2017 (11) TMI 19 - AT - Central Excise

SSI exemption - use of Brand name of others - printing the name/logo of the customer - Held that - Moulded plastic articles which are manufactured by the appellant but the duty had been demanded in respect of those goods on the basis that the appellant have sold them by printing the brand name/logo of the customers. Though the appellant had given the break up of the goods manufactured by them and sold from their shop and the goods purchased from outside and sold from their shop, but this plea had not been considered at all. Even though the factory as well as the shop are owned by the appellant, their factory will be entitled to SSI benefit in respect of goods manufactured there on the basis of the value of such clearances. From the facts of the case, we find that there is no allegation that goods manufactured in the factory are cleared bearing the brand name of customers - there is no reason to allege that goods have been manufactured and cleared bearing the brand name of others. Appeal allowed - decided in favor of appellant.

Summary

Issues: Duty demand on goods sold with brand name/logo, capacity to manufacture specific items, time-barred duty demand, imposition of penalties on the appellant and partners.

Analysis:
1. Duty Demand on Goods Sold with Brand Name/Logo:
The case involved a factory manufacturing plastic items availing SSI exemption and also selling goods with customer's brand name/logo. The duty demand was based on the assumption that goods sold with brand name/logo were manufactured by the appellant. The Tribunal noted that most of the goods in question were not even manufactured by the appellant. The appellant's plea that printing customer's name/logo does not constitute manufacturing was accepted. The Tribunal found no justification to deny SSI benefit or sustain the duty demand on these grounds.

2. Capacity to Manufacture Specific Items:
The appellant argued that they only manufactured specific plastic items and did not have the capacity to produce the goods for which duty was demanded. They contended that the duty demand on items beyond their manufacturing scope was unjustified. The Tribunal agreed with this argument and emphasized that the duty demand on goods not manufactured by the appellant was not sustainable.

3. Time-Barred Duty Demand:
The appellant raised the issue of the duty demand being time-barred, as the show cause notice was issued several years after the initial visit by excise officers. Citing a Supreme Court judgment, the appellant argued that the delay in issuing the notice rendered the duty demand invalid. However, the Tribunal did not need to rule on this issue as the duty demand itself was found unjustified.

4. Imposition of Penalties:
The appellant challenged the imposition of penalties under Section 11AC of the Central Excise Act, 1944, and Rule 26 of the Central Excise Rules, 2002, on both the firm and its partners. The Tribunal, after setting aside the duty demand, found no basis for upholding the penalties. As the duty demand was deemed unsustainable, the penalties imposed were also overturned.

In conclusion, the Tribunal set aside the impugned order, allowing the appeals in favor of the appellant. The judgment highlighted the importance of accurately assessing the manufacturing scope of the appellant and emphasized that duty demands must be based on valid grounds supported by evidence.