2008 (10) TMI 151 - AT - Central Excise

SSI exemption - brand name SUNCA does not belong to the appellant-firm and it belongs to a third party therefore, applicant-firm is not eligible for exemption u/not. no.8/2000-C.E on the basis of value of clearances since appellant have admitted the manufacture of goods with the brand name of others and clearing clandestinely and maintaining accounts in Kachcha pads, submission that the value of clearances adopted for demanding duty has been inflated, is not acceptable penalty on son of proprietor is sustainable as his involvement in evasion of duty is established however penalty cannot be imposed on proprietor when penalty has been imposed on proprietary concern

Summary

Issues: Ownership of brand name SUNCA, Quantum of clearances, Imposition of penalties

Ownership of brand name SUNCA:
The case involved a dispute over the ownership of the brand name SUNCA used on certain goods seized during a search operation. The appellant claimed that they were entitled to exemption under Notification No. 8/2000 as they believed the brand name belonged to M/s. Mikura Impex. However, evidence presented during the proceedings indicated that the brand name actually belonged to M/s. Sun Fat (Holding) Co. Ltd. The Tribunal concluded that the appellant was not the owner of the brand name SUNCA and therefore not eligible for the claimed exemption.

Quantum of clearances:
The appellant was found to have illegally used internationally recognized brand names on their products, leading to clandestine operations and inaccurate accounting practices. The Tribunal noted that the appellant failed to account for the production and clearance of goods openly, maintaining coded records to conceal actual figures. Despite claims of inflated demands and misinterpretation of certain transactions, the Tribunal upheld the duty demand, as it was established that the appellant had intentionally avoided proper accounting practices and misreported transactions.

Imposition of penalties:
The Commissioner was found to have erred in imposing separate penalties on both the firm and its proprietor, as the Tribunal considered them to be the same legal entity. The penalty imposed on the son of the proprietor was upheld due to his direct involvement in the evasion of duty. The Tribunal rejected the appeals of the firm and the son but allowed the appeal of the proprietor regarding the separate penalty imposed on him. The Tribunal's decision was based on the clear involvement of the son in the evasion of duty and the legal relationship between the firm and its proprietor.

In conclusion, the Tribunal ruled against the appellant regarding the ownership of the brand name SUNCA and upheld the duty demand based on the evidence of clandestine operations and inaccurate accounting practices. The separate penalty imposed on the proprietor was set aside, while the penalty on the son was upheld due to his direct involvement in the evasion of duty.