2015 (10) TMI 1350 - AT - Central Excise

Duty demand - Imposition of penalty - SSi exemption - Brand name - Held that - There is no dispute for payment of duty which has fairly been admitted by the appellant that they are liable to pay duty. Therefore, the appellant shall pay duty along with interest. Now, we come to the issue of penalty. We find that in this case although the observations had been made by BIFR not to take any penal action against the appellant, which is not binding on us but we consider the factual matrix of the case that the appellant is manufacturing Skimmed Milk Powder since 1968 under the brand name of INDANA . Only for a short period of 47 days, the duty was levied on the said product, therefore, it cannot be said that the appellant was having any malafide intention not to pay duty on the products. It is only issue of interpretation that when the appellant is using the brand name of third party, they are entitled for SSI exemption or not. Therefore, we hold that in such circumstances, penalty is not imposable on the appellants. - Demand of duty along with interest is confirmed - Decided partly in favour of assessee.

Summary

Issues:
Appeal against duty, interest, and penalty imposition on appellants for manufacturing Skimmed Milk Powder under a third-party brand name.

Analysis:
The appellants contested an order demanding duty, interest, and penalties for manufacturing Skimmed Milk Powder under a brand name belonging to another entity. The main appellant had been producing the powder under the brand "INDANA," which was associated with M/s. Indodan Industries Ltd. The central excise duty was imposed for a brief period from 2.6.1998 to 18.07.98. The Revenue argued that since the appellant used a brand name not owned by them, they were not eligible for the Small Scale Industry (SSI) exemption. The adjudication order upheld the duty demand, interest, and penalties, leading to the appeal.

The appellant's counsel acknowledged the duty liability due to using a third-party brand name during the disputed period. The focus shifted to requesting a waiver of penalties based on the circumstances. Reference was made to an order by the Board for Industrial and Financial Reconstruction (BIFR) suggesting exemption from penal provisions under the Central Excise Act.

During the hearing, the Authorized Representative supported the findings in the impugned order. The Tribunal considered the submissions and emphasized that the duty payment was undisputed. However, the crucial issue was the imposition of penalties. Despite the non-binding nature of the BIFR's observations, the Tribunal examined the factual background. It noted that the appellant had a long history of manufacturing the product under the brand name "INDANA" and had only briefly faced duty imposition. The Tribunal concluded that there was no malicious intent to evade duty and that the issue revolved around the interpretation of SSI exemption eligibility when using a third-party brand name.

Consequently, the Tribunal ruled in favor of the appellants. It confirmed the duty payment with interest but set aside the penalties imposed on all the appellants. The decision was based on the lack of malafide intention and the unique circumstances surrounding the use of the third-party brand name. The appeals were disposed of, granting consequential relief to the appellants.