2017 (1) TMI 422 - AT - Central Excise

SSI exemption - clubbing of clearances - use of brand name of others - The appellant claims to be a job-worker for the second unit M/s Hem Agro Industries (trader) in addition to manufacturing tractor-trailors on its own account - Held that - the two units have been artificially segregated to take advantage of the exemption available to small scale units, no effort has been put in by either of the two, on earlier occasions, and, in these proceedings, by the purported job-worker to establish that M/s Hem Agro Industries has a manufacturing facility where some production activity is undertaken on the tractor-trailors supplied by the appellant. In the absence of any evidence to the contrary and, considering the negligible scope for any further operation on branded tractor-trailors , it would appear that the second unit is merely a trading unit which disentitles them to eligibility for any exemption whatsoever. Use of brand name - Held that - The claim of the appellant to ownership of the brand Ishan arising from the finding that clearances should be clubbed does not appear to rest on sound foundation. That clearances are to be clubbed is the finding consequent upon the lack of evidence that M/s Hem Agro Industries is devoid of wherewithal to manufacture; hence, the manufactured product of the appellant is entirely attributed to appellant for levy of duty. The ownership of the brand remains with M/s Hemraj Agro Industries irrespective of the finding that the entire manufacturer is effected by the appellant. Invoking of penalty under rule 173Q of Central Excise Rules, 1994 is not a flaw in the impugned order. Appeal rejected - decided against appellant.

Summary

Issues:
Demand of duty for manufacturing tractor-trailors bearing a specific brand name under Central Excise Act, 1944 exemption eligibility, job-worker status, ownership of brand, extended period invocation, penalty under Central Excise Rules, 1994.

Analysis:

1. Duty Demand for Manufacturing Tractor-Trailors:
The appeal pertains to a demand of duty imposed on the appellant for manufacturing tractor-trailors bearing a specific brand name. The impugned order restricted the interest and penalty amounts, setting aside other penalties imposed by the original authority.

2. Exemption Eligibility and Job-Worker Status:
The proceedings were based on the appellant's ineligibility for exemption under a specific notification due to manufacturing goods with a brand name belonging to another entity. The appellant claimed to be a job-worker for the brand owner, but the authorities found that both units were artificially segregated to claim exemptions simultaneously, rendering the clearances ineligible.

3. Ownership of Brand and Extended Period Invocation:
The appellant claimed ownership of the brand, but the lack of evidence of the brand owner's manufacturing facility led to the conclusion that the manufactured product should be attributed solely to the appellant for duty levy. The extended period was invoked based on the intent to evade duty, as evidenced by the lack of awareness of exemption notifications.

4. Penalty and Cum-Duty Computation:
The impugned order included penalties under specific rules but set aside certain penalties imposed by the original authority. The order also granted cum-duty computation of assessable value, indicating a fair consideration of penalties.

In conclusion, the appellate tribunal found no reason to interfere with the impugned order and rejected the appeal, upholding the duty demand and penalties imposed. The judgment highlights the importance of compliance with exemption notifications, job-worker status verification, and the implications of brand ownership in duty liability assessments.