2007 (12) TMI 18 - SC - Central Excise

Use of brand name of others by SSI unit Non-disclosure of agreement of assessee & brand owner in reply to SCN & classification list Ignorance about exemption under notification is not related to non-disclosure No counter has been filed till today to order of SC Larger period invocable.

Summary

Issues:
Breach of Rule 173F regarding classification list disclosure and duty payment by the assessee.

Analysis:
The case involved a show cause notice alleging that the respondent-assessee breached Rule 173F by failing to declare in its classification list that it was an SSI unit using another company's brand name for its product. The Division Bench of the Court admitted the appeal based on the Attorney General's contention that the respondent's failure to disclose the brand name was intentional to evade duty. Despite the order, the respondent did not file a counter affidavit. The core issue revolved around the breach of Rule 173-F, G(1), and H of the Central Excise Rules 1944. These rules outlined the assessee's duty to determine and pay the excise duty, maintain accounts, and not bring duty-paid goods into the factory without proper documentation.

The respondent argued ignorance of the law as their defense, claiming they were unaware of their entitlement to exemption and paid the duty amount after the show cause notice. However, the crucial question was whether there was willful default on the part of the respondent in not disclosing the use of the brand name. The Court emphasized that the lack of knowledge about exemption did not justify the failure to disclose the arrangement with the brand owner. The absence of details on the transaction enabling the use of the brand logo and the failure to disclose it in the reply to the show cause notice raised doubts. The Court highlighted the lack of counter-filing and discussion on the brand's exemption eligibility by both the Tribunal and the respondent.

Ultimately, the Court held that the Tribunal should not have interfered with the Commissioner's order. Consequently, the impugned judgment of the Tribunal was set aside, and the civil appeal was allowed with no order as to costs. The decision underscored the importance of compliance with excise rules, disclosure obligations, and the need for transparency in dealings to avoid potential duty evasion issues.