2022 (8) TMI 1150 - AT - Central Excise

SSI Exemption - manufacture of air coolers by using the registered brand of others - mis-utilising the benefit of SSI Notification No. 08/2003-CE dated 01.03.2003 - admissibility of evidences - presence of corroborative evidences or not - HELD THAT - On date of search Smt. Tej Kiran Kothari, the present respondent was not the proprietor of M/s Zenox Product. On this date of the search the proprietors of M/s Zenox India and M/s Zenox Products were Shri Kunal Chaudhary and Smt. Ranjana Chaudhary who are related as mother and son. Hence the allegations in the show cause notice exists as against Smt. Ranjana Chaudhary only she being the proprietor of M/s Zenox Products for almost an year prior the date of impugned search. There appears no denial on behalf of the Department that Smt Tej Kiran Kothari while she transferred the business of firm M/s Zenox Products to Smt. Ranjana Chaudhary she had wound up her entire business under the said firm and had withdrawn everything from the premises of her business and had handed over the vacant possession thereof to the new landlord. M/s Zenox Products continued from the same premises thereafter but under the proprietorship of Smt. Ranjana Chaudhary. Hence it becomes clear that whatever articles including 106 coolers of Zi Zenox brand at the time of search, were found in those premises the ownership thereof and liability thereupon can be fasten only upon Smt. Ranjana Chaudhary but cannot be extended to Smt Tej Kiran Kothari. The Department has failed to bring on record any bill book, challan book or price list or packing material or invoice with respect to M/s Zenox Products which pertain to the period prior to August 2015. Above all it is apparent on record that M/s Zenox India under the proprietorship of Shri Girdhari Singh Kothari was in existence since February, 2012. No such similar documents logo plates etc., of the period during February, 2012 to August, 2015 have been produced by the Department. In absence thereof the allegations raised in the impugned Review Order and appeal though stands established against Smt. Ranjana Chaudhary the proprietrix of M/s Zenox Products but cannot be extended to Smt. Tej Kiran Kothari the previous proprietrix of said M/s Zenox Products. There is no evidence of similar arrangement of wrongly availment of SSI exemption to ever existed between M/s Zenox India and M/s Zenox Products when former was under proprietorship of Shri G S Kothari and later was under proprietorship of Smt. Tej Kiran Kothari - there are no reason to differ with the findings of Commissioner (Appeals) - appeal dismissed.

Summary

Issues Involved:
1. Eligibility for SSI exemption under Notification No. 08/2003-CE.
2. Alleged clandestine removal and wrong availment of SSI exemption.
3. Liability for central excise duty on manufactured air coolers bearing a registered brand name.

Issue-wise Detailed Analysis:

1. Eligibility for SSI Exemption under Notification No. 08/2003-CE:
The Department argued that M/s Zenox Products was not eligible for the SSI exemption since it was manufacturing air coolers bearing the brand name "Zi Zenox," registered to another entity, M/s Zenox India. The Commissioner (Appeals) was criticized for treating the case as one of clandestine removal rather than addressing the alleged misuse of the SSI exemption. The Department emphasized that the affidavits provided by vendors were ignored and that there was sufficient proof of branded goods manufacture by Smt. Tej Kiran Kothari.

2. Alleged Clandestine Removal and Wrong Availment of SSI Exemption:
The Department's intelligence revealed that M/s Zenox Products, under the proprietorship of Smt. Ranjana Chaudhary, was manufacturing air coolers using the "Zi Zenox" brand name without paying the required duty, thus misusing the SSI exemption. The Commissioner (Appeals) was accused of misapplying the defense of job work to Smt. Tej Kiran Kothari, the previous proprietor, and not considering the evidence properly.

3. Liability for Central Excise Duty on Manufactured Air Coolers Bearing a Registered Brand Name:
The search conducted on May 30, 2016, revealed that air coolers bearing the "Zi Zenox" brand were found on the premises of M/s Zenox Products, now under Smt. Ranjana Chaudhary. The Department issued a show cause notice for recovery of central excise duty amounting to Rs. 80,07,442 for the period from 2012-13 to December 2016. The original adjudicating authority confirmed the demand, but the Commissioner (Appeals) set it aside, leading to the current appeal by the Department.

Findings and Conclusion:
The Tribunal observed that the search was conducted much after the transfer of M/s Zenox Products from Smt. Tej Kiran Kothari to Smt. Ranjana Chaudhary. It was noted that all coolers found bore the "Zi Zenox" logo, which was registered to M/s Zenox India. The Tribunal agreed with the Commissioner (Appeals) that the liability could not be extended to Smt. Tej Kiran Kothari, as she had wound up her business and vacated the premises before the search. The Tribunal found no evidence to support the Department's claim that Smt. Tej Kiran Kothari had used the "Zi Zenox" brand during her proprietorship.

The Tribunal upheld the findings of the Commissioner (Appeals) that the statements of Shri Girdhari Singh Kothari and Shri Ramesh Gandhi did not indicate that Smt. Tej Kiran Kothari used the "Zi Zenox" brand. The Review Order's allegations were found to be established against Smt. Ranjana Chaudhary, but not against Smt. Tej Kiran Kothari. The demand against Smt. Ranjana Chaudhary was already confirmed, and the same demand could not be confirmed against another person for the same period and cause.

Order:
The Tribunal upheld the order of the Commissioner (Appeals) and rejected the Department's appeal. The findings were pronounced in open court.