2007 (8) TMI 23 - SC - Central Excise

Use of Brand name of other - SSI Exemption under Notification No. 1/93 - C.E. - Supreme court has allowed SSI Exemption to the assessee for using brand name of the other person who was also entitled to avail SSI exemption

Summary

Issues:
1. Eligibility of small scale industrial unit for exemption under Notification No.1/93-CE dated 28.2.1993.
2. Interpretation of Notification No.175/86-C.E. dated 1.3.1986 and subsequent amendments regarding exemption to small scale units.
3. Application of the judgment in Namtech Systems Ltd. v. Commissioner of Central Excise, New Delhi (2000 (115) E.L.T./ 238 (Tribunal)).

Analysis:

Issue 1: The main issue in this case was the eligibility of a small scale industrial unit (SSI Unit) for exemption under Notification No.1/93-CE dated 28.2.1993. The Tribunal held that the SSI Unit, which was a manufacturer of aerated water, was eligible for exemption as the brand name owner was also eligible for exemption under the same notification. The appellant challenged this decision, arguing that the purpose of the notification had been misunderstood. However, the Supreme Court upheld the Tribunal's decision, emphasizing that as long as the brand name owner was eligible for exemption, the SSI Unit could also avail of the exemption.

Issue 2: The interpretation of Notification No.175/86-C.E. dated 1.3.1986 and its subsequent amendment was crucial in this case. The notification provided exemption to specified goods cleared for home consumption by a manufacturer eligible for exemption. The Court highlighted that the notification was 'goods specific', requiring the manufacturer to be eligible for exemption in respect of the specified goods. The Court discussed the importance of this requirement to prevent redundancy in the purpose of the notification. The subsequent amendment clarified that the exemption would not apply if specified goods were affixed with a brand name of a person not eligible for exemption under the notification.

Issue 3: The judgment in Namtech Systems Ltd. v. Commissioner of Central Excise was referenced to support the decision in this case. The judgment held that affixation of specified goods with a brand name of an ineligible Indian manufacturer would disqualify the goods from exemption. It was emphasized that the benefit of small scale exemption would not apply if the goods were affixed with the brand name of a non-manufacturer. Although this judgment was not directly considered by the Tribunal in the present case, the principles laid down in Namtech Systems Ltd. were deemed relevant in determining the eligibility for exemption under the notifications.

In conclusion, the Supreme Court dismissed the appeal, affirming the Tribunal's decision regarding the eligibility of the SSI Unit for exemption under Notification No.1/93-CE. The Court emphasized the importance of the manufacturer's eligibility for exemption in respect of the specified goods as per the 'goods specific' nature of the notifications. The judgment in Namtech Systems Ltd. was indirectly applied to support the decision, highlighting the significance of brand name ownership and eligibility for exemption in such cases.