2018 (2) TMI 207 - AT - Central Excise

Extended period of limitation - suppression of facts - SSI Exemption - Held that - As per the provisions of small-scale exemption notification the same is not available in case the goods are manufactured with the brand name of others. In the present case, the appellants never disclosed this fact to the Revenue. The Hon ble High Court of Bombay in the case of Commissioner of Central Excise, Raigad Vs M/s. Rampty (India) Ltd 2009 (6) TMI 483 - HIGH COURT OF BOMBAY has dealt with an identical situation where the brand name belonging to another person was being used with simultaneous availment of SSI exemption. Tribunal granted the benefit on the point of limitation by observing that though the fact of use of others brand name was not disclosed in the classification list but inasmuch as the issue was of interpretation and contentious, no malafide would be attributed to the assessee. Accordingly, relief was granted by the Tribunal on the point of time bar. We find favour with the appellant s plea of, re-quantification of the demand by extending the benefit of cum-duty and direct the lower authorities to re-quantify the demand accordingly. If the demand is quantified on the lower aside, penalty would also get reduced to that amount - appeal allowed by way of remand.

Summary

Issues involved:
1. Invocation of extended period of limitation for demand confirmation.
2. Applicability of small-scale exemption notification.
3. Disclosure of manufacturing goods with brand name of others.
4. Interpretation of notification clauses on brand name usage.
5. Comparison with similar case before the Hon'ble Bombay High Court.
6. Re-quantification of demand and penalty reduction.

Issue 1: Invocation of extended period of limitation for demand confirmation:
The judgment addresses the demand confirmation against the appellant for ?40.30 lakhs, invoking the extended period of limitation due to alleged suppression of facts to evade duty payment. The appellant argued that prior decisions favored them under a bonafide belief regarding small-scale exemption notification eligibility. The Revenue contended that non-disclosure of manufacturing goods with others' brand names justified the extended limitation period. The Tribunal noted the invocation of the extended period based on suppression and lack of disclosure to Revenue, leading to demand confirmation.

Issue 2: Applicability of small-scale exemption notification:
The Tribunal found that the appellants were manufacturing goods with others' brand names while availing benefits under the small-scale exemption notification. The notification excludes such cases, and the appellants' failure to disclose this fact to the Revenue led to the extended limitation period invocation. The Tribunal considered the appellant's argument of a bonafide belief in claiming the exemption despite using another brand name, citing a lack of awareness of Central Excise procedures.

Issue 3: Disclosure of manufacturing goods with brand name of others:
The case highlighted the importance of disclosing the use of others' brand names in manufacturing goods for excise duty purposes. The appellant's failure to inform the Revenue about using the brand name "Cansoft" belonging to another company impacted the eligibility for small-scale exemption notification. The Tribunal emphasized the significance of transparency and adherence to excise duty regulations regarding brand name usage.

Issue 4: Interpretation of notification clauses on brand name usage:
The judgment analyzed the interpretation of notification clauses related to brand name usage in excise duty matters. Reference was made to a similar case before the Hon'ble Bombay High Court where non-disclosure of using another's brand name affected exemption eligibility. The High Court's observation on the clarity of notification language and the consequences of using others' brand names without disclosure influenced the decision on limitation period and exemption entitlement.

Issue 5: Comparison with similar case before the Hon'ble Bombay High Court:
The Tribunal compared the facts of the present case with a similar matter before the Hon'ble Bombay High Court. The High Court's decision emphasized the non-contentious nature of using others' brand names and the impact on exemption eligibility. Drawing parallels, the Tribunal rejected the appellant's plea on limitation, aligning with the High Court's findings based on notification interpretation and previous legal precedents.

Issue 6: Re-quantification of demand and penalty reduction:
While rejecting the appellant's limitation plea, the Tribunal acknowledged the merit in re-quantifying the demand by extending the benefit of cum-duty. Directing the lower authorities to adjust the demand accordingly, the Tribunal noted that penalty reduction would align with the revised demand amount. The judgment concluded with the rejection of the limitation plea but acceptance of the re-quantification request.

This detailed analysis of the judgment provides insights into the legal intricacies surrounding excise duty, brand name disclosure, small-scale exemption notifications, and the interpretation of notification clauses in similar legal contexts.