2024 (9) TMI 1491 - AT - Central Excise

Denial of SSI exemption - denial on the ground that goods cleared by the appellant bore brand name YES and SAFE and both the brand names are not registered in the name of appellant - penalties. Denial of SSI exemption - Demand of central excise duty on clearance of mineral water bearing brand name SAFE - appellant had contended that the brand SAFE was owned by it and it was not owned by any other person - HELD THAT - The appellant has come out with a categorical case that it purchase the brand SAFE from one Abhay Kumar Jain, proprietor of M/s Siddhi Corporation, Jodhpur under a sales agreement dated 06.06.2008. It is no doubt true that the sales agreement was not registered and that the brand name was not reflected on the site of Trade Make, but the appellant has come out with a case that Siddhi Corporation had not got the brand name registered in its name from the Trade Mark Authority. Merely because the appellant did not get the brand name registered in its own name, it cannot be urged that the exemption cannot be denied for the reason that nothing has been brought on record by the department to show that the brand name is in the name of some other person. Reference can be made to the decision of the Tribunal in Mukur Pharmaceuticals Co. P. Ltd. vs. Commr. of C.Ex., Chandigarh 2000 (3) TMI 668 - CEGAT, NEW DELHI , wherein it was observed ' The onus of proof is on the department to show that the brand name belongs to another person.' Confirmation of the demand on mineral water cleared under the brand name YES during the period from October, 2014 to August, 2016 - appellant contends that mineral water with YES brand was cleared to M/s. Bhagwati Beverages, Jodhpur under an agreement which allows the appellant to process, pack and sell mineral water with brand name YES to them alone and not to consumers or in the market - HELD THAT - M/s. Bhagwati Beverages clearly knew that the brand name did not belong to the appellant and, therefore, the brand name did not in any way indicate any connection in the course of trade between such specified goods and the appellant. According to the appellant, all the packing materials printed with brand name YES were provided by M/s. Bhagwati Beverages, who in fact sold such packed goods to the customers who know that they were buying mineral water with the brand name YES of M/s. Bhagwati Beverages - appellant would, therefore, be entitled to exemption under the exemption notification dated 01.03.2003. The penalty imposed upon the appellant or upon Tapan Rai or upon Manju Jain cannot also be sustained. The impugned order dated 17.05.2019 passed by the Commissioner (Appeals), therefore, deserves to be set aside and is set aside - Appeal allowed.

Summary

Issues Involved:
1. Demand of central excise duty on mineral water cleared under the brand name 'SAFE'.
2. Demand of central excise duty on mineral water cleared under the brand name 'YES'.
3. Imposition of penalties on the appellant, Tapan Rai, and Manju Jain.

Issue-Wise Detailed Analysis:

1. Demand of Central Excise Duty on Mineral Water Cleared Under the Brand Name 'SAFE':
The first issue concerns the demand confirmed on mineral water cleared as the "SAFE" brand during the period February 2012 to August 2016. The Assistant Commissioner confirmed the demand on the grounds that the brand "SAFE" was not owned by the appellant as it was not registered in their name and was allegedly owned by another person. The appellant contended that the brand "SAFE" was indeed owned by them, having purchased it from Abhay Kumar Jain, proprietor of M/s Siddhi Corporation, Jodhpur, under a sales agreement dated 06.06.2008.

The exemption notification dated 01.03.2003 stipulates that the exemption can be denied only when the goods bear the brand name of another person. The onus was on the department to bring evidence to substantiate that the brand name was owned by another person. The Tribunal in Mukur Pharmaceuticals Co. P. Ltd. vs. Commissioner of Central Excise, Chandigarh 2001 (135) E.L.T. 569 (Tri.-Del.) held that the department must prove that the brand name belongs to another person. In this case, no such evidence was provided by the department.

2. Demand of Central Excise Duty on Mineral Water Cleared Under the Brand Name 'YES':
The second issue pertains to the demand on mineral water cleared under the brand name 'YES' during the period from October 2014 to August 2016. The appellant argued that the mineral water with the 'YES' brand was cleared to M/s. Bhagwati Beverages, Jodhpur under an agreement that allowed the appellant to process, pack, and sell mineral water with the brand name 'YES' to them exclusively, not to consumers or the market. Thus, the appellant claimed entitlement to the exemption under the notification, as the goods were sold only to M/s. Bhagwati Beverages, who knew that the brand name did not belong to the appellant.

The Tribunal found that the appellant would be entitled to the exemption under the notification dated 01.03.2003, as the brand name 'YES' did not indicate any connection in the course of trade between the specified goods and the appellant.

3. Imposition of Penalties on the Appellant, Tapan Rai, and Manju Jain:
Given the findings on the first two issues, the penalties imposed on the appellant, Tapan Rai, and Manju Jain under the Central Excise Rules were also found to be unsustainable. The Tribunal concluded that the penalties could not be upheld as the demands themselves were not justified.

Conclusion:
The impugned order dated 17.05.2019 passed by the Commissioner (Appeals) was set aside. All three excise appeals were allowed, and the demands and penalties imposed were annulled. The judgment emphasized the necessity for the department to provide substantial evidence when denying exemptions based on brand ownership and clarified the conditions under which exemptions can be claimed under the notification dated 01.03.2003.