2019 (8) TMI 381 - AT - Central Excise

Time limitation - SSI Exemption - use of brand name - abatement of notification issued under section 4A of Central Excise Act, 1944 - HELD THAT - The appellant-manufacturer, admittedly, produces goods which are sold to M/s TVC Sky Shop Ltd who, in turn, markets the products to their customers. It is also not in dispute that the brand name does not belong to the appellant-manufacturer and that it is the appellant-manufacturer who affixed the maximum retail price on the package. The claim that such manufacture contracted with a single client is excluded from the purview of assessment under section 4A of Central Excise Act, 1944 does not stand the test of reason. It is in the nature of scheme of alternative assessment under section 4A of Central Excise Act, 1944 that the manufacturer, literally wears his intent on his sleeve and the marking of the maximum retail price on the product is the surest indicator of the goods being intended for the retail customer. This clear manifestation of intent on the part of the appellant must inevitably lead to duty liability in accordance with section 4B of Central Excise Act, 1944. Naturally such a resort is contingent upon non-eligibility for the exemption available to small scale unit under notification no. 8/2003- CE dated 1st March 2003. The appellant is a manufacturer and the brand/logo is not theirs. There is no evidence on record that contract purchaser, the supplier of brand name/logo, is entitled to the same exemption. In the absence of such a claim, the eligibility to exemption becomes questionable. The duty liability, the confiscation of goods along with imposition of penalty, fine thereon for redemption as well as penalty under section 11AC of Central Excise Act, 1944 is upheld - penalty reduced subject to fulfillment of condition - appeal allowed in part.

Summary

Issues:
1. Duty liability on clearances of 'hair removal cream' due to denial of exemption.
2. Valuation under section 4A of Central Excise Act, 1944.
3. Claim of demand being barred by limitation.
4. Eligibility for exemption under notification no. 8/2003-CE dated 1st March 2003.
5. Imposition of penalties and redemption fine.

Analysis:

1. The appeals involved duty liability on clearances of 'hair removal cream' as the brand name and logo belonged to an entity not entitled to exemption. The original authority confirmed a differential duty and penalties under Central Excise Rules, 2002. The first appellate authority upheld the demand, interest, and penalty under section 11AC, modifying penalties under certain rules.

2. The manufacturer claimed goods were transferred on a principal-to-principal basis, disputing valuation under section 4A. The appellant relied on tribunal decisions to defend the transaction value. The Authorized Representative argued against the applicability of certain judgments and the bar of limitation.

3. The contention regarding the bar of limitation was examined, focusing on the manufacturer's intent and the marking of maximum retail price on the product. The Tribunal found the manufacturer liable for duty under section 4B of the Central Excise Act, 1944, due to the clear intent to sell to retail customers.

4. The eligibility for exemption under notification no. 8/2003-CE dated 1st March 2003 was questioned as the brand/logo did not belong to the manufacturer. The Tribunal found the manufacturer ineligible for exemption due to the misapplication of relevant judgments and lack of evidence regarding the entitlement of the contract purchaser to the exemption.

5. The Tribunal upheld the imposition of penalties, redemption fine, and penalties under section 11AC. It corrected the omission of offering the option to reduce penalty as mandated by a Supreme Court ruling. The duty liability, confiscation of goods, penalties, and fines were confirmed, with the privilege of reduced payment of penalty subject to conditions.

This detailed analysis of the judgment covers all the issues involved and provides a comprehensive understanding of the legal reasoning and decisions made by the Tribunal.