2019 (4) TMI 1143 - AT - Central Excise

SSI Exemption - use of brand name - SCN issued to the appellants seeking exclusion of the branded products manufactured by them from the benefit of the notification - N/N. 1/93 dated 28/02/1993 - interpretation of notification - HELD THAT - In view of the explanation under the Notification, it is found that Learned Commissioner (Appeals) has correctly concluded that the goods manufactured by the Appellants where the brand name or the trade name of the original equipment manufactured as long as such words indicate the connection in the trade. It is a settled principle in law as well as there is no ambiguity in the wordings of notification, the same needs to be construed strictly. Demand of duty upheld. Penalty - HELD THAT - Even though penalty has been imposed u/s 11 AC of CEA 1944, both the authorities below has not extended the benefit to discharge the penalty subject to fulfillment of condition laid down there under. Consequently the appellant is allowed to discharge 25% penalty under Section 11AC and CEA 1944 subject to fulfillment of condition laid down. Penalty imposed under Rule 173Q is set aside. Appeal allowed in part.

Summary

Issues:
1. Interpretation of the SSI Exemption under Notification No.1/93 for Rubber Gaskets and Rubber Washers.
2. Whether the identification marks on the Rubber Gaskets disentitle the Appellants from the exemption.
3. Proper application of the definition of "brand name" or "trade name" under the Central Excise Tariff Act.
4. Correctness of the duty confirmation and penalty imposition.

Analysis:
1. The case involved the Appellants manufacturing Rubber Gaskets and Rubber Washers availing the SSI Exemption under Notification No.1/93. The Central Excise served a Show Cause Notice seeking exclusion of branded products from the exemption, which was confirmed by the authorities. The Commissioner (Appeals) upheld the order, leading to the appeal.

2. The Appellants contended that the identification marks on the Rubber Gaskets were simple English fonts, not Registered Trade Marks or Logos of OEM manufacturers. They argued that the marks were only for identification purposes, supported by letters from original equipment manufacturers. Citing relevant cases, they requested setting aside the duty demand and penalty.

3. The department argued that even the use of part of a brand or trade name indicating a connection in trade could disentitle the Appellants from the exemption. The Tribunal analyzed the explanation under the notification, defining "brand name" or "trade name" to establish a connection between specified goods and a person using the name, which was found applicable in this case.

4. The Tribunal found that the Appellants' use of brand names or initials on the Rubber Gaskets indicated a connection with original equipment manufacturers, disqualifying them from the exemption. The Commissioner's conclusion that the brand names were used, not simple initials, was upheld. While confirming the duty, the Tribunal allowed the Appellants to discharge 25% of the penalty under Section 11AC subject to conditions, setting aside the penalty imposed under Rule 173Q. The appeal was partially allowed based on this analysis.