2011 (1) TMI 258 - AT - Central Excise

SSI unit Brand name - goods bearing brand name of others - appellants using brand name of their foreign collaborators - appellants not claimed small scale exemption for such goods - notification specifically excludes value of clearances which are fully exempt from the whole of excise duty as also the value of clearances bearing the brand name or trade name of another person which are ineligible for the grant of small scale exemption while computing the aggregate value of clearances under the scheme Appeal allowed

Summary

Issues: Small scale exemption eligibility for goods manufactured in different units; Exclusion of branded goods from calculation; Application of brand names of foreign collaborators.

In this case, the primary issue revolves around the eligibility of small scale exemption for goods manufactured in different units. The appellants, engaged in manufacturing floor cleaning equipment under collaboration agreements with foreign companies, argued that certain goods bearing the brand names of their collaborators should be excluded from the calculation for small scale exemption eligibility. They contended that the brand name used, combining the names of both collaborators, should not disqualify them from the exemption. The Tribunal examined whether the goods cleared from the Pollachi unit, bearing the brand names of the foreign collaborators, should be considered as goods bearing their own brand name for the purpose of small scale exemption computation. Citing a Supreme Court decision, the Tribunal concluded that the use of brand names of both foreign collaborators disentitled the appellants from availing small scale exemption, even if part of the brand name indicates a connection in the course of trade. As the appellants had not claimed small scale exemption for such goods and had paid applicable duty, the Tribunal held that the value of these goods and the exempted flippers should be excluded from the calculation as per the provisions of the relevant notification. Consequently, the impugned order denying small scale exemption was set aside, and both appeals were allowed on merit without delving into the grounds of limitation raised by the appellants.

The Tribunal also addressed the argument regarding the Department's awareness of the use of brand names and the payment of duty on branded goods. The appellants contended that since they had informed the Department about using brand names of others and had paid duty on such goods, the charge of suppression and the application of an extended time limit should not be sustained. However, the Tribunal did not delve into this argument as the primary issue revolved around the small scale exemption eligibility based on the brand names used for the goods manufactured in different units.

In conclusion, the Tribunal's decision centered on the interpretation of brand names of foreign collaborators and their impact on small scale exemption eligibility for goods manufactured by the appellants in different units. By analyzing the brand names used and the relevant legal provisions, the Tribunal determined that the goods bearing the brand names of the foreign collaborators were not eligible for small scale exemption, leading to the exclusion of their value from the calculation. The decision highlighted the significance of brand names in determining exemption eligibility and upheld the appellants' position based on the specific provisions of the notification governing small scale exemption.