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2014 (12) TMI 111 - AT - Central ExciseSSI Exemption - use of Brand Name of others - Confiscation of goods - Redemption fine - Penalty u/s 11AC - Held that - Brand name or trade name need not be registered. So long as the said name indicates a connection in the course of trade between the goods and some person using such name it would suffice. - there is a connection between the name Electron and M/s. Electron Industries Ltd. during the course of trade. Therefore, the name Electron printed on the carboys satisfies the definition of brand name as defined in law. Inasmuch as the said name does not belong to M/s. Chemipol, they are not eligible for the benefit of Notification Nos. 9/2001 and 9/2002 and, therefore, they are liable to discharge full duty liability on the goods manufactured and cleared. In this view of the matter, the demand of duty confirmed on the appellant of ₹ 1,32,919/- under Section 11A(2) is clearly sustainable in law. Once the duty demand is held sustainable, interest liability automatically accrues and consequently, the appellant is liable to discharge interest liability on the duty demand confirmed against them. As regards the liability to confiscation of the goods seized from the premises of M/s. Chemipol and M/s. Electron Industries Ltd., the said goods have been cleared without payment of appropriate duty. Therefore, the goods are correctly liable for confiscation. The question is since the goods have been provisionally released, whether the redemption fine imposed is reasonable or excessive. The redemption fine of ₹ 60,000/- has been imposed on M/s. Chemipol in lieu of confiscation in respect of goods valued at ₹ 2,37,850/- and a fine of ₹ 30,000/- has been imposed on M/s. Electron Industries Ltd. in respect of the goods valued at ₹ 1,18,000/-. The purpose of imposing of redemption fine is to take away the profit margin which is available on goods. There is no evidence on record to show what is the profit margin on the impugned goods. In the absence of any such evidence, normally this Tribunal has been imposing a fine equal to 10% of the value of the goods. Therefore, following the same, in the present case also, we reduce the redemption fine. Since it relates to interpretation of law, we do not find any reason for imposition of penalty. Accordingly, the penalty is set aside on M/s. Chemipol and Shri Sajjan Kothari. As regards the penalty imposed on M/s. Electron Industries Ltd. and Shri Anil Patel, the liability to pay duty is on M/s. Chemipol and not on the buyer; therefore, it cannot be said that the buyer has violated any provision of the law. Therefore, the penalty on M/s. Electron Industries Ltd. and Shri Anil Patel are not sustainable. - Decided partly in favour of assessee.
Issues Involved:
1. Eligibility for Small Scale Industry (SSI) exemption. 2. Confiscation and redemption fine of seized goods. 3. Imposition of penalties on M/s. Chemipol, its authorized signatory, M/s. Electron Industries Ltd., and its director. Issue-wise Detailed Analysis: 1. Eligibility for Small Scale Industry (SSI) exemption: The central issue revolves around whether M/s. Chemipol was eligible for the SSI exemption under Notification No. 9/2002-C.E. The department contended that M/s. Chemipol was ineligible for the exemption because they manufactured and cleared goods bearing the brand name "ELECTRON," which did not belong to them. The Tribunal examined the definition of "brand name" or "trade name" as per the notification, which includes any name indicating a connection in the course of trade between the goods and the person using such name. The Tribunal found that the name "ELECTRON" printed on the carboys used by M/s. Chemipol was similar to the name used by M/s. Electron Industries Ltd. in their business documents, establishing a trade connection. Consequently, M/s. Chemipol was not eligible for the SSI exemption, and the duty demand of Rs. 1,32,919/- along with interest was upheld. 2. Confiscation and redemption fine of seized goods: The goods seized from M/s. Chemipol and M/s. Electron Industries Ltd. were confiscated because they were cleared without payment of appropriate duty. The Tribunal confirmed the confiscation but reduced the redemption fines. For M/s. Chemipol, the fine was reduced from Rs. 60,000/- to Rs. 23,785/- for goods valued at Rs. 2,37,850/-. For M/s. Electron Industries Ltd., the fine was reduced from Rs. 30,000/- to Rs. 11,800/- for goods valued at Rs. 1,18,000/-. The reduction was based on the Tribunal's standard practice of imposing a fine equal to 10% of the value of the goods in the absence of evidence regarding profit margins. 3. Imposition of penalties on M/s. Chemipol, its authorized signatory, M/s. Electron Industries Ltd., and its director: The Tribunal considered the penalties imposed on M/s. Chemipol, its authorized signatory Shri Sajjan Kothari, M/s. Electron Industries Ltd., and its director Shri Anil Patel. It was determined that the issue involved interpretation of the notification regarding the definition of a brand name or trade name. Since it was a matter of legal interpretation, penalties on M/s. Chemipol and Shri Sajjan Kothari were set aside. Similarly, the Tribunal found that the buyer, M/s. Electron Industries Ltd., and its director Shri Anil Patel, were not responsible for the duty liability and had not violated any provisions of the law. Therefore, the penalties on them were also set aside. Summary: (i) The duty demand of Rs. 1,32,919/- along with interest on M/s. Chemipol was confirmed. (ii) The confiscation of goods and imposition of fines were upheld, but the fines were reduced to Rs. 23,785/- for M/s. Chemipol and Rs. 11,800/- for M/s. Electron Industries Ltd. (iii) Penalties imposed on all appellants were set aside. The appeals were partly allowed.
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