2013 (7) TMI 749 - AT - Central Excise

Stay Application SSI exemption - Brand Name - Rural Area - Notification No. 8/03 - Appellant have a factory located at F-166 Industrial Area, Jhotwara Extension-I, Jaipur, Rajasthan In the factory of the Appellant D.G. Sets were being manufactured by using Mahindra & Mahindra E-Tech Engines - On D.G. sets were affixed the brandname Mahindra Powerol alongwith logo of Mahindra & Mahindra - New point that the appellant s unit is located in a rural area and, therefore, they would be eligible for SSI exemption notwithstanding the fact that they were using the brand name of other person Held that - Appellant s final product bear the brand name and logo of M/s. Mahindra & Mahindra - Rural area means the area comprised in a village as defined in the land revenue records, excluding, any area that may be notified as an urban area by the Central Government or a State Government - In terms of Section 2(b) of Rajasthan Land Revenue Act, 1956 the term urban area covers among other areas, the areas falling within Jaipur region , as defined in clause (8) of Section 2 of Jaipur Development Authority Act, 1982. According to Clause (8) of Section 2 of Jaipur Development Authority Act, 1982 , Jaipur region means an area in the limits of the city, towns and villages specified in Schedule-I Sl. No.87 of the Schedule I to the Jaipur Development Authority Act covers village Sarna Dungar in which the appellant s factory is located - Village Sarana Dungar falls within the Jaipur region and, therefore, same be treated as urban area - Appellant have not been able to establish prima facie case in their favour Decided against the Assessee Stay application dismissed.

Summary

Issues:
1. Eligibility for SSI exemption under notification no.8/03-CE.
2. Applicability of SSI exemption to goods bearing brand name of another person in a rural area.
3. Interpretation of rural area under the exemption notification.
4. Validity of Tehsildar's certificate for determining rural area status.
5. Compliance with stay order and modification request.

Issue 1: Eligibility for SSI exemption under notification no.8/03-CE:
The appellant, a factory manufacturing D.G. Sets, availed SSI exemption under notification no.8/03-CE from July 2005 to March 2009. The dispute arose when the department alleged that by affixing the brand name "Mahindra Powerol" and logo of Mahindra & Mahindra on the D.G. Sets, the appellant was ineligible for the SSI exemption. The Commissioner upheld this view, leading to a duty demand of Rs.77,98,622/-, interest, and penalties on the appellant and its authorized signatory.

Issue 2: Applicability of SSI exemption to goods bearing brand name in a rural area:
During the appeal process, the appellant argued that despite using another person's brand name, their factory's rural location made them eligible for the SSI exemption. The exemption notification specifies that goods bearing a brand name of another person are not eligible unless manufactured in a rural area. The appellant contended that their factory's rural location should exempt them from this provision.

Issue 3: Interpretation of rural area under the exemption notification:
The definition of a rural area under the exemption notification was crucial in determining the appellant's eligibility for the SSI exemption. The notification excludes areas under specific committees or notified urban areas. The appellant relied on the Tehsildar's certificate stating their factory's location in a rural area to support their claim for exemption.

Issue 4: Validity of Tehsildar's certificate for determining rural area status:
The appellant submitted a certificate from the Tehsildar indicating their factory's location in a rural area. However, the Commissioner contested this, stating that the village was within Jaipur city limits and classified as an urban area. The validity and weight of the Tehsildar's certificate in determining the rural or urban status of the factory's location were pivotal in the decision.

Issue 5: Compliance with stay order and modification request:
The appellant sought modification of the stay order directing them to deposit the disputed duty amount. Despite presenting the Tehsildar's certificate, the Tribunal dismissed the modification application, citing the failure to establish a prima facie case for eligibility for the SSI exemption based on the factory's rural location. The appellant was directed to comply with the original stay order within six weeks.

This detailed analysis of the judgment highlights the key legal issues, arguments presented by both parties, and the Tribunal's decision regarding the eligibility for SSI exemption under the specific notification and the interpretation of rural area status in this context.