2017 (3) TMI 1768 - AT - Central Excise

SSI exemption - use of brand name of others - imposition of penalty u/r 26 - HELD THAT - The present appellants even though they are owner of the brand name but merely because they have ownership of brand charge of non-payment of excise duty on the product is on M/s. Swastik Appliances who are manufacturer. It is M/s. Swastik Appliances who is supposed to comply with the Central Excise provisions as regard the dutiability of the product manufactured by them. Therefore the present appellant cannot be in any way implicated in the case of duty evasion done by M/s. Swastik Appliances. Under the facts that customers is the owner of the brand name charge of abetment of evasion of excise duty by M/s. Swastik appliances does not establish - penalty do not sustain - appeal allowed - decided in favor of appellant.

Summary

Issues:
- Imposition of penalty under Rule 26 on M/s. R.K. Fans & Allied Products Ltd. and its Director
- Allegation of evasion of excise duty by M/s. Swastik Appliances
- Ownership of brand name and duty payment responsibility
- Abetment of evasion of excise duty

Analysis:
The judgment revolves around the imposition of penalties under Rule 26 on M/s. R.K. Fans & Allied Products Ltd. and its Director in a case involving alleged evasion of excise duty by M/s. Swastik Appliances. The original adjudicating authority had imposed penalties of &8377; 3 lakhs each on the appellants based on the investigation revealing mis-declaration of production and clearances by M/s. Swastik Appliances, who were manufacturing goods under the brand name of the customer, M/s. R.K. Fans & Allied Products Ltd. The adjudicating authority confirmed the duty demand against M/s. Swastik Appliances and imposed penalties on the appellants.

During the appeal, no one appeared on behalf of the appellants, while the Revenue representative reiterated the findings of the impugned order. The Member (J) carefully considered the submissions and records. It was observed that duty payment was made by M/s. Swastik Appliances as they affixed the brand name of the customer, M/s. R.K. Fans & Allied Products Ltd. The judgment emphasized that the responsibility for complying with Central Excise provisions and duty payment lies with the manufacturer, M/s. Swastik Appliances, even if the brand name is owned by the appellants. The Member (J) concluded that the appellants could not be implicated in the duty evasion case of M/s. Swastik Appliances as the charge of abetment was not established due to the ownership of the brand name by the customer. Consequently, the penalties imposed on both the appellants under Rule 26 were deemed unsustainable, leading to the setting aside of the impugned order and allowing both appeals.

In summary, the judgment clarifies the distinction between ownership of a brand name and the responsibility for excise duty payment, absolving the appellants of penalty under Rule 26 due to the lack of involvement in the alleged duty evasion by the manufacturer, M/s. Swastik Appliances.