2017 (3) TMI 601 - AT - Central Excise

SSI exemption - use of brand name of others - misdeclaration - denial on the ground that the appellants were using brand name of someone else to manufacture the products - Held that - while the appellants are desirous of acquiring the rights to manufacture and sell the mineral water under the trade mark, what has been assigned by the assignor is only the right to manufacture the mineral water at the Nasik plant of the assignee. It is apparent that the said deeed does not assign to right to sell the product under the said brand name. The trade mark has no value whatsoever, if one does not have any right to sell the goods. The assignment merely for the purpose of production of goods cannot be treated as sale of brand name in any manner. Thus, it is obvious that the appellants are not the owners of the brand name, but they have merely acquired the right to produce goods under the brand name without any rights to sell the goods under the said brand name - appeal dismissed - decided against appellant.

Summary

Issues:
Denial of SSI exemption based on brand name ownership, validity of deed of assignment, mis-declaration by appellant.

Analysis:
The case involved the appellants, engaged in manufacturing products under a brand name initially owned by a Singapore-based entity. The revenue authorities denied SSI exemption, alleging the appellants were using someone else's brand name. The lower authorities confirmed the demand and imposed penalties under Section 11AC. The appellants argued that they acquired the brand name through a deed of assignment from Indian Beverages Ltd., making it their own brand. They contended that the deed clearly stated the assignment for manufacturing mineral water at their plant in Nasik. The appellants claimed the authorities did not consider the details of the assignment properly. They also argued that the deed did not specify a period, which, according to them, indicated a one-time payment. The appellants asserted that they were not closely related to Indian Beverages Ltd. and there was no suppression of information on their part.

The appellate tribunal considered the arguments and the deed of assignment. The tribunal noted that the deed only assigned the right to manufacture the mineral water at the Nasik plant, not the right to sell the product under the brand name. The tribunal emphasized that owning a brand name without the right to sell the goods held no value. Therefore, the tribunal concluded that the appellants did not own the brand name but only had the right to produce goods under it. The tribunal found that the appellants' declaration of brand ownership under Rule 173B was false, indicating mis-declaration on record. Consequently, the appeal was dismissed, and the mis-declaration was established.

In summary, the judgment revolved around the denial of SSI exemption due to brand name ownership, the validity of the deed of assignment, and the mis-declaration by the appellants regarding brand ownership. The tribunal ruled that the appellants did not own the brand name but only had the right to manufacture goods under it. The mis-declaration on record led to the dismissal of the appeal.