2015 (4) TMI 75 - SC - Central Excise

Entitlement of the excise exemption in terms of exemption Notification No.1/93 dated 28.2.1993 - denial on the ground that the respondent is using the brand name of M/s. TISCO Ltd. i.e. TISCOG - Held that - It becomes clear that amendment was brought to deny the benefit of Notification to those SSI units which have been making use of branded good for another person irrespective of whether the brand name owner himself is SSI unit or not. It was also made abundantly clear here that the requirement of affixation or brand name by the SSI unit was immaterial. That was the purpose for substituting the word affixing by the word bearing . Going by the consideration this Court held in Australian Foods (India) (P) Ltd. case 2013 (1) TMI 330 - SUPREME COURT that after this amendment in para 4 it was not necessary that there has to be affixation of the name or mark on the goods. - impugned order of the CEGAT is untenable and not in accordance with law - non-payment of duty by the respondent was bona fide act, having nurtured a belief that it was not liable to pay the excise duty on the goods - Therefore, while setting aside the order of the Tribunal, we restore the order of the Commissioner only insofar as it pertains to imposition of excise duty in the sum of ₹ 34,67,164/- and set aside the penalties imposed in the said order. - Decided partly in favour of Revenue.

Summary

Issues Involved:
Entitlement of excise exemption under Notification No.1/93 for small scale industries; Interpretation of para 4 of the said Notification regarding brand name usage; Impact of amendments on the eligibility criteria for exemption; Imposition of penalty under Sec. 11A(C) of the Central Excise Act.

Analysis:
The case revolves around the entitlement of excise exemption under Notification No.1/93 for small scale industries, specifically focusing on para 4 which addresses brand name usage. The dispute arose when the Revenue denied the exemption to the respondent, a small scale industry, citing the usage of the brand name "TISCOG" belonging to another entity, TISCO Ltd., as per the authorization granted to the respondent. The Revenue contended that this usage fell within the scope of para 4, thus disqualifying the respondent from the exemption.

The central issue for determination was whether the absence of physically affixing the brand name on the goods by the respondent would exempt them from the provisions of para 4 of the Notification. The Court referred to precedent, notably the case of Commissioner of Central Excise, Chennai-II vs. Australian Foods India, to elucidate the impact of amendments on the eligibility criteria for exemption. The amendment substituted "affixes" with "bearing," emphasizing that the affixation of the brand name by the SSI unit was immaterial, and the key criterion was the goods bearing another person's brand name, irrespective of the affixation process.

The Court concluded that the CEGAT's decision, which relied on the unamended para 4, was untenable and not in accordance with the law. Additionally, the Court addressed the imposition of penalties under Sec. 11A(C) of the Act, acknowledging the respondent's bona fide belief in not being liable to pay excise duty. Consequently, the Court set aside the penalties imposed but upheld the Commissioner's order regarding the imposition of excise duty, thereby partially allowing the appeals without costs.

In summary, the judgment clarified the interpretation of para 4 of Notification No.1/93 concerning brand name usage for excise exemption eligibility for small scale industries. It highlighted the significance of the amendments in determining eligibility criteria and emphasized the bearing of the brand name on the goods, irrespective of affixation, as the decisive factor. The decision underscored the importance of adhering to the amended provisions and upheld the imposition of excise duty while setting aside the penalties imposed.