1997 (2) TMI 287 - AT - Central Excise

Summary

Issues:
Claim for exemption under Notification No. 175/86 based on affixing brand names of other firms on products.

Detailed Analysis:

1. Issue of Exemption Claim:
The appellant, a manufacturer of welding electrical transformers and air compressors, claimed exemption under Notification No. 175/86 as their production was below the specified limit. The Collector disallowed the exemption, citing para 7 of the Notification, which disentitles manufacturers affixing brand names of ineligible persons. The appellant argued they marketed products under their own brand name 'kismat' and other firms affixed their brand names post-purchase. The Collector found the appellants affixed other brand names, leading to denial of exemption.

2. Interpretation of Notification:
The Collector rejected the appellant's contention that dealers purchasing goods were not manufacturers, stating 'person' in para 7 includes any juristic entity, whether dealer or manufacturer. The Collector held that even if the recipient was a manufacturer, they must also be eligible for the exemption. As the appellants failed to prove the eligibility of the purchasers for the exemption, para 7 applied, justifying the denial of exemption.

3. Consideration of Submissions:
The Tribunal noted the appellant's status as a Small Scale Industry (SSI) unit eligible for exemption under Notification No. 175/86. The Collector disallowed the exemption due to the affixing of brand names of other firms. However, the Tribunal found no evidence of the appellants affixing brand names themselves before sale. The Tribunal accepted the appellant's claim that purchasers affixed brand names post-purchase, absolving the appellants of para 7 implications.

4. Decision on Exemption Eligibility:
The Tribunal emphasized that para 7 applies only if the manufacturer affixes brand names on goods, which lacked evidence in this case. Therefore, giving the appellants the benefit of the doubt, the Tribunal held them eligible for the exemption under Notification No. 175/86 for the relevant period, setting aside the Collector's order and allowing the appeal.