2009 (11) TMI 389 - AT - Central Excise

SSI Exemption- The authorities have denied the benefit of small scale exemption to the assessees herein during the period 1996-97 upto 1999-2000 on online UPS and invertors manufactured by them on the ground that the goods bore the brand name CANSOFT which belonged to M/s. Cansoft Systems Pvt. Ltd. (hereinafter referred to as CSP). The duty demand of Rs. 6, 31, 212/- has been confirmed as a result of such denial and a penalty of equal amount has been imposed. Held that- law during the period in dispute was that use of brand name of manufacturer of goods different from those manufactured by brand name owner would not lead disentitlement to exemption. Subsequently it was clarified that use of brand name of another person on any goods would lead to disentitlement to exemption. Assessee cannot be said to have intention to evade duty by using brand name of another person and extended period not invocable.

Summary

Issues: Denial of small scale exemption on goods bearing a brand name "CANSOFT" belonging to another company, imposition of duty demand, penalty, applicability of extended period of limitation.

In the judgment by the Appellate Tribunal CESTAT, CHENNAI, the issue revolved around the denial of the small scale exemption to the assessees for goods bearing the brand name "CANSOFT," which was owned by M/s. Cansoft Systems Pvt. Ltd. The authorities below had denied the exemption for the period 1996-97 up to 1999-2000, resulting in a confirmed duty demand of Rs. 6,31,212/- and an equal penalty imposition. The assessees argued that the brand name "CANSOFT" belonged to R. Anantha Krishnan, who was both the proprietor of the appellants and a Director in CSP, asserting they used their own brand name on the goods. However, it was revealed through Shri Anantha Krishnan's admission and testimonies by CSP's Managing Director and Accounts Manager that "CANSOFT" was indeed the brand name of CSP, undermining the assessees' claim.

Moreover, the Tribunal found that the extended period of limitation was not applicable against the assessees. During the disputed period, the law allowed the use of a brand name different from the manufacturer's without losing the benefit of the SSI exemption. It was only post the disputed period that the Apex Court established in various judgments that using another person's brand name on goods would disqualify the user from the SSI notification benefit. Consequently, the assessees were not deemed guilty of suppression or misstatement to evade duty payment, precluding the application of the extended limitation period. The Tribunal upheld the demand within the normal limitation period, set aside the demand beyond that period, and directed the recalibration of duty demand within the normal period, along with a reconsideration of the penalty imposition after affording the assessees a fair hearing.

In conclusion, the appeal was partly allowed by the Tribunal, providing a detailed analysis of the issues concerning the denial of small scale exemption, duty demand, penalty imposition, and the interpretation of the extended period of limitation in light of the brand name ownership dispute and the evolving legal precedents post the disputed period.