2019 (4) TMI 749 - AT - Central Excise

SSI Exemption - use of Brand name of others - goods manufactured and cleared bearing the brand name Varuna - appellant has claimed that the owner of the brand name has authorized the appellant to use such brand name in the goods to be manufactured - Held that - The SSI notification carries a condition that the benefit of the notification was not to apply to the specified goods bearing a brand name or trade name of another person. Certain exceptions have been carved out in the notification itself which are not relevant for the present discussion. Extended period of limitation - suppression of facts or not - Held that - There are conflicting decisions of various Tribunals, High Courts and even Supreme Court on the subject of entitlement of SSI benefit in respect of goods cleared with brand name - the appellant will be entitled to the bonafide belief that the goods cleared with Varuna brand will also be entitled to the benefit. Consequently, the Revenue will not be entitled to invoking the suppression clause in Section 11A of the Central Excise Act for alleging suppression. On merit, the appellant will not be entitled to the benefit of SSI notification but the show cause notice for demand of duty has been issued on 15/07/2009 for covering the demands for the period upto 29/01/2008. Consequently no demand will survive within the normal time limit. Appeal allowed in part.

Summary

Issues:
1. Eligibility for SSI exemption in relation to goods bearing a brand name not owned by the manufacturer.
2. Interpretation of the law regarding SSI benefit when the brand name is assigned or authorized for use by the manufacturer.
3. Application of the suppression clause in Section 11A of the Central Excise Act.
4. Demand of duty for the period up to a specific date within the normal time limit.
5. Seizure of goods and issuance of show cause notice within the normal period of limitation.

Eligibility for SSI Exemption:
The appellant, a manufacturer of insulated electric wires and cables, availed SSI exemption for goods bearing the brand name "Varuna," which did not belong to them. The Department found discrepancies during a visit, leading to the confiscation of goods and imposition of penalties. A subsequent show cause notice proposed a demand for central excise duty for clearances made during a specific period. The Adjudicating Authority confirmed the duty demand, stating that the appellant was not entitled to SSI exemption for goods bearing the brand name "Varuna." The Commissioner (Appeals) upheld the decision but reduced the duty demand. The appellant argued that they were authorized by the brand owner to manufacture Varuna brand cables for their exclusive use, citing relevant case laws. The Departmental Representative contended that the appellant was not entitled to SSI exemption for goods not owned by them, referencing a Supreme Court decision. The Tribunal noted conflicting decisions on SSI benefit entitlement but held that the appellant, in good faith, believed they were entitled to the benefit, thus rejecting the suppression clause invocation.

Interpretation of SSI Benefit Law:
The dispute centered on whether SSI benefit applies to goods manufactured and cleared with a brand name not owned by the manufacturer. The Tribunal analyzed relevant case laws, including a Supreme Court decision, which altered the interpretation of SSI benefit eligibility when the brand name is assigned or authorized for use. Despite conflicting views in various judgments, the Tribunal concluded that the appellant's genuine belief in entitlement to the benefit precluded invoking the suppression clause. The Tribunal ruled that the appellant was not eligible for SSI notification benefits but noted that the duty demand notice was issued beyond the normal time limit, rendering it invalid.

Application of Suppression Clause and Demand of Duty:
The Tribunal held that the Revenue could not invoke the suppression clause under Section 11A of the Central Excise Act due to the appellant's genuine belief in the SSI benefit entitlement. The duty demand notice issued for a specific period was deemed invalid as it exceeded the normal time limit, resulting in no surviving demand within the permissible timeframe.

Seizure of Goods and Show Cause Notice Issuance:
Regarding the seizure of goods and the subsequent show cause notice, the Tribunal upheld the lower appellate authority's decision, as the notice was issued within the normal period of limitation. Consequently, one appeal was rejected, while the other was allowed based on the timing of the actions taken.

This detailed analysis of the judgment covers the issues of eligibility for SSI exemption, interpretation of SSI benefit laws, application of the suppression clause, demand of duty within the time limit, and the validity of the seizure of goods and issuance of show cause notices.