2018 (9) TMI 1493 - AT - Central Excise

SSI Exemption - packing and fixing of Brand names of others - Department took the view that packing of goods and fixing the brand names which did not belong to them, makes the process into one of the manufacture, but the two appellants will not be entitled to the benefit of the Small Scale Exemption in force at the relevant time. Held that - The activity of undertaking packing and affixing the brand name is an activity of manufacture incurring the liability for payment of duty. The goods in question are automobile parts which are specified in the 3rd Schedule of the Central Excise Act - In their respective statements, both the proprietors of the appellant firms have also admitted to the fact of packing as well as affixing the brand names - the liability for the payment of Central Excise stands established against both the appellants. The brand name VIKING is owned by the following three persons viz. Shri Vinod Kumar Dhawan, Shri Vijay Kumar Dhawan (Proprietor of M/s Vee Kay) and Shri Jugal Kishore Kohli - M/s Vee Kay will be entitled to the benefit of SSI Exemption in respect of the goods cleared with the brand name VIKING , but not for goods with VIZA brand. The brand name VIZA is claimed to be owned by Shri Vineet Dhawan, proprietor of M/s Clutch Engineers. This fact does not appear to be in dispute. Hence the goods cleared with the brand name of VIZA by M/s Clutch Engineering will be entitled to the benefit of SSI Exemption, but not goods with VIKING brand. The demand for Central Excise duty needs to be reworked and Adjudicating Authority is directed to requantify the demand - The order for confiscation and redemption fine and penalties also needs to be proportionately modified - appeal allowed by way of remand.

Summary

Issues:
1. Whether the activity of packing and affixing brand names on automobile parts constitutes manufacturing and attracts liability for payment of duty.
2. Whether the appellants are entitled to the benefit of Small Scale Exemption Notification.
3. Whether the goods cleared with specific brand names by each appellant qualify for the Small Scale Exemption.

Analysis:

Issue 1:
The Department found that the appellants were engaged in packing and affixing brand names on automobile parts, which was considered a manufacturing activity incurring duty liability. Both appellants admitted to these activities, leading to the establishment of their liability for Central Excise payment based on the Central Excise Act and relevant provisions.

Issue 2:
The Small Scale Exemption Notification No. 8/2003-CE exempts specified goods up to a certain value from duty payment unless the goods bear a brand name belonging to another person. The Revenue alleged that the appellants affixed brand names not owned by them, thus challenging their eligibility for the exemption. The appellants contested these allegations.

Issue 3:
Upon examination of the brand ownership details provided by the Deputy Registrar of Trade Mark and GI, it was established that one appellant was entitled to the Small Scale Exemption for goods with a specific brand name, while the other appellant was entitled to the exemption for goods with a different brand name. The seized goods bore different brand names, and the appellants argued that the authorities failed to consider the documents supporting the clearance of goods between them, leading to an incorrect conclusion. However, the list of relied-upon documents listed the details of goods separately by brand, supporting the authorities' decision.

In conclusion, the judgment directed the Adjudicating Authority to reevaluate the demand for Central Excise duty based on the brand-specific entitlement to the Small Scale Exemption, modifying the confiscation order and penalties accordingly.