2016 (1) TMI 15 - AT - Central Excise

Denial of SSI Exemption - use of brand name on the packing material - Department felt that as the printed cartons with brand name of others are not sold in the market as such these could not be treated as branded goods and as such the value of these clearances cannot be excluded in the aggregate value of clearances to arrive at SSI limit - whether or not the value of printed cartons and skin packagings with the brand name of others are to be added in the aggregate value to arrive at SSI exemption in terms of Notification No. 8/2002-CE - Held that - Supreme Court in the case of Kohinoor Elastics (P.) Ltd. (2005 (8) TMI 115 - SUPREME COURT OF INDIA) overruled the full bench judgment of this Tribunal in the case of Prakash Industries v. CCE 2000 (5) TMI 59 - CEGAT, COURT NO. III, NEW DELHI. The Hon ble Supreme Court in both the cases cited (supra) held that once the brand/trade name is used in the course of trade of the manufacturer, which is indicating a connection between the goods - manufactured by him and the person using the brand/trade name, the exemption is lost. It was held that in any case, it cannot be forgotten that the customer wants his brand/trade name affixed on the product not for his own knowledge or interest. The customer is getting the brand or trade name affixed because he wants the ultimate customer to know that there is a connection between the product and him. The reasoning of the Hon ble Supreme Court 2005 (8) TMI 115 - SUPREME COURT OF INDIA is squarely applicable to the branded cartons involved in the present case. Incidentally it may be noted an amendment has been carried out in the said Notification to deny the exclusion under the category of brand name for products like printed cartons etc. w.e.f. 01/09/2008 only. Considering the above legal position and the Hon ble Supreme Court s decisions, we find the order by the lower authorities is not sustainable and the same is set aside - Decided in favour of assessee.

Summary

Issues:
1. Whether the value of printed cartons and skin packagings with the brand name of others should be added to the aggregate value to determine SSI exemption under Notification No. 8/2002-CE.

Analysis:
The case involved two appeals on the same issue - one by the main appellant challenging the demand of Central Excise duty and the other by a partner contesting the imposed penalty. The appellant, engaged in manufacturing printed and non-printed cartons, labels, etc., cleared printed cartons and skin packaging with buyers' brand names, claiming SSI exemption for non-printed cartons under Notification No. 8/2002-CE. The Department disputed this treatment, arguing that printed cartons with others' brand names did not qualify as "branded goods" and should be included in the aggregate value for SSI limit calculation. The original order confirmed the demand and penalties, upheld by the Commissioner (Appeals), leading to the current appeals.

The central issue was whether printed cartons and skin packagings with others' brand names should be considered "branded goods" under Notification No. 8/2002-CE. The notification defined "brand name" or "trade name" as a mark indicating a connection between specified goods and a person using the name. The appellant contended that the printed cartons established a clear link between the brand owner, product, and customer, meeting the criteria of branded goods. Citing Supreme Court decisions, the appellant argued that affixing brand/trade names indicated a connection between the manufacturer's goods and the person using the name, leading to the loss of exemption.

Upon examination, the Tribunal found that the Supreme Court rulings emphasized the importance of the connection indicated by brand/trade names in the course of trade. The Court clarified that customers affix brand/trade names on products to establish a connection between the product and themselves for the ultimate customer's knowledge. The Tribunal concluded that the lower authorities' decision was unsustainable in light of the legal position and Supreme Court precedents. Notably, an amendment post the case excluded products like printed cartons from the category of brand names. Consequently, the Tribunal allowed both appeals, providing consequential relief as necessary.