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2019 (2) TMI 749 - AT - Central ExciseSSI Exemption - use of brand name of Gulab - N/N. 8/2002 dated 01/03/2002 as well as 8/2003 dated 1/3/2003 - Time bar - Held that - It is also not in dispute that this brand name was owned by M/s. Vinita Soya Products, a partnership firm in which the directors of the appellant-assessee were the partners. M/s. Vinita Soya Products have issued No Objection Certificate in favour of the appellant for use of such brand name. Inspite of such no objection certificate, it cannot be held that the brand name belongs to the appellant. The clearances made bearing the brand name of another person disentitles the appellant to the claim of small scale industry benefit during the relevant period. The N/N. 8/2002 as well as 8/2003 ibid, contain specific a clause that the benefit of SSI exemption will not be available for the goods cleared bearing the brand name of another person. The appellant is a Private Limited Company and has legal distinct status from that of the Partnership Firm which owned the brand name - there is no reason to interfere with the findings of the Adjudicating Authority that the appellant will not be entitled to the benefit of the SSI exemption. In any case, for the periods 2004-2005 to 2006-2007, the appellant themselves did not claim the SSI benefit, since in the total aggregate value of clearances in the previous financial years had exceeded the upper limit of ₹ 3 crores. Time limitation - Held that - From record, it is seen that the appellant, who started manufacture of the products similar in 2003, did not approach the department with intimation of the same and did not take registration with the Jurisdictional Central Excise Authorities. Only in 2006, they appeared to have got in touch with the Central Excise Superintendent who issued clarification dated 28/02/2006 to the effect that they were not required to obtain Central Excise Registration - the appellant cannot be absolved of the allegation of suppression - the findings of the lower authority upheld justifying the demand of Central Excise by invoking the extended period of time limit under Section 11A. Area Based exemption - N/N. 32/1999 dated 8/7/1999 - Held that - It is not clear whether the appellant has claimed the benefit of such Notification before the Jurisdictional Authorities. Since, this is a conditional notification, the benefit of the same is required to be claimed and duly examined by the Jurisdictional Authorities before allowing the benefit - these arguments cannot be entertained at this stage. Imposition of u/s 11AC is equal to the total duty demanded under the provisions of Section 11A - Held that - There is no discretion involve in the levy of such penalty - the finding of the Lower Authority justifying suppression, hence, the penalty under Section 11 AC cannot be waived is upheld - the penalties imposed on the two directors, merits reduction. Penalties imposed on Shri S. B. Sharma as well as Shri P. K. Sharma both directors are reduced from ₹ 2 lakh to ₹ 50,000/- Appeal allowed in part.
Issues:
- Whether the appellant is eligible for the benefit of SSI Exemption under Notifications 8/2002 and 8/2003 for manufacturing Soya products bearing a brand name not owned by them. - Whether the duty demand and penalties imposed on the appellant are justified. - Whether the penalties imposed on the directors are excessive and warrant reduction. Analysis: Issue 1: Eligibility for SSI Exemption During the period in question, the appellant manufactured Soya Bari products bearing the brand name "Gulab" owned by another entity. The Department contended that this use of a different brand name disentitles the appellant from claiming the SSI exemption. The Adjudicating Authority upheld this view, stating that the appellant, a Private Limited Company, did not own the brand name and thus could not benefit from the SSI exemption. The Notification Nos. 8/2002 and 8/2003 explicitly state that goods cleared bearing another person's brand name are not eligible for the SSI exemption. The appellant's failure to claim the SSI benefit for certain periods further weakened their case, as their total clearances exceeded the limit for eligibility. Issue 2: Justification of Duty Demand and Penalties The appellant argued that they were under a bonafide belief that their products were not liable for duty, citing the absence of specific mention of Soya Bari in the Tariff initially. However, the Chapter Notes clarified the classification of their products under the Tariff. The appellant's failure to approach the authorities promptly and obtain registration, despite starting production in 2003, contributed to the finding of suppression. The Adjudicating Authority's decision to demand Central Excise Duty and impose penalties was upheld, as the appellant's belief of non-liability was deemed unjustified. Issue 3: Reduction of Penalties on Directors The penalties imposed on the directors were deemed excessive, considering the circumstances. While the penalty under Section 11AC is mandatory and tied to the duty demand, the penalties on the directors were reduced from ?2 lakhs to ?50,000 each. This reduction was based on the view that the original penalties were disproportionate to the situation. In conclusion, the Tribunal upheld the impugned order, except for reducing the penalties on the directors. The appellant's failure to establish ownership of the brand name used and their delayed compliance with Central Excise requirements led to the rejection of their claims for exemption and the imposition of duty demand and penalties.
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