2017 (6) TMI 894 - AT - Central Excise

SSI exemption - use of brand name of others - manufacture and clearance of leather chemicals with the brand names of others - Held that - in terms of para-5 of the SSI N/N. 8/98 dt. 2.6.98 and para-4 of N/N. 8/99 dt. 22.8.99 and 8/2000 dt. 1.3.2000. In terms of relevant paras of the above notifications, the benefit is to be denied in respect of specified goods, if cleared bearing a brand name of another person - In the present case, the allegation is that the two respondents have cleared the goods bearing the brand name of another person i.e. the brand name originally owned and used by M/s.Aksol Chemicals and subsequently by various group companies. It is on record that as per Sale Deed dt. 27.03.1998 and Deed of Assignment, all the group companies ceased to exist and the entire properties and goodwill were legally transferred to both the respondents with the consent of all the family members who were proprietors/partners in the group companies. Thus, there is no dispute that the owners of the brand name have legally assigned all the brand name to both the respondents. Since the dispute is pertaining to the period after such assignment of brand names, the clearances made by both the respondents bearing these brand names has to be held as clearances of goods bearing the brand name of respondents themselves - further, M/s.Aksol Chemicals did not exist - demand not justified. With regard to allegation that Emi was a brand name belonging to MTPL, we note that Smt. K.K. Maheswari, Director of MTPL in her statement dt. 2.11.2000 has categorically stated that she was not the owner of the brand name EMI which was used as prefix to the description of goods cleared through MTPL. Appeal dismissed - decided against Revenue.

Summary

Issues:
- Allegations of Revenue against M/s.Aksol Industries and M/s.Aksol Chemical Industries regarding the availing of SSI notification for manufacturing and clearing leather chemicals with brand names of others.
- Challenge by Revenue against the dropping of duty demands by the learned Commissioner (Appeals).
- Dispute over the ownership and use of brand names by the respondents post reorganization of business activities.

Analysis:
1. Allegations of Revenue: The Revenue contended that M/s.Aksol Industries and M/s.Aksol Chemical Industries availed the SSI notification for manufacturing and clearing leather chemicals with brand names belonging to others. The original authority confirmed the duty demands, but the Commissioner (Appeals) dropped them. The Revenue challenged this decision, arguing that the brand names originally belonged to Aksol Chemicals and other group companies. They also alleged the use of the brand name "Emi" belonging to another company. The Revenue sought to deny the SSI exemption based on these grounds.

2. Ownership of Brand Names: The Tribunal examined the ownership of the brand names used by the respondents. It was established that the brand names initially belonged to Aksol Chemicals and were subsequently used by various group companies. However, through a Sale Deed and Deed of Assignment in 1998, all properties and goodwill, including the brand names, were legally transferred to the respondents. The Tribunal found that post this assignment, the clearances made by the respondents using these brand names were considered as their own, as legally assigned. The Commissioner (Appeals) also held that Aksol Chemicals ceased to exist. Therefore, the Tribunal upheld the Commissioner's decision on this ground.

3. Brand Name "Emi" Dispute: The Revenue alleged that the brand name "Emi" used by the respondents belonged to another company, MTPL. However, the Director of MTPL stated that she was not the owner of the brand name "Emi." Without additional evidence proving that the respondents were using another person's brand name, the Tribunal upheld the impugned order. Consequently, the appeals filed by Revenue were dismissed, as the Tribunal found no merit in the Revenue's contentions.

In conclusion, the Tribunal's decision was based on the legal transfer of brand names to the respondents and the lack of substantial evidence supporting the Revenue's claims regarding the use of brand names belonging to others. The judgment emphasized the importance of legal assignments and ownership in determining the entitlement to exemptions under the relevant notifications.