2015 (12) TMI 203 - AT - Central Excise

Denial of SSI Exemption - Clubbing of clearances by the proprietorship firm holding 90% in the Limited Company - Whether own brand name assigned to others and SSI unit cannot claim the exemption - Held that - Board has specifically stated and clarified that Limited Companies whether public or private are separate entities and partnership firm is separate entity than the Ltd. Company. In the case in hand the Limited Co. being separate entity and distinct from shareholders it cannot be said that Shri Venkatesh having 90% of shares in ICPL by virtue of being proprietor of Venky 50, 000/- which in facts of this case is seems to be reasonable - appellant could have entertained a bonafide belief and the issue being interpretation of Notification the penalties imposed on the appellants are harsh and needs to be set aside - Decided partly in favor of assessee.

Summary

Issues:
1. Clubbing of clearances for exemption limit calculation.
2. Eligibility for small scale exemption based on Brand name usage.
3. Confiscation of seized goods.

Clubbing of Clearances:
The issue revolved around whether two entities, Venky & Co. and ICPL, should have their clearances clubbed for calculating the exemption limit. The Tribunal disagreed with the lower authority's decision to club the clearances based on the distinct legal entities of a sole proprietorship firm and a Private Limited Company. Referring to CBEC Circular No. 6/92, the Tribunal highlighted that Limited Companies are separate entities from partnership firms. The Tribunal held that the clearances of Venky & Co. and ICPL cannot be clubbed due to their separate legal identities and geographical locations.

Eligibility for Small Scale Exemption:
Regarding the usage of Brand names "Irony" and "Terminator," the Tribunal found that the Brand "Irony" was assigned to ICPL by Venky & Co. through a deed of assignment. As the Brand was registered in ICPL's name and there was no evidence of Venky & Co. continuing to use it, ICPL was deemed eligible for the small scale exemption for clearances under the "Irony" Brand. However, since there was no evidence of assignment for the "Terminator" Brand, ICPL was held ineligible for the exemption on clearances under that Brand.

Confiscation of Seized Goods:
The Tribunal upheld the decision on the confiscation of seized goods, allowing redemption on payment of a fine. The Tribunal considered the fine amount reasonable in the circumstances. Additionally, the Tribunal set aside the penalties imposed on the appellants, noting that the issue involved interpretation of a Notification and the penalties were deemed harsh.

In conclusion, the Tribunal ruled that clearances under the "Irony" Brand were eligible for exemption, while those under the "Terminator" Brand were not. The Tribunal upheld the confiscation of seized goods with an option for redemption and set aside the penalties imposed on the appellants due to the nature of the issue.