2003 (9) TMI 251 - AT - Central Excise

Claim for small scale exemption and brand name - SSI Exemption - Clubbing of clearances - HELD THAT - The duty liability can be fastened only on one person in respect of goods manufactured. While the respondents challenged the said demand order by filing an appeal before the Commissioner (Appeals), there was no cross appeal against the Order-in-Appeal, praying for confirmation of demand against M/s. SSAE. In the circumstances the ground No. (1) above of the appeal is liable to be rejected and is therefore rejected. Once the claim for duty against M/s. SSAE stands abandoned, there is no escape from treating the respondents as independent manufacturer and therefore brand name issue has to be examined. In the appeal, great stress has been placed on the facts that, the manufactured goods under reference are precision engineering equipments, requiring elaborate technical know skill and other support which a small manufacturer like the respondents could not have accomplished without the active support from M/s. SSAE. It is claimed that, it is M/s. SSAE who are the real operators behind the issue. Therefore, the logo Varco appearing in conjunction with other letter in the full text namely, Varco Sara India (P) Ltd. , be considered as a brand belonging M/s. SSAE or Varco V.J. the foreign company. Once it is an admitted position that the respondents are an independent manufacturer, the revenue has to establish that the name Varco Sara India (P) Ltd. , which is figuring on the equipments actually belongs to another person. Even if it were to be assumed that the word Varco in the entire text is similar to the text of Varco brand of a foreign company, even in that situation the text Varco Sara India (P) Ltd. , can not be considered as the same as Varco . On this specific point of law Tribunal in their order in the case of J. Prasad Polymers Ors. v. C.C.E., 2003 (4) TMI 145 - CEGAT, NEW DELHI held that suffixing of words like Mastana , Parwana after the words Sunder does not amount to use of brand name Sunder . This case is squarely covered by the above judgement. Accordingly we hold that, the respondent's affixing the name Varco Sara (I) Pvt. Ltd. would not render them ineligible to small scale exemption on the ground that the brand name belongs to another person Therefore, the ground No. (2) is also rejected. Accordingly, we reject the appeal filed by the Revenue. Thus, we hold that the impugned order-in-appeal passed by the ld. Commissioner (Appeals) is correct in law and does not call for interference. Accordingly, the Revenue's appeal is rejected.

Summary

Issues involved: The dispute relates to respondent's claim for small scale exemption and brand name, as well as clubbing of clearances.

Small Scale Exemption Issue: The case involved M/s. Sara Services and Engineers (P) Ltd. claiming small scale exemption under Notification No. 1/93-C.E. The dispute arose when Central Excise Officers alleged that the respondent was affixing the brand name "Varco" on their products, which belonged to their foreign collaborator, M/s. Varco B.J. The officers visited the factory and found the brand name "Varco Sara" on the products. The department argued that the use of "Varco" on invoices and letterheads indicated a connection to M/s. Varco B.J. However, the respondents contended that they used "Varco Sara (I) Pvt. Ltd." on their products and had not paid any royalty to M/s. Varco B.J. The Commissioner (Appeals) allowed the respondent's appeal, stating that the use of "Varco Sara (I) Pvt. Ltd." did not disqualify them from the small scale exemption.

Brand Name Issue: The Revenue challenged the use of the brand name "Varco" by the respondents, claiming it belonged to M/s. SSAE or Varco B.J. The Tribunal rejected this argument, stating that even if the word "Varco" was similar to the foreign company's brand, the addition of "Sara India (P) Ltd." made it distinct. Citing a previous judgment, the Tribunal held that suffixing words like "Mastana" or "Parwana" after a brand name did not constitute the use of that brand name. Therefore, the Tribunal concluded that the respondent's use of "Varco Sara (I) Pvt. Ltd." did not disqualify them from the small scale exemption based on brand name ownership.

Clubbing of Clearances Issue: The Revenue sought to club the clearances of the respondents with M/s. SSAE and deny them the small scale exemption. However, the Tribunal noted that the grounds presented were contradictory. The Tribunal emphasized that duty liability rests on the manufacturer, and in this case, the respondents were to be treated as an independent manufacturer. As the claim against M/s. SSAE was abandoned, the Tribunal rejected the appeal to club clearances and confirmed the respondents' independent status.

Conclusion: The Tribunal rejected the Revenue's appeal, upholding the Commissioner (Appeals) decision that the respondents were eligible for the small scale exemption and that the brand name "Varco Sara (I) Pvt. Ltd." did not infringe on another entity's rights. The impugned order-in-appeal was deemed correct in law, and the Revenue's appeal was dismissed.