2017 (4) TMI 384 - AT - Central Excise

SSI exemption - Valuation - N/N. 9/2002-CE or 9/2003-CE - The contention of the Revenue is that value of goods cleared to M/s Director Transport UT Chandigarh and M/s Chief General Manager DTC New Delhi are to be included for determining aggregate value of 1 Crore and duty to be discharged @ 16% after crossing the value of clearance of 1 crore - Held that - the clearance of bearing a brand name and trade name for other person is not applicable for grant of exemption Notification in terms of para 4. Explanation defines the brand and trade name which says that the brand name and trade name or a mark such as symbol monogram label signature or invented word or writing which is used in relation to such specified goods for the purpose of indicating or so as to indicate a connection in the course of trade between such specified goods and some perod using such name or mark - the appellant has put mark of M/s Director Transport UT Chandigarh and M/s Chief General Manager DTC New Delhi i.e. CTU/DTC therefore its brand name of another person which is not includable in the clearance under Notification No. 9/2002 for computing total clearance. It is not intention of the notification that the said branded goods are be used in the course of trade and the same is clear from the language of the notification itself. In that circumstances on merits we hold that the clearance made to M/s Director Transport UT Chandigarh and M/s Chief General Manager DTC New Delhi are not includable in the value of the clearance made by the appellant in terms of N/N. 9/2002 or 9/2003. Extended period of limitation - Held that - the appellant were regularly filed their returns showing the clearance made to DTC or CTU and paying duty on higher rate on the said goods was in the knowledge of the department. As the activity of clearance made by the appellant were in the knowledge of the Revenue the extended period of limitation is not invokable. Appeal allowed - decided in favor of appellant.

Issues:
1. Challenge against the demand of duty, interest, and penalty for the period of 2002-2003 to 2004-2005.
2. Interpretation of Notification No.9/2002-CE and 9/2003-CE regarding the calculation of aggregate value of clearances.
3. Applicability of the extended period of limitation for issuing the show cause notice.

Analysis:

Issue 1: Challenge against the demand of duty, interest, and penalty
The appellant contested the demand of duty, interest, and penalty imposed for the period of 2002-2003 to 2004-2005. The impugned order confirmed the duty demand along with interest and penalty, based on the appellant's clearance of goods at concessional rates under specific notifications. The show cause notice was issued invoking the extended period of limitation on 12.04.2006.

Issue 2: Interpretation of Notification No.9/2002-CE and 9/2003-CE
The main contention revolved around the interpretation of Notification No.9/2002-CE and 9/2003-CE concerning the calculation of the aggregate value of clearances. The appellant argued that goods cleared bearing the brand name of another person should be excluded from the total clearance value for determining the applicability of concessional rates. The appellant highlighted that the goods cleared to specific entities at full duty rates should not be included in the exemption limit.

Issue 3: Applicability of the extended period of limitation
Regarding the extended period of limitation for issuing the show cause notice, the appellant argued that the demand was time-barred. The appellant maintained that the department was aware of the clearance details and the duty paid on goods, thus rendering the extended period of limitation inapplicable.

The Tribunal analyzed the relevant provisions of Notification No.9/2002-CE and 9/2003-CE, specifically focusing on exclusions based on goods bearing another person's brand name or trade name. The explanation provided in the notification clarified the definition of brand name or trade name, emphasizing the connection in the course of trade between specified goods and the person using the name or mark.

The Tribunal referred to a Supreme Court decision in a similar context, emphasizing that the exemption under the notification does not apply to goods bearing a brand name of another person, irrespective of whether the goods reach the market or are used for captive consumption. The Tribunal differentiated previous tribunal decisions based on the Supreme Court's interpretation, concluding that the goods cleared to specific entities with brand names of other persons should be excluded from the appellant's total clearance value.

Furthermore, the Tribunal ruled that since the revenue department was aware of the appellant's clearance details and duty payments, the extended period of limitation for issuing the show cause notice was not applicable. Consequently, the demand raised against the appellant was deemed time-barred.

In conclusion, the Tribunal set aside the impugned order, allowing the appeal in favor of the appellant, with any consequential relief to be granted accordingly.

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