2005 (2) TMI 219 - AT - Central Excise

Summary

Issues:
- Application for waiver of pre-deposit of duty and penalty
- Denial of SSI exemption benefit for manufacturing feeding bottles under the brand name of others
- Sustainability of duty demand for the period pre and post-2002
- Use of brand name "BONNE" by the applicants
- Independence of sales by the applicants

Analysis:
The judgment by the Appellate Tribunal CESTAT, New Delhi, involved an application for waiver of pre-deposit of duty and penalty imposed on M/s. Bonny Baby Care (Pvt.) Ltd., M/s. Bonny Baby Marketing Co., and Shri Subhash Aneja arising from an Order of the Commissioner Central Excise, Noida. The primary issue was the denial of Small Scale Industries (SSI) exemption benefit due to the alleged manufacture of feeding bottles by the applicants under the brand name of others.

The Tribunal considered the activities of the applicants before and after 2002. It referenced a previous decision in the case of Narang Latex and Dispersions Pvt. Ltd. v. CCE, Mumbai, where it was held that assembling and packing of products bought from others did not amount to manufacture. This decision was upheld by the Supreme Court, indicating that the demand for the period up to 2002 was not sustainable, amounting to Rs. 21 lakhs.

Regarding the period post-2002, a duty demand of Rs. 26 lakhs was confirmed based on the use of the brand name "BONNE" by the applicants, which was claimed to belong to M/s. Bonny Products. However, the Tribunal found that the brand name actually belonged to one of the partners, Sarla Aneja, who was entitled to use it. Citing a Supreme Court decision in the case of CCE, Chandigarh-II v. Bhalla Enterprises, the Tribunal concluded that the applicants had a strong prima facie case in their favor.

Additionally, a penalty demand of Rs. 5 lakhs was questioned by the Tribunal, considering the independent sales made by the applicants. Referring to a relevant decision, the Tribunal found this demand also not prima facie sustainable. Consequently, the Tribunal waived the requirement of pre-deposit of duty and penalty, staying the recovery pending the appeals scheduled for hearing on 28th April 2005.