2004 (6) TMI 126 - AT - Central Excise

Summary

Issues:
Whether M/s. Union Metals are clearing excisable goods manufactured by them bearing the brand name of another person.

Analysis:
The appeal addressed the issue of whether the goods manufactured by M/s. Union Metals were cleared bearing the brand name of another person. The Appellants argued that the Footrest they manufactured did not bear any brand name and was supplied back in corrugated sheets without any branding. They used plastic tape with 'LML' and 'PIAGGIO' branding to wrap the corrugated sheets. The Appellants claimed that the Footrest supplied to LML was used as original equipment for two-wheelers. They cited Notification No. 9/99, stating that the SSI exemption applies even if the goods bear a brand name and are used as original equipment. The Appellants failed to follow the procedure in Chapter X or file a declaration, but they submitted Form 3B of the Trade Tax Authority to rectify this. The department relied on a letter from LML, indicating a lack of correlation in tracking the usage of the supplied goods. The Appellants argued that any mistakes were on LML's part, absolving them from duty liability and penalty.

The Tribunal considered both parties' arguments and referred to Notification No. 9/99-C.E., which states that the exemption does not apply to goods bearing another person's brand name. The Tribunal noted that the plastic tape purchased by the Appellants bore the brand names 'LML' and 'PIAGGIO,' indicating branding by another person. The Appellants failed to prove that the goods were used as original equipment as required by Chapter X of the Central Excise Rules. Despite submitting Form 3B, it did not establish the goods' use as original equipment. LML's letter confirmed the use of branded goods in scooter manufacturing and sales to their spare parts division. Consequently, the Tribunal upheld the duty demand but reduced the penalty to Rs. 10,000, finding that a penalty equivalent to the duty amount was unwarranted. The Tribunal concluded that the Appellants were not eligible for the exemption under Notification No. 9/2000-C.E., affirming the duty demand and the reduced penalty.