1998 (6) TMI 431 - AT - Central Excise

Summary

Issues:
1. Whether the benefit of Notification No. 175/86 is available to the appellants when the material obtained by them was affixed with a brand name.

Analysis:
The case involved a dispute regarding the applicability of Notification No. 175/86 to the appellants who had obtained bare PCBs affixed with a brand name from suppliers. The Department initially issued a show cause notice disallowing the benefit of the notification due to the brand name affixed on the goods. A corrigendum alleged that the appellants manufactured goods for another company, leading to duty demand against them. The appellants argued that they did not affix the brand name and relied on a Tribunal decision stating that brand name embossed before receiving goods does not disqualify from the notification. They also argued that as the goods were not traded but used in manufacturing, the notification's provision did not apply based on another Tribunal decision. Additionally, they cited a proviso exempting component parts used as original equipment if certain procedures are followed, which they claimed to have substantially complied with. The Department reiterated the findings in the original orders.

The Tribunal found merit in the appellants' arguments, noting that the brand name was affixed before receiving the goods and not by the appellants themselves. Citing the Tribunal's decision in a similar case, upheld by the Supreme Court, the Tribunal ruled that the notification's provision regarding brand names did not apply. Additionally, as the goods were not traded but used in manufacturing, following another Tribunal decision, the benefit of the notification was deemed applicable to the appellants. The Tribunal also considered the proviso exempting component parts used as original equipment, stating that even if procedural requirements were not fully met, duty liability could not be imposed solely on that basis. Based on these findings, the appeals were allowed in favor of the appellants, overturning the duty demand confirmed by the Collector in the impugned orders.

In conclusion, the Tribunal's decision focused on the timing of brand name affixation, lack of trading in the goods, and substantial compliance with procedural requirements for exemption under the notification. The Tribunal's analysis emphasized the applicability of relevant legal precedents and interpretations to determine the eligibility of the appellants for the benefit of Notification No. 175/86, ultimately ruling in favor of the appellants and setting aside the duty demand imposed by the Collector.