2022 (12) TMI 1463 - AT - Central Excise

Availing wrongful SSI benefit - resorting to the incorrect valuation of the goods cleared - electrical accessories, bells, chokes and street light fixtures - relevant date for assignment of ttrademark - possession of registered trademark - HELD THAT - The trade mark No. 622155 KALKI registered in the name of Shri Mohanlal Gosar Gosrani and Smt. Hemlata Gosrani has been assigned in the name of Shri Chandrakant Gosrani and this fact has been duly intimated in the affidavit filed before Registrar of Trade Marks, Mumbai. Affidavit of 11.05.2011 also refers to the earlier deed and says that it was assigned on 06.05.2011. Reliance by Commissioner on the affidavit of 2011 to deny the fact of assignment of the trade mark in the name of the appellant on 06.05.2011 is contrary to the facts. From the perusal of the certificate of registration it is clear that the brand name KALKI was registered in the name of the appellant from 01.07.2009 - Commissioner has given no plausible reason for denying SSI exemption. Only during the financial year 2009-10 appellant had crossed the exemption limit as provided in terms of Notification No.8/2003-CE dated 01.03.2003. Accordingly central excise duty is demandable only for the said year and value of clearances which is beyond the exemption limit of Rs.1.5 crores. The total duty demand and interest and penalty under Section 11AC for the duty so short paid would be within the amount already deposited and appropriated by the Commissioner by the impugned order. Learned counsel has undertaken not to claim any refund in respect of the amount of Rs.3,00,000/- deposited and appropriated by the Commissioner - after allowing the benefit of Notification No.8/2003-CE dated 01.03.2003, the appeal is partly allowed. Appeal allowed in part.

Summary

Issues Involved:
1. Denial of SSI exemption to the appellant.
2. Correct valuation of goods under Section 4A of the Central Excise Act, 1944.
3. Confirmation of demand for excise duty and imposition of penalties.

Detailed Analysis:

1. Denial of SSI Exemption:
The primary issue was the denial of the Small Scale Industry (SSI) exemption to the appellant. The appellant argued that the brand name "KALKI" was assigned to the current proprietor, Chandrakant G. Gosrani, through a dissolution deed and subsequent affidavit, allowing them to use the brand name and claim SSI exemption. The Commissioner, however, denied this exemption, citing that the trade mark was only registered in the appellant's name on 17.10.2011, well beyond the relevant period. The Commissioner relied on the Supreme Court decisions in Meghraj Biscuit Industries Limited and Meyer Health Care Private Limited, which stated that the date of registration of the trade mark is crucial for claiming benefits under the SSI exemption.

2. Correct Valuation of Goods:
The goods in question, classified under Chapter Heading 8536, were required to be valued based on the Maximum Retail Price (MRP) as per Section 4A of the Central Excise Act. The appellant admitted that if the SSI exemption was allowed, they only crossed the exemption limit of Rs. 1.5 crores during the financial year 2009-10. The demand was based on incorrect valuation under Section 4 instead of Section 4A for the goods falling under Heading 8536.

3. Confirmation of Demand and Penalties:
The Commissioner confirmed the demand of Rs. 81,08,341/- and imposed an equivalent penalty under Section 11AC of the Central Excise Act, 1944, and Rule 25 of the Central Excise Rules, 2002. The appellant had already deposited Rs. 3,00,000/- during the investigation, which was appropriated against the confirmed liabilities. The appellant argued that the demand was based on incorrect valuation and that they were entitled to SSI exemption. They also contended that the penalty was not sustainable as there was no malafide intention to evade duty.

Judgment Summary:
The Tribunal considered the various deeds executed from 2005 onwards, which indicated that the trade mark "KALKI" was assigned to the appellant. The Tribunal found that the Commissioner had not provided a plausible reason for denying the SSI exemption. The Tribunal referred to several decisions, including Arco Whitney Ltd. and Vankatesh Yedidha, which supported the appellant's case for SSI exemption. The Tribunal concluded that the appellant was entitled to SSI exemption for the entire period of demand, except for the financial year 2009-10, where the exemption limit was crossed. The total duty demand and interest for the year 2009-10 were within the amount already deposited by the appellant. Consequently, the Tribunal partly allowed the appeal, modifying the order to confirm the demand along with interest and penalty only for the financial year 2009-10, within the amount already deposited and appropriated.

Conclusion:
The Tribunal ruled in favor of the appellant, allowing the SSI exemption for the relevant period except for the financial year 2009-10, where the exemption limit was crossed. The demand, interest, and penalty were confined to the amount already deposited by the appellant, and the appeal was partly allowed with the necessary modifications.