2017 (4) TMI 740 - AT - Central Excise

SSI exemption - use of brand name of others - It is the case of the revenue that the appellant had cleared heating elements with brand name Calrod and the wordings on the label Marketed by Elpro International which indicate that Calrod was brand name of Elpro and appellant could not have claimed the exemption on this product - whether the appellant is eligible to avail the benefit of small scale exemption notification in respect of the heating elements cleared by them during the February 1991 to December 1999? - Held that - appellant has made out a case that the product manufactured and cleared by them with the words Calrod are not the brand name of any other person. On merits, it is held in favor of the appellant as the brand name being their own they cannot be precluded from availing the small scale exemption. The words used on the label Marketed by Elpro International is also not any hurdle in the case of the appellant inasmuch as the said words did not indicate any connection of Elpro to the brand name Calrod due to which appellant could have got undue benefit in the market. Extended period of limitation - Held that - Nothing is brought on record to show that there was suppression from the side of the appellant as to use of word Calrod as the brand name - demand also hit by limitation. Appeal allowed - decided in favor of appellant.

Summary

Issues:
Whether the appellant is eligible for small scale exemption under notification 175/88-CE and 1/93-CE for the relevant period.

Analysis:
The case revolved around the eligibility of the appellant for small scale exemption concerning heating elements manufactured by them. The appellant purchased machinery and technology from Elpro International Ltd. to manufacture heating elements under the brand name Calrod. The central issue was whether Calrod was the brand name of the appellant or Elpro. The appellant claimed that Calrod was their brand name, supported by evidence such as classification lists and affidavits. The Revenue argued that Calrod belonged to Elpro based on the product labeling. The Tribunal noted that the brand name Calrod was not conclusively proven to be owned by Elpro. The Tribunal highlighted that the appellant had consistently considered Calrod as their brand name, as evidenced by official communications and filings. The Tribunal found in favor of the appellant on the merit that the brand name being their own, they were entitled to the small scale exemption.

Regarding limitation, the Tribunal found the Revenue's argument of suppression insufficient. The appellant had disclosed the use of Calrod as their brand name to the authorities in various communications and filings. The Revenue's reliance on the agreement between the appellant and Elpro for invoking the extended period was deemed inadequate. The Tribunal held that appointing a selling agent or distributor did not establish ownership of the brand name, and the non-production of such agreements did not amount to suppression of facts. Consequently, the demands were considered time-barred, and the impugned order was set aside, allowing the appeal in favor of the appellant.

In conclusion, the Tribunal ruled that the appellant was eligible for the small scale exemption as Calrod was established as their brand name. The Revenue failed to prove that Calrod belonged to Elpro, and the arguments regarding suppression of facts were deemed insufficient. The judgment highlighted the importance of clear evidence and documentation in determining brand ownership and eligibility for tax exemptions.