1994 (5) TMI 80 - AT - Central Excise

Summary

Issues Involved:
1. Denial of Exemption Notification No. 175/86
2. Alleged Suppression of Facts and Invocation of Larger Period
3. Use of Brand Name "FESTO"
4. Computation of Duty and Penalty

Summary:

1. Denial of Exemption Notification No. 175/86:
The appellants were denied the benefit of Exemption Notification No. 175/86, dated 1-3-1986, by the Collector of Central Excise, Bangalore, who confirmed the differential Central Excise Duty (CED) amounting to Rs. 18,78,856.18 for the period 1987-88 to 1989-90. The denial was based on the finding that the appellants used the brand name "FESTO," which is owned by their collaborator M/s. FESTO KG, Germany, who are not eligible for the exemption under the said notification.

2. Alleged Suppression of Facts and Invocation of Larger Period:
The show-cause notice dated 20-8-1991 alleged that the appellants suppressed the fact of manufacturing goods with the brand name "FESTO" and cleared the same without following Central Excise procedures and without payment of duty. The Collector found that the appellants did not disclose the use of the brand name "FESTO" in their declaration and classification list, thereby invoking the larger period for demand under Rule 9(2) of Central Excise Rules, 1944 read with the proviso of Section 11A of Central Excises and Salt Act, 1944.

3. Use of Brand Name "FESTO":
The Collector concluded that the appellants' use of the brand name "FESTO" was connected to the brand name of M/s. FESTO KG, Germany. The collaboration agreement indicated that the goods were manufactured according to the designs and quality laid down by the collaborator, and the use of the brand name "FESTO" was permitted under the agreement. The Tribunal upheld this finding, stating that the use of the word "FESTO" links the appellants' goods with the goods of their collaborator, thereby disqualifying them from the exemption under Notification No. 175/86.

4. Computation of Duty and Penalty:
The Tribunal noted that there was no detailed finding on the plea of computation of duty and the claim that some items were not branded or were bought out. The issue of limitation and computation of duty was remanded to the original authorities for de novo consideration. The appellants were to be given an opportunity to establish their plea that there was no suppression and that the officials were aware of the facts. The appeal was disposed of with these directions.

Conclusion:
The Tribunal upheld the denial of the exemption notification based on the use of the brand name "FESTO" and remanded the issues of limitation and computation of duty for further consideration.