2019 (4) TMI 1967 - AT - Central Excise

SSI exemption - use of the brand name of others or not - it is contended that the inscription on the goods viz. IWI Newstech and TS 300 are merely the name of the appellant and the generic name of the machine with the speed and cannot be construed as brand names of any other entity - HELD THAT - It has been admitted by the appellants that these were fixed on the goods at the time of clearance. However it has been pointed out that the first of these is the abbreviated form of the name of the manufacturing company and by no stretch could it be held to be that of one of the parent entities. There is no doubt that the overseas entity M/s IDAB Wamac International may also be abbreviated as IWI but neither can be same initials be alienated from the appellant-assessee. There is no evidence on record that the abbreviation was deployed and even associated with the overseas entity in the minds of customers which is an essential requirement for disallowance of the benefit of the exemption notification. It is also on record that the appellant-assessee had clarified the nature of the inscription TS 300 as a generic indication of the nomenclature of the equipment viz. turner stacker with speed rating of 300. Again other than a sweeping statement of the familiarity of this description with customers not founded on any recorded evidence it is found that nothing on record counters this claim. In any case there is no evidence that the inscription TS 300 is associated with any specific manufacturer. The imposition of penalties on the other two appellants under rule 26 of Central Excise Rules 2002 also flow from the finding of ineligibility of the appellant-assessee. The imposition of penalties is also without any foundation - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Interpretation of brand names and trade names in relation to central excise duties.
2. Application of exemption notification for small-scale units.
3. Imposition of penalties under Central Excise Act, 1944.

Issue 1: Interpretation of brand names and trade names in relation to central excise duties:
The case involved a joint-venture company manufacturing 'counter stacker' and 'mailroom equipment' for small newspaper establishments. The central issue was whether inscriptions on the goods, such as 'IWI Newstech' and 'TS 300,' constituted brand names of the overseas promoter, thereby attracting central excise duties. The first appellate authority concluded that the appellants were using the brand name of the foreign company based on various evidences, press briefings, and the connection established through technical know-how agreements. The authority rejected the argument that the inscriptions were merely generic names, emphasizing the association of 'TS 300' with the foreign company in the industry.

Issue 2: Application of exemption notification for small-scale units:
The original authority confirmed a demand under the Central Excise Act, 1944, against the appellants for availing benefits intended for small-scale units while affixing the brand of the overseas promoter on goods. The first appellate authority upheld the demand based on the inscriptions on the machines, indicating a connection with the overseas entity. However, the Tribunal found that the inscriptions 'IWI' and 'TS 300' did not conclusively establish association with the overseas entity in the minds of customers, a crucial requirement for disallowance of the exemption notification. The Tribunal also noted the lack of evidence to support the finding that the inscriptions were brand names of the overseas entity.

Issue 3: Imposition of penalties under Central Excise Act, 1944:
Penalties were imposed on the appellants under the Central Excise Act, 1944, for non-compliance and ineligibility for availing the exemption notification. The Tribunal, upon review, found that the penalties were imposed without a proper foundation due to the lack of factual basis or correct appreciation of the conditions in the notification. Consequently, the Tribunal set aside the impugned orders and allowed the appeals, indicating that the penalties were unwarranted given the lack of evidence supporting ineligibility for the exemption.

In conclusion, the judgment addressed the interpretation of brand names, application of exemption notifications, and imposition of penalties under the Central Excise Act, 1944. The Tribunal's decision focused on the lack of conclusive evidence establishing the inscriptions as brand names of the overseas entity and the incorrect application of penalties based on the findings of ineligibility. The appeals were allowed, highlighting the necessity for factual substantiation and correct interpretation of legal provisions in excise duty cases.