2019 (5) TMI 447 - AT - Central Excise

Non-payment of duty - it was alleged that appellant had recovered additional amount of ₹ 5,40,753/- and failed to discharge duty of ₹ 86,521/- - HELD THAT - After analyzing the relevant invoices that the appellants had issued debit notes for recovery of the conversion charges, whereas the excise invoices were issued for determining the duty payable on the assessable value of the product determined by the appellant. There is no recovery against the invoices and also by way of issuing debit notes. However, the appellant has admitted that the amount of ₹ 1,06,000/- was recovered towards administration and miscellaneous charges but the same was not considered in calculating the value of the product - the appellant is required to discharge duty of ₹ 16,960/- - demand upheld. SSI exemption - Allegation of using other s brand name - HELD THAT - Trade Marks, which were used by the seller i.e. the appellant allows/ authorizes the buyers to use the same during the course of distribution of the product. The intention of the parties is also evident from the Affidavit-cum-Disclaimer certificate issued by the said buyers. Therefore, the conclusion by the authorities below that the appellant had sold the brand name of the distributors/buyers and hence the same belong to the distributor/buyer, is without any merit and evidence on record - demand set aside. The differential duty of ₹ 16,960/- with interest is confirmed against the appellant and all other proceedings initiated against the appellant is hereby dropped - appeal allowed in part.

Summary

Issues:
1. Recovery of additional amount and Central Excise duty liability.
2. Availing SSI exemption under Notification No. 8/2003-CE and using brand names of others.

Analysis:
1. Recovery of additional amount and Central Excise duty liability:
- The appellant was alleged to have recovered an additional amount but failed to discharge Central Excise duty. The appellant contended that the excise invoices were for duty payment, and additional charges were collected separately via debit notes. The authorities confirmed a demand of &8377; 86,521, claiming the entire amount was recovered from customers. However, it was found that only &8377; 1,06,000 was collected separately for administration charges. The duty payable was determined to be &8377; 16,960, not the full amount demanded.

2. Availing SSI exemption under Notification No. 8/2003-CE and using brand names of others:
- The appellant was accused of wrongly availing SSI exemption by using others' brand names. The agreements with distributors revealed that the appellant authorized buyers to use their brand names during distribution. Affidavit-cum-Disclaimer certificates from distributors confirmed they did not intend to purchase the brand/trade names. The Tribunal found the appellant did not sell the brand names of distributors, and the demand based on this allegation was set aside. The differential duty of &8377; 16,960 with interest was confirmed, and other proceedings against the appellant were dropped.

This judgment clarifies the distinction between recovery of additional charges and excise duty liability, emphasizing the importance of proper documentation. It also highlights the significance of analyzing agreements and supporting documents to determine the legitimacy of availing exemptions and using brand names of others in commercial transactions.