2017 (6) TMI 322 - AT - Central Excise

SSI exemption - use of brand name of others - N/N. 1/1993 dated 28.2.2003 - is ALASKA brand is owned by entity other than the assessee appellant? - Held that - during the relevant period, the brand ALASKA was owned by the entity namely M/s. Vinko Auto Industries Ltd., Jalandhar, who is a different entity than the assessee-appellant, namely ALASKA Tyres Pvt. Ltd. When it is so, the appellants are not entitled to SSI benefit for the relevant period. The appellants have taken the plea that under the provisions of Trademark Act, 1999, such registration is to be treated as their brand retrospectively and therefore, they should be given the benefit of SSI exemption during the relevant period - Held that - reliance was placed in the case of MEGHRAJ BISCUITS INDUSTRIES LTD. Versus COMMISSIONER OF C. EX., UP 2007 (3) TMI 5 - SUPREME COURT OF INDIA , where it was held that issuance of registration certificate with retrospective effect from 30-9-91 will not tantamount to conferment of exemption benefit under the Excise Law once it is found that the appellants had wrongly used the trade mark of M/s. Kay Aar Biscuits (P) Ltd. - the assessee- appellant is not entitled to the benefit of SSI exemption during the said period, as during the said period, the brand name ALASKA was owned by another party, namely, M/s. Vinko Auto Industries Ltd., Jalandhar. Penalty on Shri Ravi Gupta, who is director of the assessee appellant, u/r 209 A of CER, 1944 - Held that - Shri Ravi Gupta was found to be instrumental in preparing the assignment deed in connivance with M/s. Vinko Auto Industries, in order to evade the duty of Central Excise. Thus there has been active involvement of appellant Shri Ravi Gupta in evasion of duty of Central Excise in the present proceedings making him liable to imposition of penalty under Rule 209 A of CER, 1944 - penalty upheld. Appeal dismissed - decided against appellant.

Summary

Issues Involved:
1. Ownership of the brand 'ALASKA' during the relevant period.
2. Entitlement to the benefit of SSI exemption under Notification No. 1/1993 dated 28.2.2003.
3. Validity of the assignment deed dated 1.7.1996.
4. Imposition of penalty on the Managing Director under Rule 209 A of the Central Excise Rules, 1944.

Detailed Analysis:

1. Ownership of the Brand 'ALASKA':
The main contention revolves around whether the brand 'ALASKA' was owned by the appellant-assessee, M/s. ALASKA Tyres Pvt. Ltd., during the relevant period. It was found that the brand 'ALASKA' belonged to M/s. Vinko Auto Industries Ltd., Jalandhar, not the appellant. The Central Excise officers' visit on 27.07.1998 revealed that the brand was not owned by the appellant, which was confirmed by subsequent investigations and statements.

2. Entitlement to SSI Exemption:
The appellant claimed SSI exemption under Notification No. 1/1993. However, the Tribunal observed that since the brand 'ALASKA' was owned by M/s. Vinko Auto Industries Ltd. during the relevant period, the appellant was not entitled to the SSI exemption. The Tribunal referred to the Supreme Court's decision in Meghraj Biscuits Industries Ltd. vs. CCE, UP, which held that the grant of a registration certificate under the Trade Marks Act does not automatically provide the benefit of exemption under the Excise Law.

3. Validity of the Assignment Deed:
The appellant argued that the brand 'ALASKA' was assigned to them effective from 1.7.1996 via an assignment deed. However, the Tribunal noted that the assignment deed was not disclosed during the investigation, and there were contradictions in the statements of the involved parties. The assignment deed lacked signatures of independent witnesses, casting doubt on its validity. The Tribunal concluded that the brand was not effectively transferred to the appellant during the relevant period, and the appellant was using a brand name not owned by them.

4. Imposition of Penalty on the Managing Director:
The Tribunal upheld the imposition of a penalty of Rs. One lakh on Shri Ravi Gupta, the Managing Director, under Rule 209 A of the Central Excise Rules, 1944. The Tribunal found that Shri Ravi Gupta failed to file necessary declarations under Rule 173 B and was actively involved in preparing the assignment deed in connivance with M/s. Vinko Auto Industries to evade Central Excise duty. His active involvement in the evasion of duty justified the penalty.

Conclusion:
The Tribunal sustained the impugned order, confirming the demand of Central Excise duty of ?16,90,758/- along with interest and equivalent penalty on the appellant-assessee. Additionally, the penalty of Rs. One lakh imposed on the Managing Director was also upheld. Both appeals were dismissed as without merits.

(Pronounced in the open Court on 06.06.2017)