1998 (8) TMI 349 - AT - Central Excise

Summary

Issues:
Classification under Notification No. 175/86 for diesel generating sets assembled with branded components; Denial of exemption under para 7 of the notification; Invocation of extended period of limitation.

Classification under Notification No. 175/86:
The case involved the classification of diesel generating sets assembled by M/s. Superex Industries under sub-heading 8502.00 of the Central Excise Tariff Act, 1985, and availing the benefit of exemption Notification No. 175/86 as a small scale manufacturer. The appellant assembled bought-out components at their factory, including diesel engines and alternators with brand names of other manufacturers. The dispute arose when a show cause notice was issued, alleging that the appellant's assembly of diesel generating sets with branded components disqualified them from the notification's benefit.

Denial of Exemption under Para 7:
The main contention revolved around whether the appellant affixing brand names of other manufacturers on the diesel generating sets affected their eligibility for the exemption under para 7 of Notification No. 175/86. The appellant argued that since they did not affix any brand names on the goods they manufactured, para 7 was not applicable. The respondent contended that the appellant's status as an authorized original equipment assembler and invoicing the sets as 'Kirloskar D.G. Sets' indicated a relationship with the brand owners, justifying denial of the exemption.

Invocation of Extended Period of Limitation:
The issue of the extended period of limitation was raised due to the appellant's alleged suppression of facts regarding the use of branded components in their classification lists and gate passes. The department invoked the extended period, claiming mala fide intent on the appellant's part. The appellant argued that all relevant details were disclosed, and the demand was time-barred under Section 11A of the Act.

Judgment and Analysis:
The Tribunal analyzed para 7 of Notification No. 175/86, emphasizing that for the exemption to be denied, the manufacturer must affix specified goods with another person's brand name. Since the appellant did not affix the brand names on the goods they manufactured, para 7 did not apply. The Tribunal distinguished the case from precedents cited by the respondent, highlighting that the appellant's actions did not fall within the scope of para 7. Additionally, the Tribunal noted that the appellant's disclosure of facts in their classification lists precluded the invocation of the extended period of limitation, ruling in favor of the appellant on both merits and limitation grounds.

In conclusion, the Tribunal allowed the appeal, holding that the appellant was entitled to the benefit of Notification No. 175/86 as they did not affix brand names on the goods. The demand was deemed time-barred, providing consequential relief to the appellant.