2014 (12) TMI 1220 - AT - Central Excise

Real manufacturer - Duty demand - whether the goods under dispute did not bear the brand name Deep ? - penalty imposed - Held that - The main appellant was registered with the Directorate of Industry right from 1985. Similarly, Deep Metal Works was also registered with the Directorate of Industry with effect from 13-3-1990. We have also gone through the various invoices under dispute. All the invoices very clearly state the main appellant as the manufacturer of stainless steel articles. We also note that Shri Prakash Nahar has very clearly admitted in his statement that both the units are manufacturing cutlery items and he is looking after the day-to-day work of both the units. There has been no averment on his part that the main appellant, i.e. Deep Engineering Works, was a trading unit or was getting the goods manufactured from Deep Metal Works. We observe that such a stand has been taken by the main appellant only after the issuance of show cause notice. Even in reply to the show cause notice, though they have taken such a stand, they were not able to prove anything about the procurement of either the finished products or the raw material and related payment details from anyone. Under the circumstances, we are of the considered view that the main appellant is one of the manufacturing unit and has manufactured the goods under dispute, as has been claimed by them even, in the declaration filed by them as also in the various statements of Shri Prakash Nahar who was looking after both the units The learned Counsel for the main appellant has argued that the goods were not seized by the visiting Excise officer. This itself proves that the finished goods did not bear any brand name. We are not convinced with this argument. First of all, the duty is not demanded in respect of the finished goods found during the visit of the officers but on their past declarations. Further, there is no indication whatsoever that the goods were not bearing the brand name. On the contrary, the statement recorded on that very day clearly indicates that the goods of both the units bear the brand name Deep . Under the circumstances, we reject the said contention of the appellant. We also note that the fact that the goods manufactured by the main appellant bear the brand name of other person was not disclosed to the department and this is a clear-cut suppression of facts. In fact the appellant has not even taken the Central Excise registration with the department. In such a situation, in our view, extended period of limitation would be clearly applicable. Once the goods are bearing the brand name of other person, the main appellant was not entitled for the SSI exemption and it was their duty to take the Central Excise registration and pay the duty. It is also stated that the sole proprietorship business firm is not a sui juris and it cannot be a party any proceedings. We note that the declaration was filed in the name of Deep Engineering Works and the notice was issued in the same name. The main appellant has replied and participated in the proceedings till date and under the circumstances, we do not find any force in the argument of the main appellant. As far as the role of Shri Bharat Shah is concerned, it is clear from the details that he was aware that the goods are bearing the brand name and was therefore liable to pay duty and the goods were also confiscable, but as the goods had been cleared long back, the same could not have been confiscated. The penalty imposed under Rule 209A of the Central Excise Rules is in order. We also find that Shri Prakash Nahar has been looking after both the units day-to-day activities and even during investigation he has agreed to pay the duty, but still he has not paid the duty. Undoubtedly, he has dealt with the goods in respect of which the demand has been raised. He was aware that the goods are bearing the brand name of other company and the penalty has been correctly imposed under Rule 209A on appellant No. 3.

Issues Involved:
1. Clubbing of clearances and affixing of the brand name of another person.
2. Eligibility for SSI exemption.
3. Demand of duty and imposition of penalty.
4. Validity of the show cause notice and extended period of limitation.
5. Denial of cross-examination.
6. Validity of the adjudication order.

Issue-wise Detailed Analysis:

1. Clubbing of Clearances and Affixing of the Brand Name of Another Person:
The main appellant argued that the case pertains to the clubbing of clearances but the Revenue focused on the affixing of the brand name of another person. The appellant contended that Deep Engineering Works was a trading concern getting goods manufactured from Deep Metal Works, thus duty should be demanded from Deep Metal Works. However, the Tribunal found that both units were manufacturing excisable goods and using the brand name "DEEP," which belonged to Deep Metal Works. The evidence indicated that goods manufactured by Deep Engineering Works bore the brand name "DEEP," making them ineligible for SSI exemption.

2. Eligibility for SSI Exemption:
The Tribunal noted that both units filed declarations under Rule 174 of the Central Excise Rules, indicating they were manufacturing units availing SSI exemption. The main appellant's argument that Deep Engineering Works was a trading unit was not substantiated with evidence. The Tribunal concluded that Deep Engineering Works was indeed a manufacturing unit, and the goods bore the brand name "DEEP," thus disqualifying them from SSI exemption.

3. Demand of Duty and Imposition of Penalty:
The demand for duty arose because Deep Engineering Works used the brand name "DEEP," belonging to another entity, making them ineligible for SSI exemption. The Tribunal upheld the demand for duty and penalties imposed by the adjudicating authority and the Commissioner (Appeals). It was noted that the goods manufactured by Deep Engineering Works bore the brand name "DEEP," and there was clear suppression of facts, justifying the imposition of penalties.

4. Validity of the Show Cause Notice and Extended Period of Limitation:
The appellant argued that the show cause notice was issued after four years and eight months without allegations of suppression of facts or fraudulent intent. The Tribunal found that the use of the brand name "DEEP" was not disclosed to the department, constituting suppression of facts. Therefore, the extended period of limitation was applicable, and the demand for duty was valid.

5. Denial of Cross-examination:
The appellant contended that they were not permitted to cross-examine key witnesses. The Tribunal noted that Shri Prakash Nahar's statements were consistent and not retracted, and he was responsible for the day-to-day activities of both units. The denial of cross-examination did not adversely affect the main appellant's case. The Tribunal found no merit in this argument.

6. Validity of the Adjudication Order:
The appellant argued that the adjudication order was not signed by the adjudicating authority. The Tribunal reviewed the order and found it was duly signed, dismissing this objection as irrelevant.

Conclusion:
The Tribunal dismissed all three appeals, upholding the demand for duty and penalties imposed on the appellants. The arguments presented by the appellants were found to be unsubstantiated, and the Tribunal concluded that the goods manufactured by Deep Engineering Works bore the brand name "DEEP," making them ineligible for SSI exemption. The extended period of limitation was applicable due to suppression of facts, and the denial of cross-examination did not affect the outcome of the case.

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