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2022 (4) TMI 1358 - AT - Central ExciseSSI Exemption - use of brand name of others - brand name assigned in favor of appellant or not - products bearing the brand names Cureon , Vasundhara , Healmate , assign to them by M/s Pitambari Products Pvt. Ltd. as per agreements - violation of provisions of N/N. 8/2003 CE- dated 01.03.2003 - period June 2005 to February 2011 - Extended period of limitation - levy of penalties - eligibility for duty-cum benefit - HELD THAT - On going through the agreements, it is found that the ownership in respect of the trade marks/Brand names were always with M/s. PPPL, even during the currency of assignment; at no point of time the title of the ownership of the brands or trademarks were passed on to the appellants; the agreement was not intended to convey, transfer or passed on the ownership, title or rights of the assigners. The facts of the case conclusively establish that the appellants i.e. M/s DSHL were never owners of the title of the Brand Name/trademark and they have always manufactured the impugned goods of impugned brands for and on behalf of M/s. PPPL. The said goods were exclusively sold to M/s PPPL and the connection of the impugned products, in the course of trade, was always with M/s PPPL and not with M/s DSHL. Apex Court has been consistently holding that the exemption is only to such parties who do not associate their products with some other person and that in order to avail the benefit of the exemption notification, the assessee must established that his products is not associated with some other person - reliance can be placed in the case ofCOMMISSIONER OF CENTRAL EXCISE, TRICHY VERSUS GRASIM INDUSTRIES LTD. 2005 (4) TMI 64 - SUPREME COURT and CCE, BANGALORE VERSUS M/S. VETCARE ORGANICS PVT LTD 2015 (6) TMI 156 - SUPREME COURT . In the instant case, it is found that the appellants could not establish that the brand has no connection in manufacture or trade of impugned goods with some other person that is M/s PPPL. The ownership of the brand or trademark is not taken away, even when the appellants got an assignment in their favour from the brand owner. It is found that even with respect to the assignments there was dispute between the two parties which ended in a civil suit which was settled by withdrawal on mutual consent - Tribunal in the case of VEE GEE FAUCETS P. LTD. VERSUS COMMISSIONER OF C. EX., GURGAON 2010 (3) TMI 710 - CESTAT, NEW DELHI held that merely because there is some arrangement between the parties giving consent for use of such brand name or trade name cannot result in nullifying the mandatory condition imposed in the notification. The notification does not provide any scope for any benefit on assignment. Thus, even on assignment of right to manufacture goods, with others Brand name or trade name by the owners thereof, such manufacturer would not be eligible for exemption under the notification. Extended period of limitation - HELD THAT - The department had no wherewithal to find out the availment of benefit in violation of the conditions of the Notification and consequential evasion of duty by the appellants. The appellants cannot take the plea of bona fide belief. Therefore, extended period is rightly invoked in this case. Levy of equal penalty on the company as well as the Director in addition to penalty of other director of the appellants and the Director of M/s PPPL - HELD THAT - Going through the facts of the case and the role played by directors of the appellants, it is found that the penalty is quite harsh and is not commensurate with the part played. Therefore, the penalties imposed on the directors of the appellants, is reduced. Levy of penalty on M/s PPPL - HELD THAT - The role played by them in the evasion of duty by the appellant is not clearly coming forth. M/s PPPL have assigned/allowed the appellants to used their brand names in the manufacture of specified goods and have purchased and marketed entire production of the appellant. It was for the appellants to pay appropriate Central Excise Duty and for the nonpayment of the same M/s PPPL cannot be faulted with. Therefore, the penalty imposed on the director of M/s PPPL need to be set aside. Benefit of cum-duty benefit - HELD THAT - There is merit in the submission of the appellants. For the purpose of computation of duty the value at which the impugned goods are cleared needs to be taken as cum-duty value and the benefit thereon should be given to the appellants. Appeals are partly allowed by way of remand to the original authority - it is directed that the duty liability shall be arrived after allowing the cum-duty benefit - interest under Section 11AB of Central Excise Act, 1944 shall be on such recalculated duty; penalty under Section 11AC shall be equal to the duty confirmed after allowing cum-duty benefit.
Issues Involved:
1. Eligibility for exemption under Notification No. 8/2003-CE. 2. Invocation of extended period for demand. 3. Justification of penalties imposed. 4. Eligibility for cum-duty benefit. Issue-wise Detailed Analysis: 1. Eligibility for Exemption under Notification No. 8/2003-CE: The primary issue was whether the appellants (M/s Dr. Smita Herbal Laboratories) could avail the exemption under Notification No. 8/2003-CE for products bearing the brand names "Cureon," "Vasundhara," and "Healmate," assigned to them by M/s Pitambari Products Pvt. Ltd. (M/s PPPL). The appellants argued that the brands were assigned to them through deeds of assignment and that M/s PPPL did not manufacture the specified products during the impugned period. However, the Tribunal found that the ownership of the brand names remained with M/s PPPL, and the appellants were merely manufacturing the goods using these brands. The Tribunal concluded that the appellants were not eligible for the exemption as the goods were associated with M/s PPPL, and the notification did not provide scope for benefit on assignment. 2. Invocation of Extended Period for Demand: The appellants contended that they had a bona fide belief that they were eligible for the exemption, and therefore, the extended period for demand should not be invoked. The Department argued that the appellants did not file periodic returns, making it difficult to detect the violation. The Tribunal found that the appellants could not claim bona fide belief due to the clear wording of the notification and the established legal precedents. Consequently, the extended period was rightly invoked. 3. Justification of Penalties Imposed: The penalties imposed on the appellants and their directors were considered harsh. The Tribunal reduced the penalties imposed on Dr. Smita Raste and Shantanu Raste, considering their roles in the case. However, the penalty on M/s PPPL was set aside as their role in the evasion of duty was not clearly established. The Tribunal held that M/s PPPL's assignment of brand names to the appellants did not make them liable for the appellants' duty evasion. 4. Eligibility for Cum-duty Benefit: The appellants argued that the adjudicating authority did not allow cum-duty benefit. The Tribunal found merit in this submission and directed that the duty liability should be recalculated after allowing cum-duty benefit. The interest and penalty would be based on the recalculated duty. Order: 1. Appeals E/392/2011 and E/86417/2017 were partly allowed by remanding to the original authority to recalculate duty after allowing cum-duty benefit. 2. Penalties on Dr. Smita Raste were reduced to ?5,00,000/- and ?1,00,000/- respectively. 3. Penalties on Shantanu Raste were reduced to ?1,00,000/- and ?10,000/- respectively. 4. Appeals E/395/2011 and E/86416/2017 were allowed, setting aside the penalty on M/s PPPL. Conclusion: The Tribunal concluded that the appellants were not eligible for the exemption under Notification No. 8/2003-CE, the extended period for demand was applicable, and penalties were adjusted based on the roles of the individuals involved. Cum-duty benefit was allowed, and the duty liability was to be recalculated accordingly.
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