying duty after affixing the goods with certain names alleged by the Department to belong to the trading firm. Show-cause notices were issued to the manufacturers seeking to deny the benefit of Small Scale Industry (SSI) exemption, demanding duty payment, and invoking penal provisions under Section 11AC of the Central Excise Act, 1944, along with proposing penalties under Rule 209A of the Central Excise Rules. The Additional Commissioner confirmed the demands and imposed penalties, leading to appeals by both the manufacturers and the trading agency against these orders. Subsequently, the Commissioner (Appeals) set aside the demands, accepting the submission that the brand names did not belong to the trading agency, resulting in the Revenue appealing against this decision.

During the hearing, it was revealed that the partner of the trading agency had stated in an affidavit that the agency did not own the brand names in question. The Commissioner (Appeals) relied on this affidavit and a statement made before the Sales Tax authorities indicating that the trading agency did not own any brand names. The Department failed to produce any evidence to establish that the names used by the manufacturers were indeed the brand names of the trading agency, except for a statement by the Manager of the firm, which was later retracted. Consequently, the Tribunal found no justification to interfere with the Commissioner (Appeals) decision. Therefore, the Tribunal upheld the decision in favor of the manufacturers and rejected the appeals filed by the Revenue.

In conclusion, the Tribunal's decision was based on the lack of concrete evidence provided by the Department to prove that the brand names belonged to the trading agency, especially after contradictory statements were made by the partner of the agency and the Manager of the firm. This case highlights the importance of substantial evidence in establishing ownership of brand names and the implications for excise duty exemptions and penalties under relevant laws and rules.