2008 (7) TMI 194 - AT - Central Excise

Whether the respondents were entitled to SSI benefit under Notifications No. 9/98 and 9/99-C.E. in respect of their products cleared under the brand name which belonged to a foreign company - exclusive right to use the brand name in India was granted to the respondents by the brand name-owner qualified to be treated as assignment for purposes of SSI notifications therefore lower appellate authority was right in granting the benefit of the notifications to the respondents

Summary

Issues:
Entitlement to SSI benefit under Notifications No. 9/98-C.E. and No. 9/99-C.E. for products cleared under the brand name "BOARD WIZARDS" during 1998-99 and 1999-2000.
Invocation of extended period of limitation under Section 11A(1) of the Central Excise Act due to suppression of facts by the SSI unit.

Analysis:
1. Entitlement to SSI Benefit:
The main issue in this case was whether the respondents were entitled to the SSI benefit under Notifications No. 9/98-C.E. and No. 9/99-C.E. for products cleared under the brand name "BOARD WIZARDS." The respondents had entered into a "KNOW-HOW AND TECHNICAL ASSISTANCE AGREEMENT" with a foreign company to obtain intellectual property rights for manufacturing and selling certain products in India under the said brand name. The department contended that SSI benefit was not available for goods cleared under the brand name of another person. The original authority upheld the demand for duty and penalties against the party, citing suppression of facts. However, the Commissioner (Appeals) set aside the demand, ruling that the brand name belonged to the assessee, allowing them to claim SSI benefit. The Tribunal agreed with the Commissioner, emphasizing that the grant of exclusive right to use the brand name in India qualified as an 'assignment' for SSI notifications, regardless of ownership or registration status.

2. Invocation of Extended Period of Limitation:
The department invoked the extended period of limitation under Section 11A(1) of the Central Excise Act, beyond the normal six-month period, due to the alleged suppression of facts by the SSI unit regarding the brand name ownership. The learned JCDR argued that the respondents failed to disclose their use of a brand name belonging to a foreign company, constituting suppression of material facts. However, the Tribunal found that the grant of exclusive right to use the brand name under the agreement constituted an 'assignment' for SSI notifications, justifying the benefit claimed by the respondents. Consequently, the Tribunal dismissed the Revenue's appeal, emphasizing that the erroneous finding by the lower appellate authority did not affect the respondents' entitlement to the SSI benefit under the relevant notifications.

In conclusion, the judgment by the Appellate Tribunal CESTAT, CHENNAI clarified the entitlement to SSI benefit for goods cleared under a foreign brand name, emphasizing the significance of exclusive rights granted under agreements in determining eligibility for concessions. The decision highlighted the distinction between ownership and the right to use a brand name, ultimately upholding the respondents' claim for SSI benefit and rejecting the invocation of the extended period of limitation based on alleged suppression of facts.