2001 (1) TMI 486 - AT - Central Excise

Summary

Issues:
1. Duty demand on PVC water pipes under Central Excise Rules.
2. Eligibility for SSI exemption under Notification No. 1/93.
3. Use of brand name belonging to another unit.
4. Grant of Modvat credit and deduction in assessable value under Section 4.
5. Invocation of larger period of limitation.
6. Re-computation of duty and penalty imposition.

Analysis:

Issue 1: Duty demand on PVC water pipes under Central Excise Rules
The appeal concerned duty demand of Rs. 5,95,076 on PVC water pipes manufactured and cleared by the appellants. The Commissioner confirmed the duty demand under Rule 9(2) of the Central Excise Rules, along with confiscation of seized goods and penalties. The appellants contended for Modvat credit on inputs used, which was initially agreed upon but later disregarded by the Commissioner. The rejection of pleas regarding brand ownership and duty deduction was based on the Supreme Court judgment in Bata India case.

Issue 2: Eligibility for SSI exemption under Notification No. 1/93
The department found that the appellants were using the brand name of another unit, M/s. Southern Plastics, despite the appellants' claim of using their own brand name, 'CHERAAN.' The Commissioner rejected the SSI exemption claim under Notification No. 1/93 due to the unauthorized use of another entity's brand name, invoking a longer period of limitation for suppression of information.

Issue 3: Use of brand name belonging to another unit
The appellants argued that they had declared their own brand name 'CHERAAN' to the department, although sounding similar to M/s. Southern Plastics' brand name. However, statements from partners of M/s. Southern Plastics confirmed the unauthorized use of the latter's brand name on seized goods, leading to the rejection of the SSI exemption claim.

Issue 4: Grant of Modvat credit and deduction in assessable value under Section 4
The appellants sought Modvat credit and deduction in assessable value under Section 4, disputing the application of the Bata India case by the Commissioner. The Tribunal considered the appellants' claim for deduction, noting discrepancies in the duty computation and directing a re-calculation of duty and penalty imposition by the Commissioner.

Issue 5: Invocation of larger period of limitation
The department invoked a larger period of limitation due to the appellants' failure to inform about the use of another entity's brand name. The Tribunal upheld the invocation of the larger period based on the unauthorized use of the brand name and the suppression of relevant information.

Issue 6: Re-computation of duty and penalty imposition
While confirming the denial of SSI exemption and the invocation of the larger period, the Tribunal remitted the case back to the Commissioner for re-quantification of duty computation, reworking of deduction in duty element, and reconsideration of penalty imposition in light of the reduced duty amount. The appellants were granted an opportunity for a hearing in the re-quantification process.