2015 (11) TMI 1245 - AT - Central Excise

Denial of SSI Exemption - Use of other s brand name - Seizure of goods - Imposition of redemption fine and penalty - Held that - Appellant were manufacturing the brake linings using brand name-TVS and Rane and also brake linings using their brand or other brands which are not owned by any particular person or unbranded brake linings. The Commissioner in the impugned order has denied SSI Exemption in respect of only brake linings cleared under the brand names-TVS and Rane. However, the value of the goods whether sold under the brand name TVS and Rane or sold under other brand names or sold without any brand has not been determined on the basis of the price declared in the invoices. In this regard, the Commissioner in respect of the brake linings bearing brand name TVS and Rane has adopted the price at which the brand name owners were selling the same goods and the value of the goods of other brand or unbranded goods has been determined on the basis of the quotations given by the three traders M/s. Masu International, M/s. Serbestos Auto International and M/s. Minocha Metals (P) ltd. It is not the department s case against the appellant that the appellant had any agreement with TVS and Rane for manufacture of brake linings as per their standards and specifications and could use their brand name. The appellant were obviously using the brand name TVS and Rane on certain brake linings manufactured by them unauthorisedly and thus, the brake linings with the brand name TVS and Rane cleared by them have to be treated as duplicate brake linings. In view of these circumstances, in our view, there is no justification to value these brake linings at the price at which such brake linings were being sold by the brand name owners. The actual production of RPM has been determined on the basis of three registers recovered from the premises of RPM. The department, however, based on the statement of Shri Pradeep Kumar Goel and his factory Supervisor Shri Satender Kumar has taken the stand that this production has been recorded in the terms of sets, each set being of eight brake linings, while the appellants stand is that the production in these registers is not in sets but the numbers mentioned are the number of brake linings not of the sets of brake linings. There is nothing in the registers from which it can be inferred that the production recorded therein is in terms of sets. Though initially Shri Pradeep Kumar Goel had given the statement that the production recorded is in sets, this statement has been retracted by him. Though Shri Satender Kumar, Supervisor working in the RPM s factory had stated that the production has been recorded in sets., in our view without his cross-examination, his statement cannot be accepted at face value when his statement is not corroborated by any other evidence. - Production recorded in the three registers recovered from the premises of RPM is in terms of sets of brake linings is not sustainable and accordingly, the production recorded in these registers is to be treated as production of that many brake linings not of the sets of brake linings - Impugned order is set aside and the matter is remanded to Commissioner for re-quantification of the duty liability in terms of our observations in this order - Decided in favour of assessee.

Summary

Issues Involved:
1. Clubbing of clearances for SSI exemption.
2. Valuation of goods bearing brand names TVS and Rane.
3. Quantum of goods produced and cleared.
4. Confiscation and penalties imposed.

Detailed Analysis:

1. Clubbing of Clearances for SSI Exemption:
The department alleged that RPM Auto (RPM) and PEE KAY Enterprises (PKE) were controlled by the same family and their clearances should be clubbed to determine SSI exemption eligibility. However, the Commissioner found no independent evidence to support the assertion that accounts were maintained jointly for both units. Thus, the clubbing ceased to be an issue as there was no way to attribute production to either factory specifically.

2. Valuation of Goods Bearing Brand Names TVS and Rane:
The Commissioner denied SSI exemption for brake linings cleared under the brand names TVS and Rane and adopted the value based on the price lists of the brand name owners after a 40% discount. The appellants argued that these were duplicate goods and should not be valued at the same price as genuine goods sold by the brand owners. The Tribunal agreed, stating there was no justification to value these duplicate brake linings at the price at which such goods were sold by the brand name owners.

3. Quantum of Goods Produced and Cleared:
The department alleged underreporting of actual production, treating the figures in the registers seized from RPM as sets of brake linings (each set consisting of eight brake linings). The appellants contended that the figures represented individual brake linings, not sets. The Tribunal found no evidence in the registers to infer production in sets and noted the retraction of the initial statement by Shri Pradeep Kumar Goel. Without corroborative evidence, the Tribunal held that the production recorded in the registers should be treated as individual brake linings, not sets.

4. Confiscation and Penalties Imposed:
The Commissioner had ordered the confiscation of seized goods and imposed penalties under section 11AC of the Central Excise Act, 1944, and Rule 209A of the Central Excise Rules, 1944. The Tribunal directed re-quantification of the duty liability based on the correct valuation and quantum of goods, and stated that penalties should be imposed accordingly.

Conclusion:
The impugned order was set aside, and the matter was remanded to the Commissioner for re-quantification of the duty liability in line with the Tribunal's observations. The penalties under section 11AC on RPM and under Rule 209A on Shri Pradeep Kumar Goel would be according to the re-quantified duty demand.