2010 (3) TMI 556 - AT - Central Excise

SSI - Brand name - The demand has been confirmed on the ground that appellant was using the brand name Sudhir Gensets which was also used by another unit as Sudhir Engineering Company . Plea that Sudhir a common name cannot be considered as brand name at all and be connected to manufacturer. Held that - Sudhir engg. Manufacturing same product from 1995 assessee started subsequently under same brand name. Management of Companies same. Intention to capitalize on popularity of name Sudhir. SSI exemption not available.

Issues:
1. Duty demand confirmation for financial years 1997-98 and 1998-99.
2. Imposition of penalties on the appellants.
3. Use of brand name "Sudhir Gensets" by multiple units.
4. Allegations of suppression of facts and mis-declaration.
5. Applicability of SSI exemption.
6. Interpretation of Section 11AC for penalty imposition.
7. Reduction of penalties on Managing Director and General Manager.

Analysis:

1. The duty demand for the financial years 1997-98 and 1998-99 amounting to Rs. 4,15,650/- was confirmed by the lower authorities against the appellants, who are engaged in the manufacture of Generator Sets. The demand was based on the usage of the brand name "Sudhir Gensets," which was also being used by another unit, Sudhir Engineering Company. The penalties imposed on the appellants were equivalent to the duty amount.

2. The advocate for the appellants argued that the department's case was built on the declaration filed under Rule 173B, where they had declared the brand name "Sudhir Gensets." He contended that since the department had access to all necessary information through statutory declarations, there was no suppression of facts or mis-declaration. The advocate cited relevant case laws and Supreme Court decisions to support the appellants' position.

3. The Departmental Representative countered by stating that the declaration filed under Rule 173B implied that the brand name belonged to the declaring unit unless stated otherwise. The DR highlighted correspondences indicating mis-declaration by the first appellant regarding the ownership of the brand name. The proximity of the two units and shared management further strengthened the department's argument.

4. The Tribunal analyzed the submissions and records, emphasizing that the appellants were obligated to declare the ownership of the brand name as per the Central Excise Rules. The Tribunal referenced a Supreme Court decision to support the view that the appellants were not eligible for exemption due to the intentional usage of the brand name for capitalizing on its existing popularity. The Tribunal found the suppression of facts and mis-declaration correctly invoked based on the evidence presented.

5. Regarding penalties, the Tribunal upheld the penalty under Section 11AC for the first appellant but provided an option to reduce the penalty amount if the full duty, interest, and 25% of the duty as penalty were paid within 30 days. The Tribunal noted that this option had not been explained by the lower authorities but could be extended by the Tribunal as per precedent.

6. The penalties imposed on the Managing Director and General Manager were reduced considering the total duty demand amount and the mandatory penalty under Section 11AC. The penalty on the Managing Director was reduced to Rs. 50,000 and on the General Manager to Rs. 10,000.

This detailed analysis covers the duty demand confirmation, penalties imposed, brand name usage, allegations of suppression of facts, applicability of SSI exemption, interpretation of penalty provisions, and the reduction of penalties on specific appellants as per the judgment of the Appellate Tribunal CESTAT AHMEDABAD.

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