2007 (5) TMI 100 - AT - Central Excise

SSI Exemption - Revenue contended that appellant product are to be considered as branded product and duty to be discharged by appellant and accordingly not entitle for SSI exemption - Held that revenue contention was not correct and appellant entitle for exemption

Summary

Issues:
Appellant's eligibility for concessional rate of duty under Notification No. 38/97, classification of products as branded or not, adherence to Chapter X procedure for duty discharge.

Analysis:
The appellant, a Small Scale Industry (SSI) unit, availed a concessional duty rate under Notification No. 38/97 for products affixed with logos like "CK/TATA." The Revenue argued that these products should be considered branded, requiring duty payment due to non-compliance with Chapter X procedure. However, the appellant contended that since they supplied products to original equipment manufacturers, the goods were not branded as per CBEC Circular No. 71/71/94-C.E. The circular clarified that goods bearing the customer's brand for further manufacturing are not considered branded if not traded in the market. The appellant's products, bearing the original equipment manufacturer's logo and used exclusively by them, fell within this exemption. The appellant's assertion of selling 100% of production to the original manufacturer was undisputed. Consequently, the Tribunal held the appellant eligible for SSI benefits, setting aside the impugned order and granting consequential relief.

This judgment addressed the crucial issue of determining whether the appellant's products qualified as branded goods under the relevant notification. By referencing the CBEC circular, the Tribunal established that goods bearing logos for exclusive use by the original equipment manufacturer do not fall under the definition of branded products. The appellant's adherence to supplying goods solely to the original manufacturer further supported their eligibility for SSI benefits. The decision highlighted the importance of factual analysis in distinguishing branded goods from those intended for specific industrial use, emphasizing the need to consider the nature of transactions and product usage in such cases.

In conclusion, the Tribunal's detailed analysis of the appellant's case underlines the significance of interpreting legal provisions in alignment with industry practices and specific circumstances. By applying the CBEC circular to the factual scenario presented, the Tribunal clarified the classification of the appellant's products and upheld their eligibility for concessional duty rates as an SSI unit. This judgment serves as a precedent for similar cases involving the classification of goods under concessional duty notifications and underscores the importance of adherence to relevant procedures and guidelines for duty benefits.