2001 (3) TMI 366 - AT - Central Excise

Summary

Issues:
1. Eligibility for exemption under Notification No. 175/86 based on the brand name used on weighing scales.
2. Time limit for raising duty demand.
3. Use of brand name "Terraillon" and its implications on exemption eligibility.
4. Assessment of duty based on sales realization and Modvat credit.
5. Consideration of penalty and re-computation of duty.

Eligibility for Exemption:
The appellant, a Small Scale manufacturer of weighing scales, manufactured goods under an agreement with Terraillon of France. The issue revolved around the eligibility for exemption under Notification No. 175/86, which stated that goods bearing another person's brand name would not be eligible for exemption. The appellant was directed to pay duty as the weighing scales bore the brand name "Terraillon," belonging to the French company. The appellant argued that "Terraillon" was a house mark, not a brand name of the foreign company. However, the Tribunal rejected this argument, citing a previous case that held using a foreign company's brand name would disqualify goods from exemption.

Time Limit for Duty Demand:
The appellant contended that the duty demand was beyond the time limit as it was not raised within six months. They claimed a bona fide belief that using another person's brand name would not affect exemption eligibility, citing a stay order by the High Court of Allahabad. The Tribunal dismissed this argument, stating that the stay order did not constitute a decision on exemption eligibility. The duty demand was upheld based on the use of the brand name and the timeline of events.

Use of Brand Name and Exemption Eligibility:
The appellant admitted to using the brand name "Terraillon" in their reply to the show cause notice. The Tribunal rejected the appellant's defense that using a foreign company's brand name that did not operate in India would not affect exemption eligibility. It was established that using a foreign company's brand name would disqualify goods from exemption, as per previous judgments. The appellant's plea based on a bona fide belief was also dismissed, as interim stay orders from the High Court did not establish eligibility to exemption.

Assessment of Duty and Modvat Credit:
Regarding the assessment of duty, the Tribunal referred to a previous case stating that sales realization should be treated as cum-duty price, and assessable value should be calculated after excluding duty elements from the sale price. The appellant's claim for Modvat credit was deemed valid, and the case was remanded for re-computation of duty considering these factors. A proportionate reduction in penalty was also suggested.

Penalty and Re-Computation of Duty:
The appeal was disposed of by remand, instructing the Adjudicating Authority to recompute the duty and adjust the penalty based on the Tribunal's observations. The duty calculation was to be revised considering the sales realization, Modvat credit, and other relevant factors to ensure accurate assessment.