2004 (11) TMI 106 - SC - Central Excise

SSI Exemption - Held that - CEGAT has held that the benefit of the Notification would be lost only if the manufacturer affixes the specified goods with a brand name or trade name of the another who is not eligible to the exemption under the notification. It could not be denied that the name Kirloskar is not affixed to the generating sets. CEGAT has held that merely because, in the invoices, the set is passed off as a Kirloskar generating set, the benefit of the Notification would not be lost. We see no infirmity in this reasoning. - Decided against Revenue.

Summary

Issues:
Interpretation of Notification No. 175/86 dated 1st March, 1986 regarding exemption for specified goods bearing a brand name or trade name of another person.

Analysis:
The appeal before the Supreme Court was against the Order of the Customs, Excise and Gold (Control) Appellate Tribunal (CEGAT), Calcutta dated 21st August, 1998. The Respondents are manufacturers of diesel generating sets, using components manufactured by Kirloskar. Although the generating sets do not bear the name Kirloskar, in the invoices issued to purchasers, they are described as "Kirloskar Generating sets." The adjudicating authority held that this description made them ineligible for the benefit of Notification No. 175/86 dated 1st March, 1986. This Notification exempts specified goods unless they bear a brand name or trade name of another person not eligible for the exemption. CEGAT interpreted that the benefit of the Notification would only be lost if the manufacturer affixes the specified goods with a brand name of a non-eligible person. Since the name Kirloskar was not physically affixed to the generating sets, CEGAT ruled that describing them as Kirloskar in invoices did not disqualify the Respondents from the exemption. The Supreme Court found no fault in this reasoning and dismissed the appeal, stating that there is no reason to interfere with CEGAT's decision.

In conclusion, the Supreme Court upheld CEGAT's interpretation of Notification No. 175/86, emphasizing that the physical affixation of a brand name is crucial for disqualifying goods from the exemption. Merely describing goods with a brand name in invoices does not affect their eligibility for the exemption. The Court's decision highlights the importance of strict adherence to the language and conditions specified in legal notifications to determine the applicability of exemptions in customs and excise matters.