2017 (1) TMI 1539 - AT - Central Excise

SSI Exemption - use of Brand Name - Department was of the view that the stoves sold under the brand name Suzuki and Mitsubishi are not eligible for SSI exemption as the same are sold by affixing with the brand name of other persons - Held that - assessee-appellants are not eligible for the SSI exemption in respect of the goods sold under the brand name Mitsubishi and Suzuki , as they have failed to produce any evidence before the lower authorities pertaining to the ownership of the brand name Mitsubishi and Suzuki - duty demand upheld. As regards the stoves cleared by the assessee-appellants by affixing the brand name/logo of BPCL and HPCL along with their own brand name Advanta and Advanta Green which were sold through sale outlets of BPCL and HPCL, they would be eligible for the SSI exemption. Appeal allowed in part.

Summary

Issues:
Claim of SSI exemption for gas stoves sold under different brand names, Ownership of brand names "Mitsubishi" and "Suzuki", Applicability of SSI exemption criteria, Interpretation of relevant legal judgments, Imposition of penalty.

Analysis:
The appeal involved the claim of Small Scale Industry (SSI) exemption by the assessee-appellants for gas stoves sold under various brand names. The assessee-appellants manufactured LPG gas stoves and availed the SSI exemption under Notification No. 8/2003-C.E. During the dispute period, stoves were sold under brand names "Advanta", "Advanta Green", "Mitsubishi", and "Suzuki". The Department contended that stoves sold under "Suzuki" and "Mitsubishi" were not eligible for SSI exemption as they were sold under other persons' brand names. The dispute centered on the ownership of these brand names and the applicability of the SSI exemption criteria.

The counsel for the assessee-appellants argued that stoves sold under "Advanta" and "Advanta Green" bearing BPCL and HPCL logos were eligible for SSI exemption as per their agreements with these oil companies. Reference was made to a Bombay High Court judgment stating that goods sold by an SSI unit through a distributor under the distributor's brand name are eligible for SSI exemption. However, the Department disputed ownership of "Mitsubishi" and "Suzuki" brand names, leading to a demand for duty payment. Legal interpretations of relevant judgments and circulars were crucial in determining the eligibility for SSI exemption.

The Department, supported by a Supreme Court judgment, argued against granting SSI exemption to the assessee-appellants for stoves sold under "Mitsubishi" and "Suzuki" due to the lack of evidence regarding brand ownership. After hearing both sides and examining the evidence, the Tribunal held that the assessee-appellants failed to establish ownership of "Mitsubishi" and "Suzuki" brand names, thus denying SSI exemption for those stoves. However, stoves sold under "Advanta" and "Advanta Green" with BPCL and HPCL logos were deemed eligible for SSI exemption based on the Bombay High Court judgment.

The Tribunal partially allowed the appeal, granting relief in proportion to the penalty imposed. The decision highlighted the importance of providing evidence of brand ownership to claim SSI exemption and the significance of agreements with third parties in determining eligibility. The judgment underscored the need for clarity on brand ownership and adherence to legal criteria for availing exemptions under Central Excise regulations.