2014 (2) TMI 546 - AT - Central Excise

SSI Exemption - Brand Name - extended period of limitation - Whether the assesses, who are using the already embossed castings, as inputs, in the manufacture of their final products are to be denied the benefit of small scale industries notifications or not - Held that - there are plethora of decisions of the Tribunal holding that the presence of brand name of another person on the inputs/raw-materials used for manufacture of final products, when no affixation of any brand name being done by the manufacturers would not amount to use of brand name of another person. These decisions are sufficient for the appellant to entertain a bona fide belief of non-use of brand name so as to be entitled to the benefit of Small Scale Notifications. It stands held by the Hon ble Supreme Court in the case of Menhta Allied Products 2004 (5) TMI 74 - SUPREME COURT OF INDIA that when divergent views are expression difference decisions, the extended period of limitation cannot be invoked. - Decided in favor of assessee.

Issues:
- Interpretation of small scale industries notifications regarding the use of brand names on final products.
- Application of brand name prohibition to goods manufactured using inputs with pre-embossed brand names.
- Limitation period for raising demands and penalties.
- Tribunal decisions on the use of brand names in final products.
- Reversal of decisions based on subsequent legal developments.

Interpretation of Small Scale Industries Notifications:
The judgment involves multiple appeals by assesses and Revenue concerning the denial of small scale industries benefits due to the use of brand names on final products. The assesses procured castings pre-embossed with brand names from manufacturers, leading to the belief that they were manufacturing final products under those brand names. The Revenue argued against the applicability of small scale industries notifications, resulting in demands and penalties being imposed on the assesses.

Application of Brand Name Prohibition:
The central issue revolved around whether using pre-embossed castings with brand names in manufacturing final products would disqualify assesses from small scale industries benefits. The adjudicating authority contended that the presence of brand names on the final products, originating from the pre-embossed castings, rendered the assesses ineligible for the notifications. This argument was based on the perception that the brand names on the castings were being utilized in the final products' manufacturing process.

Limitation Period and Tribunal Decisions:
The judgment highlighted the limitation period for raising demands and penalties, with the assesses contesting the demands based on Tribunal decisions. The assesses referenced previous Tribunal rulings that indicated the use of pre-embossed brand names on inputs did not constitute the use of brand names in the final products. They argued that these precedents supported their belief and negated the Revenue's claims, especially regarding the limitation period for invoking demands.

Reversal of Decisions and Legal Developments:
The judgment discussed the absence of direct reversals of the Tribunal decisions on the use of brand names on procured inputs during the relevant period. The assesses' advocate emphasized the lack of subsequent legal developments overturning the Tribunal's stance on brand name usage. Citing various Tribunal cases, the assesses maintained a bona fide belief in compliance with small scale industries notifications, leading to the appeals being allowed based on the limitation period without delving into the merits of the case.

In conclusion, the judgment allowed the assesses' appeals based on the limitation period, rejecting penalties due to the assesses' genuine belief. While confirming demands in seizure cases, penalties were set aside for M/s. Auto Spares (India). The judgment underscored the significance of Tribunal decisions in interpreting brand name usage and upheld the assesses' position regarding the small scale industries notifications.

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