2008 (6) TMI 114 - AT - Central Excise

Eligibility of the respondent IGE for S.S.I. Exemption Notification - adjudicating authority confirmed the demand, interest and imposed penalty on the proprietor on the ground that IGE had used logo CDRAISE of Germany Co. respondent are using label on the machinery is not disputed and the contents of the label which has the logo as well as the name of the foreign company and the local manufacturer is not disputed demand upheld

Summary

Issues:
Eligibility of the respondent for S.S.I. Exemption Notification based on the use of a logo owned by a foreign company.
Applicability of rural area exemption retrospectively.
Interpretation of brand name or trade name as per relevant notifications.
Validity of penalty imposed on the proprietor and the firm.

Analysis:
The judgment by the Appellate Tribunal CESTAT Ahmedabad involved appeals by the Revenue regarding the eligibility of the respondent, M/s. Indo German Engineers, for S.S.I. Exemption Notification during the period from April 1998 to March 2000. The dispute centered around the use of a logo, "CDRAISE," owned by a German company, on the machineries manufactured by the respondent. The original adjudicating authority had confirmed the duty demand, citing the use of the foreign logo as grounds for ineligibility for exemption. The Commissioner (Appeals) later set aside this decision, referencing a previous Tribunal case. The Revenue argued that the use of the logo indicated a connection to the German company, boosting sales and brand value for the respondent. The Tribunal, referring to a Supreme Court judgment, emphasized that even an ordinary name or mark, if used to indicate a connection between a product and another company, could qualify as a brand name or trade name. The Tribunal found the Supreme Court's ruling applicable to the case and allowed the Department's appeal, emphasizing the need to re-calculate the duty and penalty amounts. It was also noted that once a penalty is imposed on the firm, no additional penalty should be levied on the proprietor. The penalty imposed on the proprietor was thus set aside.

The issue of rural area exemption was also addressed, with the Tribunal noting that such exemption was only available from a specific date and could not be extended retrospectively. The Tribunal's analysis focused on the interpretation of the brand name or trade name as defined in the relevant notifications, emphasizing the importance of a connection between the product and the company indicated by the name or mark. The Tribunal differentiated the case at hand from previous decisions, highlighting the ownership of the logo by the foreign company and its impact on the trade connection established by the respondent. The judgment underscored the significance of the connection reflecting on the manufacture and quality of the products, aligning with the legal principles established by the Supreme Court. The decision ultimately favored the Revenue's arguments regarding the ineligibility for exemption based on the use of the foreign logo and upheld the re-calculation of duty and penalty amounts in line with the findings.