SSI Units and Brand Name - Central Excise Practice Manual (OLD) - Central Excise

SSI Units and Brand Name SSI exemption is not available when goods are cleared from the factory bearing brand name or trade name belonging to others whether their brand name is registered or not. Thus if brand name does not belongs to any another person, SSI exemption will be available to the manufacturer. Connection of assessee, with other person or with his goods - If the same Brand Name is used by two manufacturers the assessee should be able to satisfy the assessing authority that there was no intention of indicating any connection with the assessee, the goods or such other person so as to indicate any such connection. Burden of proof - Burden of proof that the brand name does not belong to SSI is on the department. Thus if there is no proof (i.e. In the absence of certificate of ownership), that brand name belongs to some other person, by the Revenue to prove that such person's brand name was used by the assessee on his product, assessee would be entitled to exemption. Effective Date of Registration of brand name - Registration of brand name is effective from the date of application for registration and therefore benefits of SSI exemption are available on all clearances affected from the date of application for registration. Cases where SSI exemption is not available: - 1. If brand name belongs to sister concern. 2. If brand name belongs to non- manufacturing trader or to a Foreign company. 3. Where the assessee was using brand name in respect of some goods and the same brand name is used by another manufacturer for some other goods, assessee would not be entitled to SSI exemption (except where brand name is registered with both the manufacturer). 4. If assessee puts his own brand name in addition to other's brand name, SSI exemption is not available to the assessee. 5. Where the subsidiary company was using the brand name of the holding company, SSI exemption is not available to the subsidiary company as two are the separate units. 6. Use of part of a brand name would disentitle the person from getting the SSI exemption if it indicates the connection in the course of trade between the goods and some person using the trade mark. Cases where SSI exemption is available: - 1.Where the manufacturer manufactures components or parts cleared under the brand name of buyer for use as an Original Equipment (OE) in the manufacture of any equipment or machinery by the buyer, the exemption would be available subject to the provisions of Central Excise (Removal of goods at Concessional Rate of Duty for Manufacture of Excisable Goods) Rules 2001, in respect of clearances exceeding Rs.150lakhs and mere declaration to that effect in case clearances are less than Rs.150lakhs. 2. An assessee would be entitled to the benefit of the exemption if the brand name belongs to the assessee himself although someone else may be equally entitled to use such name. Thus if the same brand name is registered in the name of more than one person, in respect of different goods, the benefit of SSI exemption is still available to the owner. 3. Where the brand name is indicated on the invoice only, and not affixed on the goods SSI exemption is not deniable. 4. Where two persons hold the trade name jointly but manufactures in different territory, SSI exemption is still available. 5. Affixation of promoter's logo along with the assessee's own brand name, the benefit of SSI exemption is still available as logo cannot be considered as brand name. Similarly where the logos of two companies are same but their brand names are different, SSI exemption cannot be denied. However, now SSI units will have to be extremely careful while putting words 'In technical collaboration' or name of group to which it belongs. Even putting name of the marketing company should be avoided to be on a safe side. 6. Assignment of brand name will entitle the assessee the owner of the brand name and therefore benefit of SSI exemption cannot be denied to the assessee. 7. Using the name of the licensor along with its own brand name would not disentitle the assessee from SSI exemption. 8. As the brand name is in respect of final products, it was held that SSI unit manufacturing metal labels, castings and forgings bearing brand name/monograms of Customers which was used for further manufacturing by the customer will be eligible for SSI exemption. However if the branded castings are traded in the market as such, SSI exemption will not be available. 9. Affixation of buyer's name for identification or for distinguishing the buyers will not disentitle the assessee from SSI exemption. For ex. the name of electricity board to which electric meters are supplied by the SSI unit, mere embossing if the customer's name on the product will not amount to use of any brand name. 10. Where a deceptively similar brand name is affixed by a manufacturer, the SSI exemption will still be available. 11. If the brand name is not registered in any one's name or if no one is claiming ownership of brand name it does not belong to anyone even if the mark is used by different manufactures, SSI unit will be eligible for exemption. 12. The brand name must be on the goods at the time of clearance from the factory. If after clearance the buyer is affixing the label, the manufacturer is eligible for SSI exemption. 13. The use of House Mark by the assessee will not deny him from the benefits of SSI exemption as there is a clear distinction between House mark and Product mark (Brand name) - House mark is an identification of the manufacturer whereas the product mark or brand name is one by which product is identified. Thus where the assessee is using brand name together with House mark in form of symbol/monogram to indicate that it belongs to the particular group, it was held that SSI exemption is not deniable. Similarly, Registration of product profile or designs under Copyright Law is different from the registration of product manufactured and sold in the market under brand name. 14. Even if the Brand name belongs to some other person SSI exemption is available to the assessee, but only if Brand name belongs to the following persons: - Khadi and Village Industries Commission State Khadi and Village Industries Board National Small Industries Corporation State Small Industries Development Corporation State Small Industries Corporation 15. Goods manufactured under other's Brand name will be exempt from duty in respect of 1 st turnover of Rs.150lakhs, if the goods are manufactured in Rural Area. 'Rural Area' means the area comprised in a village as defined in the land revenue records, excluding (i) Area under any municipal committee, municipal corporation, town area committee, cantonment board or notified area committee or (ii) Any area that may be notified as an urban area by State Government or Central Government. It is better to obtain certificate from State govt. Revenue Authorities that the Factory is within the Rural Area, even a metropolitan area may come under Rural area if it is outside the preview of the definition of 'metropolitan area'. Special Relief with effect from 1-9-2008 Vide Notification no. 47/2008 dated 1-9-2008 -Central Excise Central Excise Exemption scheme to SSI unit amended in respect of use of brand name. It provides that the benefit of the exemption shall be available to goods bearing the brand name or trade name of another person if they are in the nature of packing materials, namely, printed cartons of paper or paper board, metal containers, HDPE woven sacks, adhesive tapes, stickers, PP caps, crown corks and metal labels. The amendment comes into effect on the 1st of September, 2008 and shall be available for a turnover of these goods not exceeding Rs. 90 lakh in the remaining part of this financial year