2018 (6) TMI 994 - AT - Central Excise

SSI Exemption - use of brand name of others - N/N. 8/2003-CE dt. 01.03.2003 - The case of the Revenue is that as the assessee is using the brand name of third party, therefore the appellant is not entitled to the benefit of SSI exemption N/N. 8/2003-CE dt. 01.03.2003 - benefit of Circular 71/71/94-CX dt. 27.10.1994 availed - Extended period of limitation - Held that - If the assessee is manufacturing the goods bearing the name of the brand of the customer and the said goods has been used by the customer further manufacturing and cleared the goods on payment of duty, in that circumstance, the benefit of SSI exemption notification cannot be denied. Extended period of limitation - Held that - As there was a dispute during the impugned period for availability of benefit of SSI exemption Notification to the appellant, in these circumstances, extended period of limitation is not invokable. Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Denial of exemption Notification No. 8/2003-CE to the appellant due to the use of a third-party brand name.
2. Validity of invoking the extended period of limitation for issuing the show cause notice.

Analysis:

Issue 1: Denial of Exemption Notification:
The appellant, engaged in manufacturing MIGI pipe fittings and CI castings under the brand name 'Zoloto,' faced a demand for duty due to the denial of exemption under Notification No. 8/2003-CE. The Revenue argued that as the appellant used a third-party brand name, they were not eligible for the SSI exemption. The proceedings were initiated based on this premise, and a show cause notice was issued invoking the extended period of limitation. The adjudicating authority initially dropped the proceedings following a Board's Circular but the Ld. Commissioner (Appeals) relied on a Supreme Court decision to deny the exemption, leading to duty demand, interest, and penalty. The appellant contended that they were entitled to the exemption during the relevant period as per the Board's Circular and that the extended limitation period was incorrectly invoked.

Issue 2: Extended Period of Limitation:
The appellant argued that during the relevant period, they were entitled to the exemption as per the Board's Circular, which was in force. They highlighted that the Supreme Court decision relied upon was delivered after the relevant period and thus the extended limitation period should not have been invoked. The Tribunal examined the Circular's provisions, emphasizing that if goods bearing a customer's brand name are used for further manufacturing and cleared on payment of duty, the SSI exemption cannot be denied. Considering the dispute during the relevant period regarding the exemption, the Tribunal held that the demand against the appellant was time-barred due to the incorrect invocation of the extended limitation period.

In conclusion, the Tribunal set aside the impugned order, allowing the appeal in favor of the appellant due to the limitation issue and providing consequential relief.