2018 (9) TMI 902 - AT - Central Excise

Penalty - SSI Exemption - use of Brand Name of others - only allegation against the appellant is that they dealt with the goods on which duty was not discharged - Held that - The penalties imposed under Rule 26 are excessive and requires interference - the penalties imposed on M/s. Raj Ganesh Enterprises is reduced from ₹ 5,00,000/- to ₹ 1,50,000/-; M/s. Sowbaghya Enterprises Pvt. Ltd. is reduced from ₹ 5,00,000/- to ₹ 1,50,000/- and M/s. Sowbaghya Enterprises Pvt. Ltd. is reduced from ₹ 1,00,000/- to ₹ 50,000/- - Appeal allowed in part.

Summary

Issues involved:
Penalties imposed under Rule 26 of Central Excise Rules, 2002 on manufacturing units for non-discharge of central excise duty and misuse of brand name.

Analysis:
The case involved M/s. Sri Ganapathi Marketing and M/s. Annapoorani Industries manufacturing wet grinders under the brand name "Sowbaghya." Show cause notices were issued due to suspicions of non-payment of central excise duty and misuse of the brand name. The original authority confirmed the demand, interest, and penalties, which were upheld by the Commissioner (Appeals). The appellants challenged the penalties under Rule 26 before the Tribunal.

The appellants argued that the brand name "Sowbaghya" belonged to a different entity initially and was later assigned to Sowbaghya Enterprises Pvt. Ltd. They claimed that the manufacturing units were instructed to operate in rural areas, but they violated this instruction by operating outside rural areas. The main appellants, Sri Ganapathi Marketing and Annapoorani Industries, did not appeal the duty demands. The appellants sought to set aside the penalties due to the units' non-compliance with instructions.

The Assistant Commissioner (AR) supported the penalties, stating that the manufacturing units were guilty of violating the Central Excise Act by using the brand name without discharging duty. After reviewing the submissions and records, the Tribunal found that the main appellants had not appealed the duty demands. Considering the circumstances, the Tribunal deemed the penalties excessive and intervened. The penalties for the appellants were reduced significantly: M/s. Raj Ganesh Enterprises from Rs. 5,00,000 to Rs. 1,50,000; M/s. Sowbaghya Enterprises Pvt. Ltd. from Rs. 5,00,000 to Rs. 1,50,000; and M/s. Sowbaghya Enterprises Pvt. Ltd. from Rs. 1,00,000 to Rs. 50,000.

In conclusion, the Tribunal modified the impugned order by reducing the penalties for the appellants while upholding the remaining portions of the order. The appeals were partly allowed in favor of the appellants.