2011 (5) TMI 341 - AT - Central Excise

SSI - Exemption notification - Use of others Brand name - M/s. Kich Manufacturers are engaged in the manufacture of various type of hardware/furniture fittings falling under Chapter 83 of the Central Excise Tariff Act 1985. M/s. Kich Industries is also manufacturing identical goods like Knobs Door handles C- handles D- handles etc. falling under chapter heading 82 and are clearing the same under their brand name Kich - Note that Smt. Chetna Jagdish Mistry Proprietor of M/s. Neki Corporation one of the dealers in her statement has very clearly stated that the goods obtained from both the manufacturers were identical and could not be differentiated - They were processing goods from either of the two units from July 2003 onwards - Further the fact that the name of manufacturer was not being written on outside of the packing material is itself indicative of the fact that appellants intended to capitalised on the popularity of the name KICH the brand belonging to M/s. Kich Industries who was already an established unit and M/s. Kich Manufacturers was started with effect from July 2003 - Further the fact that it is family group of companies also does not stand disputed by the appellant - In the case of Sudhir Gensets Limited (2010 -TMI - 78508 - CESTAT AHMEDABAD) the Tribunal after considering that two manufacturing units were having the same brand common management and using the same brand name dis-entitles the manufacturer from availing the benefit of the small scale exemption notification - Decided against the assessee.

Summary

Issues Involved:
1. Use of brand name "Kich" by M/s. Kich Manufacturers.
2. Entitlement to the benefit of Small Scale Notification No. 08/2002 and 08/2003.
3. Confirmation of duty, interest, and imposition of penalties.

Issue-wise Detailed Analysis:

1. Use of Brand Name "Kich" by M/s. Kich Manufacturers:
M/s. Kich Manufacturers and M/s. Kich Industries were both found to be using the brand name "Kich" on their products. The Preventive Officer of Central Excise discovered that both entities were using identical branding, including the brand name "Kich" on their products and packaging. The investigation revealed that M/s. Kich Manufacturers were sending their goods to M/s. Kich Industries for affixing the brand name "Kich" before returning them for final packaging. This practice was confirmed by statements from authorized signatories and dealers, who admitted that both companies used the same brand name and packaging materials, creating a common market identity.

2. Entitlement to the Benefit of Small Scale Notification No. 08/2002 and 08/2003:
The core issue was whether M/s. Kich Manufacturers were entitled to the benefit of the Small Scale Notification, which exempts small-scale manufacturers from certain duties. According to the notification, the exemption is not available if the manufacturer uses the brand name of another person. The term "Brand name or Trade Name" is defined in the notification as a name or mark used to indicate a connection between the goods and the person using the name. The adjudicating authority found that M/s. Kich Manufacturers were using the brand name "Kich," which belonged to M/s. Kich Industries, thereby disqualifying them from the exemption. The evidence included the use of identical packaging materials, ISO certification, and the absence of the manufacturer's name on the products, all indicating a deliberate attempt to create a unified market presence.

3. Confirmation of Duty, Interest, and Imposition of Penalties:
The adjudicating authority confirmed the demand for duty of Rs. 17,71,232/- against M/s. Kich Manufacturers, along with interest and a penalty of an identical amount under Section 11AC of the Central Excise Act. Additional penalties of Rs. 10,000/- each were imposed on the authorized signatory and M/s. Kich Industries. The goods under seizure were also confiscated, with an option for redemption on payment of a fine. The Commissioner (Appeals) upheld this order, leading to the present appeals. The Tribunal found no merit in the appellants' contention that they only started using the brand name from 01.06.2004, noting inconsistencies in their statements and the lack of credible evidence to support their claim.

Conclusion:
The Tribunal upheld the lower authorities' decision, rejecting the appeals and confirming the duty, interest, and penalties imposed. The judgment emphasized the importance of strict compliance with the provisions of the notification to claim benefits and cited relevant case law to support its findings. The use of the brand name "Kich" by both entities, the identical packaging, and the family ownership were key factors in disqualifying M/s. Kich Manufacturers from the small-scale exemption.