2013 (9) TMI 54 - AT - Central Excise

SSI Exemption under Notification No.8/2003 - Brand Name - More than one owner - Revenue was of the view that the appellants were using the brand name of another person and the factory was not located in a rural area and the exemption under Provision 4 of Notification 8/2003 was not available to them - Held that - They were the owners of brand name Vivek and the brand name belongs to the family - It was argued by the appellants that the Hon ble Civil Court have accepted and declared the ownership of the brand name to the family or to each of the applicant, therefore the benefit ought to have been extended - There can be more than one owner of the brand name - The appellants also pointed out that the original adjudicating authority ignored the clarification issued by C.B.E. & C. bearing No. 52/52/94 wherein it was clarified that unless the brand is proved to have been owned by some other person, the benefit cannot be denied. They also contended that the demand is barred by limitation and imposition of penalties and redemption fine on the seized goods are not sustainable. Extended Time-Limit - In terms of rule 173B of the Central Excise Rules, 1944 no responsibility was cast on the appellants to declare the trade name or brand name affixed by them on their goods - the extended period of limitation was not invocable in the case - The order confirming the demand for the period beyond six months under the proviso to Section 11A of Central Excise and Salt Act, 1944 was not sustainable and the differential duty if any was to be recovered only in respect of clearances during the normal period of limitation i.e. 6 months from the date of show cause notice. Stay Application - Financial Hardship - Prima facie strong case both factually and legally in favour of the appellants - Their financial condition was very bad primarily due to the recession in the market and produced copy of the balance sheet and profit and loss account for the year ended 31-3-2011 - Assessee had very strong legal case stay may be granted waiving any pre-deposit - stay granted.

Summary

Issues involved:
Applicability of SSI exemption under Notification No. 8/2003-C.E. to partnership firms manufacturing specific machines using a brand name owned by another person, misuse of object and SSI exemption schemes, extended period for demand of duty, imposition of penalties and confiscation of goods, ownership of brand name, financial condition affecting stay application.

Analysis:

1. Applicability of SSI exemption under Notification No. 8/2003-C.E.:
The partnership firms engaged in manufacturing specific machines claimed SSI exemption under Notification No. 8/2003-C.E. However, the department contended that as they were using a brand name owned by another person, they were ineligible for the exemption. The original adjudicating authority confirmed the demand, interest, penalties, and confiscation of goods. The firms argued that they were the owners of the brand name "Vivek" and cited legal precedents supporting their claim that multiple owners of a brand name are permissible. The authority found a misuse of the SSI exemption schemes to disentitle manufacturers using another's brand name.

2. Ownership of brand name:
The firms claimed ownership of the brand name "Vivek," stating it belonged to the family. They referred to a civil court order supporting their ownership claim. The original adjudicating authority noted the admission by another firm that the brand name belonged to them, questioning the family ownership claim. The authority emphasized the misuse of brand names to ensure benefits reach specific manufacturers not using branded products.

3. Extended period for demand of duty:
The authority justified invoking the extended period as the firms were intentionally misusing the exemption scheme. They reworked the duty value for specific periods and accepted the firms' argument regarding cum duty price for determining assessable value. However, the proposal for imposing personal penalties was rejected due to lack of evidence of knowledge or belief regarding duty liability.

4. Financial condition affecting stay application:
The firms highlighted their poor financial condition due to market recession, presenting financial documents. The legal representative argued for waiving pre-deposit based on a strong legal case. The appellate tribunal considered the firms' financial situation and the strength of their case, granting the stay petitions and waiving pre-deposit until finalization of the case.

In conclusion, the appellate tribunal allowed the stay petitions based on a prima facie assessment of the case, emphasizing that the final decision on the issues would be made later. The judgment highlighted the complexities of brand ownership, misuse of exemptions, extended periods for duty demand, and the impact of financial conditions on stay applications.

This detailed analysis of the judgment from the Appellate Tribunal CESTAT AHMEDABAD provides a comprehensive understanding of the legal issues involved and the arguments presented by the parties, leading to the final decision on the stay petitions filed by the appellants.