2003 (5) TMI 118 - AT - Central Excise

SSI Exemption - Brand name - Valuation (Central Excise) - Related person - Mutuality of interest - Demand - Limitation - Suppression - Penalty

Issues Involved:
1. Whether the goods manufactured by M/s. Beco Chemicals (P) Ltd. bear the Brand Name "Anand" belonging to M/s. BEC Fertilisers Ltd.
2. Whether both entities are 'related persons' under Section 4 of the Central Excise Act.
3. Applicability of the benefit of Notification Nos. 175/86-C.E. and 1/93-C.E.
4. Validity of the duty demand and whether it is time-barred.
5. Applicability of cum-duty-price and Modvat credit adjustments.
6. Imposition of penalties under Sections 11AA, 11AB, and 11AC of the Central Excise Act and Rule 209A of the Central Excise Rules.

Issue-wise Detailed Analysis:

1. Brand Name "Anand":
The Tribunal considered whether the goods manufactured by M/s. Beco Chemicals (P) Ltd. bear the Brand Name "Anand" belonging to M/s. BEC Fertilisers Ltd. It was undisputed that the plant growth regulators manufactured by M/s. Beco Chemicals bear the brand name 'Anand' which belongs to M/s. BEC Fertilisers. The Tribunal referred to the decision in Fine Industries, which stated that the goods manufactured by the SSI unit and cleared under the brand name of another person should be identical to those manufactured by the brand name owner. However, the Tribunal noted that M/s. BEC Fertilisers are dealing with the goods manufactured by M/s. Beco Chemicals, making them a non-manufacturing trader. Therefore, the benefit of Notification Nos. 175/86 and 1/93 was not available as the goods bore the brand name of another person.

2. Related Persons:
The Tribunal examined whether both entities are 'related persons' under Section 4 of the Central Excise Act. It was argued that both entities are separate and distinct, with dealings at arm's length and on a principal-to-principal basis. The Tribunal found that the Revenue failed to establish mutuality of interest between the two appellants. The agreement between the two did not constitute mutuality of business interest, and thus, they were not considered related persons.

3. Benefit of Notification Nos. 175/86-C.E. and 1/93-C.E.:
The Tribunal held that the benefit of Notification Nos. 175/86 and 1/93 was not available to M/s. Beco Chemicals as the goods manufactured by them bore the brand name of another person, namely M/s. BEC Fertilisers, who were non-manufacturing traders in this context.

4. Validity of Duty Demand and Time-bar:
The Tribunal agreed with the Revenue that the extended time-limit for demanding duty was applicable due to the suppression of the fact that the goods bore the brand name of another person. The fact was not mentioned in the classification list or RT-12 returns. However, the Tribunal noted that the provisions of Section 11AB and Section 11AC would not apply to the demand for the period before their insertion on 28-9-1996. The Tribunal remanded the matter to the Commissioner to recompute the duty amount and examine if the duty demand was overlapping for certain periods.

5. Cum-duty-price and Modvat Credit Adjustments:
The Tribunal agreed with the appellant that if duty was payable, the price should be treated as cum-duty-price, and the assessable value should be determined after deducting the duty amount. The Commissioner was directed to extend the benefit of Modvat credit to the appellants subject to the production of duty-paying documents.

6. Imposition of Penalties:
The Tribunal set aside the penalty imposed on M/s. BEC Fertilisers under Rule 209A, as they could not be said to have knowledge that the goods were liable for confiscation. The aspect of imposing a penalty under Rule 173Q was left to the Commissioner after a reasonable hearing.

Conclusion:
Both appeals were disposed of with directions for recomputation of duty, examination of overlapping duty periods, and extension of Modvat credit benefits. Penalties were reconsidered based on the findings and applicable legal provisions.

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