1993 (3) TMI 376 - AT - Central Excise

Summary

Issues:
Interpretation of the expression "another person" in Notification 175/86-CE, denial of exemption eligibility due to affixing goods with brand names, difference of opinion on the interpretation of "another person" in para 7 of the notification, applicability of extended period of limitation, calculation of duty on cum-duty price, extension of modvat credit to inputs used in manufacturing.

Analysis:
The judgment revolves around the interpretation of the term "another person" in Notification 175/86-CE and its impact on the eligibility for exemption. The Tribunal addressed the issue of whether the brand names affixed to the goods belonged to a manufacturer or a trading concern. It was established that the expression "another person" has a wider meaning than just a manufacturer and includes trading concerns as well. The Tribunal rejected the argument that the term should be limited to manufacturers only, emphasizing that the amendment aimed to prevent misuse by both manufacturers and trading concerns with registered trade names.

The Tribunal referred to a previous case, Thio Pharma v. Collector of Central Excise, where there was a difference of opinion among the members on the interpretation of "another person" not eligible for exemption. One member held that the prohibition applied only if the goods were affixed with a brand name of a manufacturer not eligible for exemption, while the other member disagreed, stating that the term "person" should not be limited to manufacturers only. The Tribunal ultimately concurred with the latter view, holding that the appellants were not eligible for exemption under para 7 of the notification.

Regarding the applicability of the extended period of limitation, the Tribunal found that the demand should be restricted to six months prior to the show-cause notices. The appellants' bona fide belief that the embargo in para 7 of the notification applied only to goods with brand names of manufacturers, not traders, was considered, leading to the conclusion that the extended period of limitation was not applicable.

Furthermore, the Tribunal ruled that duty should be calculated on the cum-duty price, following the precedent set by the Supreme Court in the Bata Shoe Co. (P) Ltd. case. Additionally, the benefit of modvat credit was to be extended to inputs used in manufacturing the final products, based on records relied upon by the Department, in line with the Tribunal's order in a previous case involving Haryana State Electricity Board.

In conclusion, the Tribunal held that the appellants were not eligible for exemption, restricted the duty demand period, based duty calculation on cum-duty price, extended modvat credit, upheld confiscation of goods with redemption option, set aside penalties, and disposed of the appeals accordingly.