2015 (11) TMI 673 - AT - Central Excise

Benefit of small scale exemption - Use of brand name of others - brand name registered in favor of others for different goods - Notification 8/2003 dated 01/03/2003 - Held that - Appellant is using the brand/trade name for mixer grinder in class 7 while R.K.Fans and Allied Products for class 9 goods - appellant was using the brand name Vipanchi on mixer grinder while their customer was using the same brand name on other products, does not help the cause of the appellant. - Goods were bearing brand name Vipanchi along with logo of Veena belonging to R.K. Fans and Allied Products Ltd. while what is registered was Vipanchi . - after issuance of the first show cause notice, extended period cannot be invoked in the subsequent show cause notices. It is noted that the appellant was not registered and they did not take the registration even after issuance of the first show cause notice of 16th July 2007. We also note that the SSI units are generally required to file quarterly returns. It is also noted that the fact that the symbol Veena continues to be used on the mixer grinder as also on the cartons could be found only during the visit of the officials at the premises of the appellant. Vital facts were suppressed and thus, in our view, this is appropriate case for invoking the extended period of limitation in subsequent notice. We, therefore, do not see any infirmity in invoking the extended period of limitation in subsequent notices. Levy of penalty - From the day one it was very clear that the appellant was manufacturing the goods in their own brand name and entered into a contract with Shri A. Ramkishan, Director of R.K. Fans and Allied Products, to manufacture mixer grinder in their brand name to be exclusively supplied to them. There can be no doubt that they were manufacturing the goods in the brand name of others and that is exactly what the said notification prohibits to permit. In any case, the period involved in the present case is 2004 onwards when the decisions of the Hon ble Supreme Court on the issue were available and there could have been no doubt whatsoever relating to the interpretation of the notification. - Decided against assessee.

Issues Involved:
1. Eligibility for Small Scale Exemption under Notification No. 8/2003.
2. Validity and impact of the Memorandum of Understanding (MoU) on brand name assignment.
3. Applicability of extended period for issuing subsequent show cause notices.
4. Imposition of penalties on the appellant.

Detailed Analysis:

1. Eligibility for Small Scale Exemption under Notification No. 8/2003:
The appellant, engaged in manufacturing mixer grinders, claimed benefits under the Small Scale Exemption Notification No. 8/2003. However, investigations revealed that the appellant was manufacturing mixer grinders under the brand name 'Vipanchi' with the logo 'Veena,' belonging to M/s. R.K. Fans & Allied Products, Hyderabad. The goods were exclusively sold to M/s. R.K. Fans & Allied Products or their marketing arms. According to the Revenue, this disqualified the appellant from availing the small scale exemption, as the goods bore the brand name of another entity, violating the conditions of the exemption notification.

2. Validity and Impact of the Memorandum of Understanding (MoU) on Brand Name Assignment:
The appellant presented a MoU dated 10.06.2004, claiming that the brand name 'Vipanchi' was assigned to them by M/s. R.K. Fans & Allied Products. However, the Tribunal noted that the MoU was not mentioned during the initial investigations and was only produced much later. The MoU was not notarized or registered and did not constitute a legally enforceable deed of assignment. The Tribunal concluded that the MoU was merely an understanding about the business model and did not transfer the brand name rights to the appellant.

3. Applicability of Extended Period for Issuing Subsequent Show Cause Notices:
The appellant argued that the extended period could not be invoked in subsequent show cause notices following the first one. However, the Tribunal observed that the appellant had not registered or filed returns even after the first show cause notice. The continued use of the 'Veena' logo on the mixer grinders and cartons indicated suppression of vital facts. Therefore, the extended period of limitation was appropriately invoked in subsequent notices.

4. Imposition of Penalties on the Appellant:
The appellant contended that penalties should not be imposed as the issue pertained to the interpretation of the notification. The Tribunal rejected this argument, noting that the appellant was clearly manufacturing goods under another's brand name, which the notification explicitly prohibits. The Tribunal emphasized that the appellant's actions were in direct violation of the notification, and the penalties were justified.

Conclusion:
The Tribunal upheld the duty demand and penalties imposed on the appellant, dismissing all appeals. The appellant was found ineligible for the small scale exemption due to the use of another's brand name, and the extended period for issuing subsequent show cause notices was deemed valid. The MoU presented by the appellant was not recognized as a valid deed of assignment, and the penalties were affirmed as appropriate.

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