2000 (7) TMI 165 - AT - Central Excise

Summary

Issues Involved:
1. Eligibility for exemption under Notification No. 175/86-C.E.
2. Alleged misuse of brand name 'APLAB' by M/s. Swicon Micro System Pvt. Ltd.
3. Time limit for issuing the show cause notice.
4. Imposition of penalty under Rule 209A of Central Excise Rules.

Detailed Analysis:

1. Eligibility for exemption under Notification No. 175/86-C.E.:
The core issue was whether M/s. Swicon Micro System Pvt. Ltd. was eligible for exemption under Notification No. 175/86-C.E. The Tribunal found that the goods manufactured by Swicon were affixed with the brand name 'APLAB', belonging to M/s. Applied Electronics Ltd. Paragraph 7 of Notification No. 175/86 as amended stipulates that the exemption is not applicable to goods affixed with the brand name of another person not eligible for the exemption. The Tribunal concluded that since Swicon's products bore the 'APLAB' brand, they were not eligible for the exemption.

2. Alleged misuse of brand name 'APLAB' by M/s. Swicon Micro System Pvt. Ltd.:
The Tribunal noted that the brand name 'APLAB' was affixed on Swicon's products and covered with a sticker bearing Swicon's name. This act was seen as a deliberate attempt to conceal the use of another's brand name. The Tribunal rejected the argument that the goods were further processed by Applied Electronics, as no substantial evidence was provided to support this claim. The Tribunal held that the goods were sold in the market under the 'APLAB' brand, thus entering the course of trade, and Swicon's actions attracted the mischief of the notification.

3. Time limit for issuing the show cause notice:
The Tribunal upheld the invocation of the extended period of limitation under Section 11A of the Central Excise Act, as Swicon did not disclose the use of another's brand name in their classification list. The Tribunal emphasized that the appellants had not mentioned this fact in their classification list, thereby justifying the extended period for issuing the show cause notice.

4. Imposition of penalty under Rule 209A of Central Excise Rules:
The Tribunal found that penalties were justifiable for both Swicon and Applied Electronics due to the deliberate act of camouflaging the brand name 'APLAB' and clearing goods without appropriate duty payment. However, the penalties for the other three appellants were set aside due to the lack of specific allegations and clear findings indicating their role and conscious knowledge of the goods being liable for confiscation. The Tribunal reduced the penalties to Rs. 5 lakhs for Swicon and Rs. 2.5 lakhs for Applied Electronics, considering the amount of duty involved.

Conclusion:
The Tribunal upheld the demand of duty confirmed by the Collector, the confiscation of goods, and the redemption fine. Penalties for Swicon and Applied Electronics were reduced, while penalties for the other three appellants were set aside. All appeals were disposed of in these terms.