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2019 (4) TMI 159 - AT - Central ExciseSSI Exemption - job-work - use of brand name - it was alleged that the brand name belongs to third party i.e. M/s Luk India Ltd. - whether these assemblies were having embossed brand name LUK thereon or not? - Held that - There is no evidence available on record to show that the job workers in question are manufacturing LUK brand, Clutch assembles. In that circumstances, demand against the manufacturers are not sustainable - Moreover, the packing activity has been undertaken on job works who were packing these assemblies in the Polythene boxes branded by M/s Luk India Ltd. Merely, packing of these assemblies does not amount to manufacture as there was no deeming provision during the relevant time. The appellants are not manufacturing the goods having brand name of third party. Therefore, the allegation against the appellants is not sustainable in the absence of any cogent evidence. The appellants are entitled for exemption under Notification No. 8/2003 dated 01.03.2003 and no demand is sustainable against them - penalties also not sustainable - appeal allowed - decided in favor of appellant.
Issues:
Appeal against duty demand and penalties imposed on appellants. Analysis: The appellants, including S. K. Auto Industries, Marshall Agrotech Pvt. Ltd., and Marshall Auto Ancillaries Pvt Ltd., filed appeals against impugned orders demanding duty and imposing penalties. The appeals stemmed from a common order, leading to their disposal through a common order. The case involved M/s Eagle Glide Exim Pvt. Ltd., a trading firm that entered into an agreement with M/s LUK India Pvt Ltd. for the supply of clutch plate assembly and cover assembly for motor vehicles. The manufactured auto parts were sent to firms like Marshall Agrotech Pvt. Ltd. and Marshall Auto Ancillaries Pvt. Ltd. for packing on a job-work basis. The Revenue contended that since the assemblies carried the brand name LUK belonging to M/s LUK India Ltd., the manufacturers were not entitled to SSI exemption and were liable to pay duty. Consequently, proceedings were initiated against all appellants, resulting in duty demands, interest, and penalties. The appellants challenged these orders. The appellants' counsel argued that the manufacturers did not produce branded goods, and no evidence existed to prove otherwise. The reliance on statements from M/s LUK India Ltd. employees was questioned due to the lack of sample testing or cross-examination. The job workers engaged in packing were not considered manufacturers during the relevant period, and there was no provision deeming packing as manufacturing for assembly parts. Therefore, the duty demand and penalties were deemed unsustainable. On the contrary, the Ld. AR supported the impugned orders, emphasizing that the goods in question bore a brand name, making the manufacturers ineligible for SSI exemption as they were producing branded goods not owned by them. After hearing both parties, the Tribunal deliberated on whether the assemblies indeed bore the brand name LUK. The absence of sample testing during the investigation rendered the employee statements unreliable under Section 9D of the Central Excise Act, 1944. No evidence proved that the job workers manufactured LUK brand clutch assemblies. Thus, the demand against the manufacturers was deemed unsustainable. Additionally, mere packing of the assemblies did not constitute manufacturing, especially without a relevant deeming provision at the time. Consequently, the appellants were found entitled to exemption under Notification No. 8/2003, and no demand was sustainable against them. As the demands against the manufacturers were not tenable, the penalties imposed on all appellants were also set aside. In conclusion, the impugned orders were set aside, and the appeals filed by the appellants were allowed with any consequential relief.
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