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2014 (12) TMI 238 - AT - Central ExciseSSI exemption - user of similar brand name as the brand name of others - notification no.175/86-CE - Held that - Even the use of the brand name by a SSI unit, which is similar to the brand name used by some other person or is a part of the brand name of another person would debar him from the benefit of the SSI exemption. However, during the period of dispute, in a case where a small scale unit used the brand name of another manufacturer, the benefit of SSI exemption could be denied to that unit only if the brand name owner was not eligible for the SSI exemption. In this case, there is no dispute about the fact that the brand name owner - M/s PRIPL, Bombay was registered with the Directorate of Industries as a small scale unit. However, during that period, that unit was not availing SSI exemption for the reason that its product had been classified by the Assistant Commissioner under Heading no.4009.99 where rate of duty is nil and this classification has been affirmed by the Commissioner (Appeals) as well as by the Tribunal as a result of which they were not paying any duty. For the purpose of SSI exemption to the respondent, what is material is as to whether during that period, the brand name holder (M/s PRIPL) was eligible for SSI exemption. It is not disputed that if as per the provisions of the SSI exemption, the value of the exempted goods is excluded from the aggregate value of the clearances of PRIPL, during each preceding financial year, the same would be well within the exemption limit. Therefore, it cannot be said that, during the period of dispute, the brand name holder, PRIPL was not eligible for SSI exemption and for this reason, it would not correct to deny the benefit of the SSI exemption to the respondent unit. Tribunal in the year 1998 vide order dated 19.3.98 held that the Synthetic Rubber Aprons and Cots are parts of the textile machinery and would be classifiable under Heading No.84.48, in our view, on the basis of this decision, the classification of the goods, during the period of dispute, cannot be revised and it has to be held that during the period of dispute, PRIPL, Bombay were eligible for SSI exemption and hence, use of their brand name Precitex by the respondent unit would not debar them from the benefit of the SSI exemption - Decided against Revenue.
Issues:
1. Eligibility for SSI exemption based on the use of a brand name. 2. Classification of goods manufactured by PRIPL, Bombay. 3. Interpretation of SSI exemption notification no.175/86-CE. Analysis: Issue 1: Eligibility for SSI exemption based on the use of a brand name The case involved a dispute regarding the eligibility of a respondent, a manufacturer of Synthetic Rubber Aprons and Cots, for Small Scale Industry (SSI) exemption under notification no.175/86-CE due to the use of the brand name 'Precitex' owned by another manufacturer, PRIPL, Bombay. The Joint Commissioner initially denied the SSI exemption, leading to a penalty and duty demand against the respondent. However, the Commissioner (Appeals) reversed this decision, allowing the appeal by emphasizing that PRIPL, Bombay was eligible for SSI exemption during the disputed period. The Tribunal upheld this decision, noting that the brand name holder's eligibility for SSI exemption was crucial for determining the respondent's entitlement to the exemption. Despite subsequent classification changes by the Tribunal, the original classification during the dispute period was deemed valid, supporting the respondent's eligibility for SSI exemption based on the brand name use. Issue 2: Classification of goods manufactured by PRIPL, Bombay The classification of the goods manufactured by PRIPL, Bombay, specifically Synthetic Rubber Aprons and Cots, was a key aspect of the case. The Assistant Commissioner initially classified these goods under Heading no.4009.99 with a nil rate of duty, a classification later affirmed by the Commissioner (Appeals). Despite a subsequent Tribunal decision in 1998 altering the classification to textile machinery under Heading no.84.48, the original classification during the disputed period was deemed valid. This classification determination was crucial in establishing PRIPL, Bombay's eligibility for SSI exemption and subsequently, the respondent's entitlement to the exemption based on the brand name use. Issue 3: Interpretation of SSI exemption notification no.175/86-CE The interpretation of the SSI exemption notification no.175/86-CE played a significant role in the case. The Tribunal emphasized that the value of exempted goods should be excluded from the aggregate value of clearances to determine eligibility for SSI exemption. In this context, it was crucial to establish that the brand name holder, PRIPL, Bombay, was eligible for SSI exemption during the disputed period. The Tribunal's decision highlighted the importance of the brand name owner's eligibility for SSI exemption in determining the respondent's entitlement to the exemption despite subsequent classification changes by the Tribunal. In conclusion, the Tribunal dismissed the Revenue's appeal, upholding the Commissioner (Appeals)'s decision to grant the respondent SSI exemption based on the brand name use and the eligibility of PRIPL, Bombay for the exemption during the disputed period. The case underscored the significance of the brand name owner's eligibility for SSI exemption in determining a manufacturer's entitlement to the exemption under the relevant notification.
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