2019 (1) TMI 1771 - AT - Central Excise

SSI Exemption - use of brand name of others - appellant had been clearing manufactured goods under the brand name ADVANCE which allegedly belonged to the joint venture partner in the United States of America and the use being that of an ineligible brand name, it was concluded that duty liability should be discharged without the benefit of the exemption notification - HELD THAT - Reliance placed in the decision in the case of COMMR. OF C. EX., MUMBAI-V VERSUS CAPITAL CONTROLS INDIA (P) LTD. 2010 (7) TMI 465 - CESTAT, MUMBAI where it was held that any absolute right over the brand name was not transferred or assigned by the Licensor to the assessee. Therefore, the respondent cannot claim SSI benefit on the strength of the said agreement, though they can claim the benefit on the strength of the certificate of registration. The decision of the Tribunal pertains to the period from April 1998 to June 2000 - The present dispute pertains to the period from April 2003 to November 2003 and from May 2004 to December 2004. In the light of the above decision of the Tribunal, entitling the appellant the use of brand name as their own, the findings of the first appellate authority fails. Appeal allowed - decided in favor of appellant.

Summary

Issues:
Appeal against duty liability confirmation with interest but penalties set aside due to use of allegedly ineligible brand name 'ADVANCE' under joint venture with a US company.

Analysis:
The appeal before the Appellate Tribunal CESTAT MUMBAI involved M/s Capital Controls India Limited contesting the duty liability confirmed by the Commissioner of Central Excise (Appeals), Mumbai Zone - I, amounting to ?5,16,413 along with interest, while the penalties imposed on the appellant were set aside. The core issue revolved around the use of the brand name 'ADVANCE' for goods manufactured by the appellant under a joint venture with a US company, which was deemed ineligible for exemption notification purposes.

The appellant, a small scale unit, manufactured chlorinators/vacuum regulators and parts in collaboration with the US company. The dispute arose due to the brand name 'ADVANCE,' believed to be owned by the US partner, leading to the duty liability imposition without exemption benefit. However, the appellant argued that the trademark was assigned to them through an agreement dated January 9, 1996, and was duly registered under the Trademarks Act, 1958, in August 2005, with retroactive effect from August 18, 1999, as per the Trade Marks registry.

Referring to a previous Tribunal decision, the Appellate Tribunal highlighted the importance of brand name registration in determining eligibility for benefits. The Tribunal's decision covering the period from April 1998 to June 2000 supported the appellant's claim to use the 'ADVANCE' brand name as their own, contradicting the findings of the first appellate authority for the subsequent periods in dispute, i.e., April 2003 to November 2003 and May 2004 to December 2004.

In conclusion, the Appellate Tribunal set aside the impugned order, allowing the appeal in favor of the appellant based on the established rights over the brand name 'ADVANCE' as per the trademark registration and the terms of the agreement. The judgment emphasized the significance of brand name ownership and registration in determining entitlement to statutory benefits, ultimately overturning the duty liability decision while upholding the appellant's position concerning the brand name usage.