2018 (6) TMI 236 - AT - Central Excise

SSI exemption - use of Brand name of third party - Redemption fine - penalty - Held that - As the appellant is using the brand name of third party and not paying duty thereon, the goods are held liable for confiscation. It is a fact on record that out of total value of the goods of ₹ 4,54,957/- the goods worth ₹ 76,544/- are agriculture equipments on which, no duty is payable by the appellant. In that circumstance, the total value of duty payable goods, after abatement is of ₹ 2,64,889/-, therefore, the redemption fine and penalty imposed on the appellant are on higher side - the redemption fine is reduced to ₹ 10,000/- and penalty is reduced to ₹ 5,000/-. Appeal allowed in part.

Summary

Issues:
1. Seizure and confiscation of goods under SSI exemption Notification
2. Use of a third-party brand name by the appellant
3. Imposition of redemption fine and penalty

Analysis:

Issue 1: Seizure and confiscation of goods under SSI exemption Notification
The appellant, a manufacturer of tractor and agricultural parts, appealed against an order seizing and confiscating goods, later allowed for redemption upon payment of fines and penalties. The dispute arose from the allegation that the appellant, by using the brand name of a third party, was ineligible for the benefit of SSI exemption Notification No. 08/2003-CE dated 01.03.2003. The appellant contended that after leaving a partnership with the firm owning the 'Five Star' brand, they began producing goods under 'Five Star Super Spare,' distinct from the original brand. The appellant argued they were entitled to the SSI exemption. The Tribunal noted that the issue of using a third-party brand was not contested by the appellant, focusing the appeal on the penalty and fine imposition.

Issue 2: Use of a third-party brand name by the appellant
The appellant's use of a third-party brand name raised concerns regarding their eligibility for the SSI exemption. While the appellant claimed ownership of 'Five Star Super Spare' as their brand, the Tribunal emphasized the importance of paying duty on goods associated with a third-party brand. The Tribunal held the goods liable for confiscation due to the usage of the third-party brand name. However, it acknowledged that a portion of the seized goods, specifically agricultural equipment valued at ?76,544, were duty-exempt. Consequently, the Tribunal reduced the redemption fine and penalty, considering the duty payable on the remaining goods valued at ?2,64,889.

Issue 3: Imposition of redemption fine and penalty
After considering arguments from both sides, the Tribunal determined that the redemption fine and penalty imposed on the appellant were excessive given the circumstances. Consequently, the Tribunal reduced the redemption fine to ?10,000 and the penalty to ?5,000. The appeal was disposed of with the revised terms, providing relief to the appellant in terms of financial obligations.

In conclusion, the Tribunal's judgment addressed the issues of seizure, use of a third-party brand name, and the imposition of fines and penalties, ultimately providing a balanced resolution by reducing the financial burden on the appellant while upholding the duty obligations associated with the goods in question.