2017 (7) TMI 893 - AT - Central Excise

SSI Exemption - N/N. 8/2001-CE dated 01.03.2001 as amended - Revenue entertained a view that the appellant manufactured the branded goods and accordingly, not eligible for the said concession - Held that - the restriction for denial of exemption Notification in terms of Para 5 of Notification 8 of 2001, availability of any symbol monogram, writing, in such goods indicating connection in the course of trade between such goods and the some person using such name, is sufficient. On perusal of evidences, we are satisfied that the goods manufactured did bear such brand name, which will make the appellant ineligible to claim the SSI exemption. Most of the purchase bills produced by the appellant, where reference is to nuts. The present case is relating to bolts with names embossed on them. As such, we find that the purchase documents cannot be linked with the seized goods. Penalty u/s 11AC - Held that - In respect of the goods, which were still lying in the factory, no duty demand can be confirmed and accordingly, equivalent penalty cannot be imposed in terms of Section 11AC of the Central Excise Act, 1944. Accordingly, we find that the confirmation of duty demand and imposition of equal amount of penalty on the goods, which are still lying in the factory premises, is not sustainable. Appeal allowed - decided partly in favor of appellant.

Issues:
1. Eligibility for small scale unit exemption under Notification No.8/2001-CE
2. Confiscation of seized goods and imposition of penalty
3. Brand name implications on exemption claim
4. Job work engagement claim
5. Trading activity justification
6. Correctness of confiscation order
7. Penalty imposition without short payment of duty
8. Excessive redemption fine imposition

Eligibility for Small Scale Unit Exemption:
The appellant, engaged in the manufacture of bolts/nuts, claimed exemption as a small scale unit under Notification No.8/2001-CE. However, the Revenue contended that the appellant manufactured branded goods, rendering them ineligible for the concession. The original authority confirmed a Central Excise liability on seized goods and imposed penalties. The Tribunal upheld this decision, noting the presence of distinct brand names on the goods, making the appellant ineligible for the SSI exemption.

Confiscation of Seized Goods and Penalty Imposition:
The appellant contested the confiscation and penalty imposed, arguing that the goods seized from the factory premises should not be subject to penalties as they were not cleared. The Tribunal agreed, stating that penalty under Section 11AC cannot be imposed when goods are still in the factory. However, duty would be applicable upon redemption and clearance of these goods.

Brand Name Implications:
The appellant claimed that the letters on the bolts were generic abbreviations, not brand names, supported by a client's letter. The Tribunal disagreed, emphasizing that the presence of any symbol indicating a connection in trade with a person satisfies the brand name condition, making the appellant ineligible for the exemption.

Job Work Engagement Claim and Trading Activity Justification:
The appellant's claims of job work engagement and trading activity were refuted due to lack of evidence supporting these assertions. Purchase documents related to nuts could not be linked to the seized goods, indicating inconsistency in the appellant's trading claims.

Correctness of Confiscation Order:
The Tribunal upheld the confiscation order due to the appellant's manufacturing of goods with others' brand names and non-registration with the Department, attracting Rule 25 provisions.

Penalty Imposition Without Short Payment of Duty:
The Tribunal agreed that equivalent penalty cannot be imposed when there is no short payment of duty for goods still in the factory, modifying the penalty attributed to duty on such goods.

Excessive Redemption Fine Imposition:
The Tribunal found the redemption fine excessive and reduced it, considering the nature of the goods and the appellant's profit margin, ultimately modifying the fine imposed for a more just outcome.

In conclusion, the appeal was dismissed, except for modifications reducing the fine and penalty attributed to goods still in the factory, ensuring a fair resolution based on the detailed analysis of each issue involved in the case.

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