2010 (11) TMI 390 - AT - Central Excise

Waiver of pre-deposit - SSI exemption - Brand names belonging to the buyers - Limitation - The crucial documents governing the transactions between the appellant and their marketing agents are the agreements, some of which are available on record As a matter of fact, the relevant Recitals contained in these agreements declare the buyers to be bona fide owners of the brand names which were affixed to the goods in question - Prima facie, therefore, SSI benefit in respect of such branded goods was barred by the provisions contained in para 4 of the SSI exemption notification wherein it was laid down that the benefit of the Notification would not be available to specified goods cleared under the brand name of another person not eligible for SSI benefit - the plea of limitation inasmuch as the crucial fact that the goods were cleared under brand names belonging to the buyers was not disclosed to the department by the appellant during the period of dispute - , However, considered the plea of financial hardships - the appellant is directed to pre-deposit 50% of the duty amount

Summary

Issues:
Seeking waiver of pre-deposit and stay of recovery in relation to duty and penalty due to denial of SSI benefit based on agreements with marketing agents.

Analysis:
The appellant sought waiver of pre-deposit and stay of recovery for duty and penalty amounting to Rs. 8,23,127/- each, following the denial of SSI benefit for medical formulations cleared to marketing agents from April 2005 to March 2008. The denial was based on the goods being cleared under brand names owned by the buyers, as per the agreements between the appellant and the marketing agents. The appellant argued that despite Recitals in the agreements transferring brand name ownership to buyers, disclaimers were obtained to clarify that buyers did not purchase the brand names. The appellant contended that the agreements did not transfer brand name ownership to buyers, and interpretation of agreements and disclaimers could establish the buyers' status as bona fide owners of the brand names. The appellant highlighted their small unit status, poor turnover, low profit, and pleaded limitation against the duty demand, asserting that all material facts were disclosed through filed returns, negating any intent to evade duty payment and challenging the applicability of the extended limitation period.

Upon careful consideration, the tribunal found no prima facie case in favor of the appellant. The crucial agreements between the appellant and marketing agents, available on record, indicated the transfer of brand name ownership to buyers, making them bona fide owners of the brand names affixed to the goods. This transfer of ownership barred SSI benefit under the relevant notification, as goods cleared under another person's brand name ineligible for SSI benefit were excluded. The tribunal noted that the crucial fact of goods being cleared under buyers' brand names was not disclosed during the dispute period, only coming to light during an audit. While financial hardships were acknowledged, the plea of limitation was not accepted. As a result, the tribunal directed the appellant to pre-deposit 50% of the duty amount within six weeks, with compliance due by a specified date.