2017 (3) TMI 510 - AT - Central Excise

SSI exemption - job-work - use of brand name of others - ready made garments - goods manufactured and cleared under the brand name of Rusty Soul and Woods & Woods and Jeanagers - whether the main appellant M/s. Parit Enterprises (PE) is liable to pay differential duty for the period in question, on the redeemed garments bearing the brand name and manufactured and cleared by them and consequently interest and penalties on the main appellant as well as other appellant? - Held that - the benefit of N/N. 12/01-CE would be applicable to the appellant here as it is on record that the brand Rusty Soul and Woods & Woods were not registered with the authorities and application were made - as the benefit of N/N. 12/01-CE is applicable to the readymade garment manufactured by the appellant, no Central Excise duty liability arises on them. Accordingly, the differential demand of duty along with interest is liable to be set aside and we do so. Since the demand of the duty is set aside, we also set aside the penalties imposed on both appellants. There is no dispute as to the fact that these readymade garments were of brand Rusty Soul and Woods & Woods . As already held hereinabove, these branded readymade garments are not liable to duty by virtue of benefit of N/N. 12/01; accordingly the confiscation is set aside, and it is held that these readymade garments are not liable for confiscation. Appeal allowed - decided in favor of appellant.

Summary

Issues:
Differential duty liability under small scale exemption notification, Confiscation of seized goods, Brand ownership dispute, Benefit of notification 12/01-CE applicability.

Analysis:
1. Differential Duty Liability: The case involved the appellant, a garment manufacturer, clearing goods under the brand names "Rusty Soul," "Woods & Woods," and "Jeanagers." The revenue claimed the appellant exceeded the small scale exemption limit and demanded differential duty. The authorities seized garments bearing the same brand names, leading to show-cause notices and penalties. The appellant argued that the brands were not registered, citing trade notices and statements. The Tribunal found that the brands were not registered, making the appellant eligible for exemption under notification 12/01-CE, thus setting aside the duty demand and penalties.

2. Confiscation of Seized Goods: The seized garments were branded with "Rusty Soul" and "Woods & Woods." The revenue argued that since the brands belonged to a related entity, confiscation was justified. However, the Tribunal's analysis revealed that the brands were not registered, making the goods exempt from duty. Consequently, the confiscation was set aside as the garments were not liable for confiscation.

3. Brand Ownership Dispute: The lower authorities had concluded that the brands belonged to another entity based on trade mark registrations. However, the Tribunal examined letters from the brand owner stating the brands were not registered, along with Registrar of Trade Marks reports indicating the brands were new applications. This crucial evidence led to the finding that the brands were not registered, impacting the duty liability and confiscation decisions.

4. Benefit of Notification 12/01-CE Applicability: The Tribunal extensively analyzed the registration status of the brand names "Rusty Soul" and "Woods & Woods." Finding that the brands were not registered but only applied for, the Tribunal applied the provisions of notification 12/01-CE, exempting the appellant from duty liability. This detailed analysis formed the basis for setting aside the duty demand, penalties, and confiscation of the seized goods.

In conclusion, the Tribunal's thorough examination of the brand ownership dispute and the applicability of relevant notifications led to the setting aside of the duty demand, penalties, and confiscation. The judgment highlighted the importance of accurate brand registration status in determining duty liability and confiscation decisions.