2004 (2) TMI 135 - AT - Central Excise

Summary

Issues:
1. Eligibility for exemption under Notification No. 175/86-C.E.
2. Ownership of brand-names "Merizyme Elixir" and "Merizyme Drops"
3. Application of penalty under Rule 173Q of the Central Excise Rules, 1944

Eligibility for exemption under Notification No. 175/86-C.E.:
The case involved a dispute regarding the eligibility of two medicines, "Merizyme Elixir" and "Merizyme Drops," for exemption under Notification No. 175/86-C.E. The appellants claimed that the goods were cleared under their own brand-names, while the respondent argued that they were cleared under the brand-names of M/s. MLL, who were not eligible for the exemption. The agreement between the parties dated 6-1-1988 regarding the brand-names indicated that M/s. MLL owned the brand-names. The appellants' admission and oral evidence supported this conclusion. The Commissioner's finding that M/s. MLL were not eligible for the exemption was not challenged. Therefore, the clearances of the medicines were not eligible for the exemption due to the bar in the Notification.

Ownership of brand-names "Merizyme Elixir" and "Merizyme Drops":
The agreement dated 6-1-1988 between the appellant-firm and M/s. MLL established that the brand-names "Merizyme Elixir" and "Merizyme Drops" belonged to M/s. MLL. The terms of the agreement, coupled with the oral evidence, confirmed that the brand-names were owned by M/s. MLL during the relevant period. The appellants' attempt to challenge this ownership was not supported by the evidence presented. The brand-names were registered under M/s. MLL's name, and the appellants' application for registration in their favor came after the disputed period. The cited case law was distinguished as it did not apply to the current scenario where the appellants did not acquire ownership of the brand-names.

Application of penalty under Rule 173Q of the Central Excise Rules, 1944:
The appellants were found to have suppressed facts with the intent to evade payment of duty, justifying the imposition of a penalty under Rule 173Q. The penalty imposed on the appellants was deemed reasonable. However, separate penalties on the partners of the firm were deemed unwarranted. As a partnership firm has no distinct legal personality from its partners, the imposition of a personal penalty on the partners was deemed unjustified. Consequently, the demand of duty against the appellant-firm was upheld, along with the penalty imposed, while the penalties on the partners were set aside.

Conclusion:
The judgment upheld the demand of duty against the appellant-firm, affirmed the penalty imposed on them, and set aside the penalties on the partners. The impugned order was modified accordingly, with one appeal dismissed and the others allowed.