2013 (5) TMI 344 - AT - Central Excise

SSI exemption Brand Name - As per revenue brand name NITCO is also used by other group companies which are controlled by the same family, the appellant company is not eligible for the benefit of SSI exemption as the combined turnover of all the group companies is more than Rs. 3 Crore. Demand of duty/interest/penalty accordingly. Held that - Certificate issued by the Trade Marks Authority makes it clear that the brand name belonged to the appellant. In such a case, the denial of benefit of exemption Notification on the ground that other companies are also using the said name is not in accordance with the notification. Just because the said brand name Nitco which is owned by the appellant is being used by other companies, the appellant cannot be denied the benefit and also all other group companies who are using the said brand name Nitco are not availing the benefit of SSI exemption and are clearing their final products on payment of duty. Thus, impugned order is set aside. Appeal is allowed.

Summary

Issues:
Denial of SSI exemption to the appellant firm due to the use of the brand name NITCO by other group companies. Confirmation of duty demand, imposition of penalties, and dismissal of appeals by CCE (Appeals).

Analysis:
The case involved M/s Northern India Tiles Corporation (NITCO), a partnership firm availing SSI exemption under Notification No. 8/03-CE for the manufacture of tiles chargeable to Central Excise duty. The dispute arose as the department contended that since the brand name NITCO was used by other group companies controlled by the Talwar family, the appellant firm was ineligible for the SSI exemption due to the combined turnover exceeding the exemption limit. Three show cause notices were issued for recovery of short paid duty, penalties on the firm and its authorised signatory, Shri Pawan Talwar. The Additional Commissioner confirmed the duty demand, imposed penalties, and dismissed the appeals filed by the appellant firm and Shri Pawan Talwar.

The main contention raised by the appellant was that the brand name NITCO was registered in their name since 1964, and they were clearing goods under their own brand name. They argued that just because other group companies used the same brand name did not justify denying them the SSI exemption. The department, represented by the Senior Joint Departmental Representative, opposed this plea based on the findings of the Commissioner in the impugned order.

Upon careful consideration of submissions, the Tribunal found that while the original adjudicating authority dropped the allegation of clubbing clearances of various units of the Talwar family, the benefit of SSI exemption was denied to the appellant due to the shared use of the brand name NITCO by other group companies. The Tribunal noted that the brand name belonged to the appellant, as confirmed by the Trade Marks Authority, and that denial of the SSI benefit on the grounds of other companies using the same brand name was unjustified. The Tribunal set aside the impugned order, allowing all four appeals with consequential relief to the appellants.

In conclusion, the Tribunal held that the appellant firm was entitled to the SSI exemption as the brand name NITCO belonged to them, and the use of the same brand name by other group companies did not warrant denial of the exemption. The judgment emphasized the ownership of the brand name as a crucial factor in determining eligibility for the SSI exemption, ultimately ruling in favor of the appellants.