2002 (8) TMI 219 - AT - Central Excise

Summary

Issues Involved:
The issues involved in the judgment are the demand of duty and imposition of penalty on the appellants for manufacturing shock pulse analyzers and testers falling under Chapter 90 of the Central Excise Tariff Act, 1985, based on a collaboration agreement granting them the right to use a foreign company's brand name.

Details of the Judgment:

(a) Ownership of Brand Name:
The appellants were granted a non-transferable right and license to use the foreign company's brand name, making them the sole owners of the brand name in India. The ownership of a brand name can stem from registration or use, and in this case, the appellants became owners through exclusive use. The demand based on this issue was not sustained, citing the decision of the Calcutta High Court in a similar case.

(b) Limitation of Demand:
The demand was considered barred by limitation due to the appellants' disclosure of the brand name in their classification lists and the approval of these lists by the Department. The Tribunal's precedent highlighted that Rule 173B of the Central Excise Rules does not mandate disclosure of a brand name. As the lists were approved after due verification, the Department could not invoke the longer period of limitation under Section 11A of the Central Excise Act, 1944.

(c) Charge of Suppression:
The Tribunal emphasized that charges of suppression must be individually proven for invoking the extended period. The demands made on other counts were examined in light of this principle.

(d) Differential Duty and Valuation:
The Department demanded differential duty based on a comparable basis for Demonstration Kits, but the appellants argued against adopting the sale value of unsold items. The demands related to undervaluation of duty were upheld, while the limitation plea on another demand was rejected due to lack of supporting documentation.

(e) Clandestine Clearances:
The demand for clandestine clearances was defended by the Department, but the Tribunal found the smallness of clearances insufficient to absolve the appellants from penalty and duty demands. The duty demand on this account was confirmed.

(f) Penalty Reduction:
As certain demands were not upheld, the penalty on the appellants was reduced from Rs. 10 lakhs to Rs. 2.50 lakhs. The penalty on the Managing Director was also reduced from Rs. 5 lakhs to Rs. 50,000, considering the duty liability.

The judgment concluded by disposing of the appeals accordingly.