2014 (6) TMI 851 - AT - Central Excise

Denial of SSI exemption - Manufacturing in name of other person - Held that - Investigation result revealed discovery of the fact that the business activities of M/s, Soft Pharmaceuticals was carried out from the premises of the respondent situated at 47-48, Industrial Area, Phase-II, Chandigarh, where Administrative Office of the said office was functioning. Shri M.D. Sharma, Representative of M/s. Soft Pharmaceuticals sits in the administrative office of the respondent. The respondent categorically stated in the statement recorded under Section 14 of the Central Excise Act, 1944 that it had manufactured and sold goods under the brand name SOFT Pharmaceuticals w.e.f. April, 2003. The investigating officers when examined invoices no. 1 dated 1.4.2003 to Invoice no.1524 dated 30.08.2003 along with pamphlets found that product carried out the brand name SOFT Pharmaceuticals and that also carried the logo SOFT Pharmaceuticals . Although a statement was given that Soft Pharmaceuticals was promoter of the product manufactured by the respondent that could not be established by the respondent. The respondent also discharged duty liability upon investigation results and discovery of the materials in the course of investigation - When record reveals aforesaid factual matrix based on evidenced and unlawful benefit was enjoyed by respondent, in absence of rebuttal leading cogent evidence by respondent for SOFT Pharmaceuticals brand belonged to it. Revenue should succeed in its appeal - respondent failed to satisfy condition of SSI benefit manufacturing branded goods of others not proving that the brand name was its own - Decided in favour of Revenue.

Summary

Issues:
1. Interpretation of brand ownership in manufacturing drugs.
2. Claim of SSI exemption based on brand ownership.
3. Reversal of cenvat credit and duty liability.

Analysis:
1. The appeal dealt with the issue of whether the respondent manufactured drugs under the brand name of 'SOFT Pharmaceuticals' belonging to another entity. The Revenue contended that the respondent issued invoices with the 'SOFT Pharmaceuticals' logo and claimed SSI exemption, while the Commissioner (Appeals) held that the respondent manufactured its own branded goods. The Revenue argued that the brand ownership did not belong to the respondent based on evidence from the proprietor and show cause notices.

2. The investigation revealed that business activities of 'Soft Pharmaceuticals' were conducted from the respondent's premises, with a representative of 'Soft Pharmaceuticals' present in the administrative office of the respondent. The respondent admitted to manufacturing and selling goods under the 'SOFT Pharmaceuticals' brand. Invoices and pamphlets confirmed the branding, and the respondent discharged duty liability upon investigation. The Adjudicating authority emphasized the importance of statements and evidence in proceeding against the respondent.

3. The Revenue relied on a judgment from the Bombay High Court regarding the satisfaction of conditions for SSI benefit. The court highlighted the presence of multiple logos on the product as a factor affecting eligibility for benefits. As the respondent failed to prove brand ownership and satisfy SSI benefit conditions, the Revenue's appeal was allowed, overturning the Commissioner (Appeals) decision. The judgment emphasized the need for clear evidence and compliance with benefit conditions for successful appeals.