2000 (9) TMI 698 - AT - Central Excise

Issues Involved:
1. Eligibility for exemption under Notification No. 96/86-C.E. and Notification No. 80/90-C.E.
2. Use of the brand name 'Lovelites' and eligibility for small scale exemption under Notification No. 175/86-C.E.
3. Alleged suppression of production and clandestine removal of goods.

Detailed Analysis:

1. Eligibility for exemption under Notification No. 96/86-C.E. and Notification No. 80/90-C.E.

The Department alleged that M/s. Kapoor Lamp Shade Company (hereinafter referred to as 'M/s. Kapoor') manufactured two categories of lights: those made of glass and those not made of glass. It was claimed that M/s. Kapoor irregularly claimed exemption under Notification No. 96/86-C.E. and Notification No. 80/90-C.E. for lamps made of glass, which were cleared as non-glass lamps. The Commissioner of Central Excise, Delhi-II, held that M/s. Kapoor were entitled to the benefit of exemption under Notification No. 80/90-C.E., based on the verification by Departmental Officers and Board's Circular No. 8/91. Consequently, the demand of Rs. 19,46,981/- was dropped.

2. Use of the brand name 'Lovelites' and eligibility for small scale exemption under Notification No. 175/86-C.E.

The Department alleged that M/s. Kapoor affixed the brand name 'Lovelites' on their products, which did not belong to them, making them ineligible for the small scale exemption under Notification No. 175/86-C.E. The Commissioner disagreed with M/s. Kapoor's contention that the brand name belonged to them, ruling that they were not entitled to the exemption and confirming duty liability of Rs. 16,52,557/- as basic excise duty and Rs. 82,628/- as special excise duty. M/s. Kapoor argued that the brand name was only mentioned on tags attached to the packages and not on the goods themselves, citing Tribunal decisions to support their claim. They also asserted that the brand name belonged to their family and was assigned to them under a Deed of Assignment, which was not registered due to it being a family arrangement.

3. Alleged suppression of production and clandestine removal of goods

The Department alleged that M/s. Kapoor suppressed production and clandestinely removed goods without accounting for and paying central excise duty. The Commissioner found these allegations substantiated, confirming a total duty of Rs. 19,46,981/- and imposing a penalty of Rs. 20,00,000/-. M/s. Kapoor contended that there was no willful suppression and that they operated under a bona fide belief regarding the brand name's ownership. They also argued that the demand was time-barred, as the show cause notice was issued on 28-7-1993 for the period from July 1988 to March 1991. They referred to an earlier show cause notice dated 3-9-1991, which had been withdrawn, and argued that no penalty could be imposed if the demand was time-barred.

Extended Period of Limitation

The Tribunal examined whether the extended period of limitation was justified. M/s. Kapoor were a duty-paying licensed unit, availing Modvat credit and filing classification and price lists regularly. The Tribunal noted that a similar show cause notice dated 3-9-1991 had been issued and subsequently withdrawn, with the adjudicating authority finding M/s. Kapoor entitled to the exemption. The Tribunal concluded that there was no suppression of facts to justify invoking the extended period of limitation for the demand.

Conclusion

The Tribunal allowed the appeal on the ground of limitation alone, without addressing other issues. The appeal was accepted, and consequential benefits were granted to M/s. Kapoor as per law.

← Previous Next →