2018 (8) TMI 793 - AT - Central Excise

SSI Exemption - use of Brand Name - the appellant have been using the brand name Surya Gold and Luxmi on their manufactured products - Extended period of limitation as per proviso u/s 11A. Held that - It is a matter of fact as admitted by the appellant/assessee that the brand name Surya Gold and Luxmi does not belong to them and both the brand names are registered in the name of some other persons. The Department has also come to know about this fact only when they have referred to the website of Controller General of Patent Design and Trade Marks. The person availing the benefit of the notification (which provides exemption from payment of duty) has to ensure or take necessary precautions before availing the benefit of such exemption notification. It is expected from the person availing the benefit of any notification that he himself has to be sure and meet all the conditions of such notification before making any claim of benefit - It was the duty of appellant/assessee to ensure that the brands used by them does not pertains to any other person and in case the same was pertaining to any other person it was also required from them to have paid the appropriate central excise duty on manufacture and clearance of such branded goods. It is a settled law that it is the onus of ensuring compliance of the conditions of the notification are to be made by the person who is availing the benefit of such exemption notification - It is a matter of record now that the appellant/assessee have been using the brand name of other persons and thus the SSI notification benefit N/N. 8/2003-CE is certainly not available to them as per the conditions provided thereunder. Time Limitation - Held that - The onus of proving that the conditions of notification are not being violated rest with the person availing the benefits of such notification, the assessee has failed in ensuring the proper compliance of the conditions mentioned in the N/N. 8/2003-CE and, therefore, the extended time proviso under Section 11A of Central Excise Act, 1944 is invokable in this case. Appeal dismissed - decided against appellant.

Summary

Issues Involved:
1. Eligibility for SSI exemption under Notification No. 08/2003-CE.
2. Use of brand names registered to other persons.
3. Invocation of extended time proviso under Section 11A of the Central Excise Act, 1944.
4. Allegations of suppression of facts and mis-declaration.

Issue-wise Detailed Analysis:

1. Eligibility for SSI Exemption under Notification No. 08/2003-CE:
The appellant/assessee is engaged in the manufacture of LPG Gas Stoves and has been availing the benefit of small-scale industries (SSI) exemption under Notification No. 08/2003-CE. However, the Department's audit revealed that the appellant was using the brand names "Surya Gold" and "Luxmi," which are registered to other individuals. According to the SSI exemption Notification No. 08/2003-CE, the exemption is not available for goods bearing a brand name or trade name of another person, whether registered or not. The Tribunal emphasized that it is the duty of the person availing the benefit of the notification to ensure compliance with all its conditions. The appellant failed to meet this requirement, making them ineligible for the SSI exemption.

2. Use of Brand Names Registered to Other Persons:
The appellant admitted to using the brand names "Surya Gold" and "Luxmi," which are registered to Namit Wadhwa and Geeta Gupta, respectively. The Tribunal referred to the conditions under Notification No. 08/2003-CE, which explicitly states that the exemption does not apply to goods bearing a brand name or trade name of another person. The Tribunal held that the appellant should have ensured that the brands used did not belong to any other person. The failure to do so disqualified them from availing the SSI exemption.

3. Invocation of Extended Time Proviso under Section 11A of the Central Excise Act, 1944:
The appellant argued that there was no suppression of facts as they had declared the brand names in their quarterly returns. However, the Tribunal held that the appellant's long-term use of the brand names without verifying their ownership constituted a failure to comply with the conditions of the notification. The Tribunal cited the Supreme Court's judgment in CCE, Delhi vs. Ace Auto Comp. Ltd., which held that the onus of ensuring compliance with the conditions of the exemption notification rests with the person availing the benefit. Therefore, the extended time proviso under Section 11A was applicable in this case.

4. Allegations of Suppression of Facts and Mis-declaration:
The appellant contended that there was no suppression of facts or intent to evade duty, citing various judgments. However, the Tribunal found that the appellant's failure to verify the ownership of the brand names amounted to non-compliance with the notification's conditions. The Tribunal held that the appellant's assertion of ignorance did not absolve them of their responsibility to ensure compliance. The Tribunal concluded that the extended time proviso under Section 11A was rightly invoked, and the demand for duty and penalties was justified.

Conclusion:
The Tribunal upheld the order-in-appeal, confirming the demand for duty and penalties. The appeals were rejected, and the Tribunal emphasized the importance of compliance with the conditions of exemption notifications. The onus of ensuring such compliance rests with the person availing the benefit, and failure to do so can result in the denial of the exemption and the invocation of extended time provisions for duty recovery.

(Order pronounced in open court on 13/08/2018)