2000 (7) TMI 309 - AT - Central Excise

Issues Involved:
1. Eligibility for small scale exemption under Notification No. 175/86-C.E.
2. Affixing of brand name of an ineligible person.
3. Interpretation of prior Tribunal decisions.
4. Application of Modvat credit.
5. Limitation and penalty.

Detailed Analysis:

1. Eligibility for Small Scale Exemption under Notification No. 175/86-C.E.:
The primary issue is whether M/s. Densons Poly Products Pvt. Ltd. (M/s. Densons) is eligible for the small scale exemption under Notification No. 175/86-C.E., dated 1-3-1986. The product in question, HIP (High Impact Polystyrenes) Moulds, was affixed with the brand name 'Densons' belonging to M/s. Yamuna Gases and Chemicals Ltd. (M/s. Yamuna), who had exceeded the eligibility limit for small scale exemption. The Collector of Central Excise, Delhi, held that M/s. Densons were not entitled to the exemption as the goods were affixed with the brand name of an ineligible person.

2. Affixing of Brand Name of an Ineligible Person:
M/s. Yamuna, the owner of the brand name 'Densons', had clearances exceeding the eligibility limit for small scale exemption and availed Modvat credit. The Tribunal observed that under the amended Notification No. 175/86-C.E., para-7 inserted by Notification No. 223/87-C.E., the exemption does not apply if the specified goods are affixed with the brand name of another person who is not eligible for the exemption. Since M/s. Yamuna was ineligible, the HIP Moulds affixed with 'Densons' were also ineligible for the exemption.

3. Interpretation of Prior Tribunal Decisions:
The appellants relied on previous Tribunal decisions, such as Collector of Central Excise, Bombay-II v. Hames Industries and Collector of Central Excise New Delhi v. Densons Engineers, Jagadhri. However, these were found irrelevant to the present case. The Tribunal distinguished the facts and noted that the decision in Densons Engineers pertained to a different context and did not affect the eligibility of M/s. Yamuna for the exemption.

4. Application of Modvat Credit:
M/s. Yamuna had availed of Modvat credit, which further disqualified them from the exemption under Notification No. 175/86-C.E. The Tribunal referred to its decision in Collector of Central Excise, Chandigarh v. Densons Pultroteknik, where it was held that if one unit avails of Modvat credit, the other unit cannot avail of the exemption if their combined clearances exceed the permissible limit.

5. Limitation and Penalty:
The adjudicating authority observed that M/s. Densons knowingly and consciously used the brand name of another person and illegally availed the exemption. The Tribunal agreed with these observations and confirmed the demand of Central Excise Duty of Rs. 66,377.85. However, the penalty imposed was reduced from Rs. 15,000/- to Rs. 7,500/-.

Conclusion:
The appeal was rejected except for the reduction in the penalty amount. The Tribunal confirmed that M/s. Densons were not eligible for the small scale exemption as the goods were affixed with the brand name of an ineligible person, M/s. Yamuna, who had exceeded the clearance limit and availed Modvat credit. The Tribunal's decision was based on the interpretation of the relevant notifications and prior decisions, and the facts presented in the case.

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