2000 (5) TMI 321 - AT - Central Excise

Summary

Issues:
1. Benefit of exemption Notification No. 175/86-C.E. for manufacturing membrane switches under the brand name of customers.
2. Validity of the impugned order allowing exemption contrary to the law laid down by the Larger Bench of the Tribunal.
3. Interpretation of Notification No. 175/86-C.E. regarding the use of brand names and eligibility for exemption.

Analysis:
1. The appeal was filed by the Revenue against an order denying the benefit of exemption Notification No. 175/86-C.E. to the respondents for manufacturing membrane switches under the brand name of their customers. The Assistant Collector initially denied the benefit, but the Collector (Appeals) reversed this decision, allowing the exemption based on a Tribunal decision in a similar case.

2. The Revenue challenged the Collector (Appeals) order, arguing that it contradicted the law established by the Larger Bench of the Tribunal in Namtech Systems Ltd. The respondents manufactured and cleared products under the brand names of customers not eligible for the exemption, making them ineligible for the benefit. The Collector (Appeals) was criticized for wrongly granting the benefit to the respondents.

3. The Tribunal analyzed the facts and found that the respondents indeed manufactured goods under the brand names of other manufacturers, falling within the definition of a 'manufacturer' under the Central Excise Act. The respondents sold these goods to manufacturers who provided drawings and specifications but did not supply raw materials. The Tribunal held that the benefit of the exemption notification could not be claimed if goods were manufactured under an ineligible person's brand name, even if not sold in the market but used captively in the production of final products.

4. The Tribunal emphasized that the law did not require the goods to be sold in the market to deny the exemption; manufacturing under an ineligible brand name was sufficient to disqualify the manufacturer from the exemption. The Collector (Appeals) decision was deemed erroneous, as it contradicted the law laid down by the Larger Bench in Namtech Systems Ltd. Previous decisions cited by the respondents' counsel were deemed irrelevant after the Larger Bench's ruling.

5. Consequently, the Tribunal set aside the Collector (Appeals) order and reinstated the Assistant Collector's original decision, granting the appeal of the Revenue. The judgment clarified the interpretation of Notification No. 175/86-C.E. regarding the use of brand names and the eligibility for exemption, aligning with the legal principles established by the Tribunal's Larger Bench.