2008 (2) TMI 120 - AT - Central Excise

Notification No.23/2001, the exemption was not available to the garments manufactured and cleared bearing registered brand name - we find that for the period (from March and April 2001) during which the goods were cleared by the appellant, they did not actually have the brand name or trade name, even though they had applied for the same in the year 1995 - Only in 2003, they got the registration with retrospective effect - Exemption is available u/not. 23/01 so demand is set aside

Summary

Issues:
Demand of duty on garments cleared by the appellant for the period from March and April 2001; Applicability of Notification No.23/2001 regarding exemption for garments bearing registered brand name; Imposition of penalty on the appellant; Interpretation of Trade Notice No.17/2001 issued by Chennai Commissionerate.

Analysis:
The appeal was filed against Order-in-Appeal No.159/2006 CE dated 7.3.2006 passed by the Commissioner of Customs and Central Excise (Appeals), Cochin. The issue revolved around the demand of duty on garments cleared by the appellant for the period from March and April 2001. The appellant, a manufacturer of readymade garments under the registered brand name V-Star and VANESA, faced duty demands due to the absence of a registered brand name during the relevant period. The Revenue invoked the extended period to demand duty and imposed penalties accordingly.

The Original Authority confirmed the demand, which was upheld by the Commissioner (A) in the impugned order. The appellants contested the decision, leading to a hearing where Shri Chacko George, learned Sr. Advocate, represented the appellant, and Ms. Sudha Koka, learned SDR, represented the Revenue. The duty involved was Rs.23,19,829/- with an equal penalty imposed. The exemption under Notification No.23/2001 covered all goods under Sub Heading 6201 and 6202, excluding garments bearing a registered brand name. Despite the appellant's application for a trade name, they did not possess a registered brand name during the clearance period.

A Trade Notice No.17/2001 issued by the Chennai Commissionerate clarified that duty applies only when the brand name is actually registered under the Trade and Merchandise Marks Act, 1958. The lower authorities concluded that the appellant was liable for duty discharge based on the registration effect from 1995. However, upon careful consideration, it was found that during the clearance period, the appellant did not have the brand name or trade name, even though they had applied for it in 1995. The Tribunal determined that the appellant was entitled to the benefit of the Notification as they did not have a registered brand name when the goods were cleared. The retrospective registration in 2003 did not warrant a longer period for demanding duty. Therefore, the demand of duty was deemed unsustainable, and the penalty was not imposed due to the absence of contumacious conduct by the appellants. The appeal was allowed with consequential relief.