2010 (7) TMI 863 - AT - Central Excise

Summary

Issues Involved:
1. Whether the respondent company M/s. Ganesh Enterprises is a subsidiary of Ganesh Beedi Works and hence clearances of both the units need to be clubbed and SSI benefit can be denied since the value of clearances exceeded the limit.
2. Whether the wordings used by the appellants on the detergent cakes wrapper would amount to using the brand name/trade name, house mark of some other persons due to which they are not eligible for benefit of SSI Exemption.

Summary:

Issue 1: Clubbing of Clearances and SSI Benefit Denial
The adjudicating authority denied the SSI exemption to M/s. Ganesh Enterprises, alleging it was a subsidiary of Ganesh Beedi Works, thus necessitating the clubbing of clearances. The Commissioner (Appeals) set aside this finding, noting that both firms, despite having the same partners, were separately constituted, operated at different locations, and manufactured different products. The Commissioner emphasized that no ownership or managerial control existed between the two firms, and they dealt with each other on a principal-to-principal basis. The Tribunal upheld this view, stating that the provisions of Section 4 of the Central Excise Act, which pertain to valuation, do not apply to the denial of SSI exemption under Notification No. 8/2003. The Tribunal found no evidence of financial flowback or interconnectedness beyond common partners, thus dismissing the revenue's appeal on this point.

Issue 2: Use of Brand Name/Trade Name
The adjudicating authority also denied the SSI exemption based on the use of the brand name belonging to M/s. Mangalore Ganesh Beedi Works. The Tribunal found that the inscriptions on the detergent cakes, such as "A quality product from Mangalore Ganesh Beedis" and "since 1940," indicated a connection with Mangalore Ganesh Beedi Works. This connection suggested that the products were from the House of Mangalore Ganesh Beedis, thus attracting the mischief of Notification No. 8/2003. The Tribunal referred to the Supreme Court's decision in CCE Trichy v. Grasim Industries, which held that using another company's trade name to indicate a connection in trade disqualifies the benefit of SSI exemption. Consequently, the Tribunal remanded the matter for a limited purpose of re-quantifying the duty amount for the period during which the inscriptions were used and directed the adjudicating authority to consider penalties based on the revised duty liability.

Disposition:
The appeal was disposed of with the Tribunal upholding the Commissioner (Appeals) on the clubbing issue and remanding the matter for re-quantification of duty and reconsideration of penalties regarding the use of the brand name.