2011 (7) TMI 690 - AT - Central Excise

Confiscation - SSI Exemption Notification (No. 8/2000-CE dated 1.3.2000) - Suppression of facts - Rule 173Q of the Central Excise Rules, 1944, - ssessee conveyed to the Range Superintendent their intention to setup a manufacturing plant for manufacturing goods specified for SSI exemption - It appears from the records that the crucial fact that the goods were intended to be cleared under the brand name belonging to the German company was not disclosed to the department before the period of dispute - The expression used in the notification was brand name belonging to another person , which meant that the brand name should be owned by another person - It is also not in dispute that the German company has got the brand name registered in their name in India - Decided against the assessee Regarding redemption fine - in the circumstances of this case, the minimum fine of Rs 5000/- will serve the purpose - Appeal is disposed of

Issues:
1. Denial of SSI exemption benefit to the assessee for clearing specified goods under a brand name belonging to a holding company.
2. Confiscation of goods, imposition of redemption fine, and penalty on the manufacturer for alleged suppression of facts with intent to evade payment of duty.
3. Contesting the confiscation and penalty on the grounds of maintaining a bona fide belief in eligibility for SSI exemption and exclusive right to use the brand name.
4. Disclosure of crucial facts regarding the brand name ownership and intent to clear goods under the brand name to the department.
5. Interpretation of the SSI Exemption Notification regarding brand name ownership and inadmissibility of benefit for goods cleared under another person's brand name.
6. Assessment of the quantum of redemption fine imposed in lieu of confiscation.
7. Challenge to the penalty imposed under Section 11AC for suppression of material facts with intent to evade duty payment.

Analysis:
1. The appeal challenges the denial of SSI exemption benefit to the assessee for clearing specified goods under a brand name belonging to their holding company. The dispute arose when the department proposed denial of the exemption, confiscation of goods, and imposition of penalties due to alleged suppression of facts with intent to evade duty payment. The original authority confirmed duty demand against the assessee, leading to the present appeal after dismissal by the Commissioner (Appeals).

2. The appellant contested the confiscation and penalty, arguing a bona fide belief in eligibility for SSI exemption and exclusive right to use the brand name assigned by the German company. The department opposed this plea, highlighting the lack of disclosure regarding the brand name ownership and intent to affix it on goods. The records indicated that crucial facts were not disclosed before the dispute period, leading to the conclusion that the appellant suppressed material facts to evade duty payment.

3. The Tribunal found merit in the department's argument, emphasizing that the brand name belonged to the German company, and the appellant's limited right to use it did not negate the company's ownership. The failure to disclose this fact before the dispute period supported the findings of suppression with intent to avail inadmissible exemption and evade duty payment, justifying the confiscation under Rule 173Q.

4. While upholding the confiscation, the Tribunal intervened in the quantum of redemption fine, reducing it to the minimum of Rs 5000 considering the circumstances. The penalty imposed under Section 11AC was sustained due to established suppression of material facts, as mandatory in cases of intent to evade duty payment. The appeal was disposed of accordingly, affirming the confiscation and penalty while adjusting the redemption fine.

5. The judgment highlights the importance of full disclosure of material facts to tax authorities, especially regarding eligibility for exemptions and ownership of brand names when claiming benefits under relevant notifications. The case underscores the consequences of suppression with intent to evade duty payment, leading to confiscation of goods and imposition of penalties as mandated by law.

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