1999 (12) TMI 409 - AT - Central Excise

Summary

Issues Involved:
1. Classification of 'liquid gold' under the Central Excise Tariff Act.
2. Entitlement to the benefit of Small Scale Exemption Notification No. 1/93-CE.

Issue-wise Detailed Analysis:

1. Classification of 'liquid gold' under the Central Excise Tariff Act:

The primary issue in Appeal No. 2070/97-C was the classification of 'liquid gold' manufactured by the appellants. The appellants argued that 'liquid gold' should be classified under Chapter 71 of the Central Excise Tariff, which attracted a nil rate of duty. However, the Assistant Commissioner classified the product under Chapter Heading 3207.90, attracting a duty rate of 20%. The Commissioner of Central Excise (Appeals) upheld this classification.

The appellants contended that 'liquid gold' was an alloy of gold and should therefore be classified under Chapter 71 as an 'article' of gold. They relied on the Allahabad High Court judgment in the Ratan Lal Garg case, which held that 'liquid gold' was an article of gold for purposes of the Defence of India Rules. However, the Commissioner (Appeals) and the Tribunal found that this judgment was not applicable to the Central Excise Tariff classification. The Tribunal decision in National Gold Industries, which classified 'liquid gold' as a ceramic color under Chapter Heading 3207.90, was considered more relevant.

The Tribunal concluded that 'liquid gold' did not have metallic properties and was more appropriately classified under Chapter 32, which covers dyes, colors, and paints. The appeal was dismissed, and the classification under Chapter Heading 3207.90 was upheld.

2. Entitlement to the benefit of Small Scale Exemption Notification No. 1/93-CE:

In Appeal No. 2071/97-C, the issue was whether the appellants were entitled to the benefit of Small Scale Exemption Notification No. 1/93-CE for 'liquid gold' branded as "Golden Oriole." The appellants claimed ownership of the brand name based on a deed of assignment dated 3-4-1993 from M/s. National Gold Industries. The Adjudicating Authority initially accepted this claim and dropped the SCN and seizure. However, the Commissioner (Appeals) reversed this decision, questioning the authenticity of the deed of assignment.

The Commissioner (Appeals) noted that the appellants did not produce the deed during the investigation and applied for brand name registration only after the seizure. The possibility of the deed being backdated was raised due to the familial relationship between the partners of the two firms. The Tribunal found that the rejection of the deed based on suspicion and speculation was not justified. The onus was on the Department to disprove the authenticity of the deed.

The Tribunal held that the appellants' claim to the brand name "Golden Oriole" was established based on the deed of assignment and that they were entitled to the benefit of Notification No. 1/93-CE. The appeal was allowed, and the appellants were granted the consequential benefits subject to the other conditions of the notification.

Conclusion:

The Tribunal dismissed Appeal No. 2070/97-C, upholding the classification of 'liquid gold' under Chapter Heading 3207.90. In Appeal No. 2071/97-C, the Tribunal allowed the appeal, recognizing the appellants' entitlement to the Small Scale Exemption Notification No. 1/93-CE based on the deed of assignment for the brand name "Golden Oriole."