2012 (6) TMI 585 - AT - Central Excise

Denial of SSI exemption - the specified goods manufactured by assessee are affixed with the brand name of a foreign person, or a trader who is not a manufacturer appellants contention that that the impugned brand names were owned by the 100% holding companies of the appellant-company which should not be considered completely different from its subsidiary - Held that - Following the judgment of the Single Bench of the Calcutta High Court in the case of ESBI Transmission Pvt. Ltd. v. CCE - 1997 (1994 (9) TMI 99 (HC)) stating that it has been held that there is no bar to availing SSI exemption if the unit is using a trade mark belonging to the foreign firm so long as the said unit is exclusive owner of the said trade mark in India - in favour of assessee. Whether the price at which the respondent sold the product should be treated as cum duty price and therefore the excise duty should be deducted from the price for arriving at the assessable value Held that - The case to be remanded back to the Commissioner for re-quantification.

Summary

Issues:
1. Denial of SSI exemption to the appellants based on the brand names Ritzbury and Munchee belonging to foreign companies.
2. Interpretation of case laws regarding SSI exemption eligibility when affixing a foreign brand name.
3. Ownership of brand names by the appellants and its impact on SSI exemption.
4. Applicability of small scale exemption to subsidiaries of foreign companies.

Analysis:
Issue 1: The appellants were denied SSI exemption due to the brand names Ritzbury and Munchee being owned by foreign companies. The Department relied on case laws stating that using a foreign brand name disqualifies from SSI exemption.

Issue 2: The lower appellate authority upheld the denial of SSI exemption, citing judgments like Union of India Vs. Paliwal Electricals and CCE vs. Rukmani Pakkwell Traders, emphasizing that using a foreign brand name makes one ineligible for SSI exemption.

Issue 3: The appellants argued ownership of the brand names by their holding companies and the assignment of exclusive rights to use them in India. They contended that not acting as agents of the foreign companies should make them eligible for SSI exemption, as per the case of CCE, Ahmedabad Vs. Vikshara Trading & Investment Pvt. Ltd.

Issue 4: The Tribunal considered various precedents like CCE, Mumbai Vs. Capital Controls (I) Pvt. Ltd. and CCE, Jaipur Vs. Dugar Tetenal India Ltd., which held that mere assignment of a brand name by a foreign collaborator does not confer ownership for SSI exemption. However, decisions in cases like CCE, Goa Vs. Primella Sanitary Products and CCE, Meerut Vs. Convertech Equipment Pvt. Ltd. supported the appellants' entitlement to SSI exemption.

The Tribunal, following the decisions in Primella Sanitary Products and Convertech Equipment, ruled in favor of the appellants, allowing SSI exemption. The judgment highlighted the distinction between ownership and the right to use a brand name, ultimately upholding the appellants' eligibility for the small scale exemption.