2017 (10) TMI 114 - AT - Central Excise

SSI Exemption - use of Brand name of others - whether PET has used the brand name of another so as to deny the benefit of SSI exemption? - Held that - There is no dispute that brand name CASCADE originally belonged to Swarna Steel Works (SSW) which was a partnership firm with Shri P. Alagesan, Shri A. Mahesh and Smt. A.Swarnalatha as partners. There is no dispute that the very same P. Alagesan is also proprietor in Pratheep Electro Technics (PET) - Various decisions of higher appellate courts have now unequivocally held that benefit of SSI exemption is admissible to a proprietary concern manufacturing excisable goods bearing brand name owned by another partnership firm, in which the proprietor of the first concern is a partner of the second. SSI exemption cannot be denied for the impugned period to PET for use of the brand name CASCADE - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Validity of SSI exemption for using a brand name owned by another partnership firm.
2. Allegations of fraudulent practices in obtaining deed and irregular availment of exemption.
3. Imposition of penalties on the appellant and related individuals.

Analysis:
1. The case involved the issue of whether the appellant, a manufacturing concern, was eligible for Small Scale Industry (SSI) exemption while using a brand name owned by another partnership firm. The appellant used the brand name "CASCADE" which originally belonged to a different entity. The tribunal referred to various legal precedents, including decisions by higher appellate courts, which established that SSI exemption could be granted to a proprietary concern using a brand name owned by another partnership firm in which the proprietor of the concern is a partner. Based on these precedents, the tribunal held that the appellant was entitled to the SSI exemption for the period in question, and the denial of the exemption was not sustainable. Consequently, the appeal filed by the manufacturing concern was allowed, and any penalties imposed were set aside.

2. The department alleged fraudulent practices in obtaining the deed and irregular availment of exemption. The appellant's representative argued that the assignment deed was valid, and even if it was executed later, the appellants became entitled to use the brand name from the effective date mentioned in the deed. The tribunal considered these arguments but ultimately upheld the validity of the assignment deed and the entitlement of the appellants to use the brand name. The penalties imposed on the appellant and related individuals were set aside based on the findings regarding the validity of the SSI exemption and the use of the brand name.

3. Penalties were imposed on the appellant and related individuals for their alleged involvement in fraudulent practices and irregular availment of exemption. The tribunal, after considering the arguments presented by both sides, concluded that the penalties were not justified in light of the legal precedents and the validity of the SSI exemption. As a result, the penalties imposed on the appellant and the related individuals were set aside, and the appeals in their favor were allowed with consequential reliefs. The appeal filed by an individual who did not appear was dismissed for non-prosecution.

This detailed analysis of the judgment highlights the key legal issues, arguments presented by both sides, and the tribunal's findings and decisions on each issue involved in the case.