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TMI Blog2007 (9) TMI 3X X X X Extracts X X X X X X X X Extracts X X X X ..... n under Notification No. 175/86-CE dated 1.3.1986 for the product 'CRC Acryform'. In their declarations they claimed the classification of the products 'CRC 2-26' under Chapter 2710.99 and 'CRC Acryform' under Chapter 3203.40. 4. On the basis of the material gathered during the routine transit checks and other information the Department issued show cause notice dated 12.2.1993 to the respondent-assessee calling upon it to show cause as to why Central Excise duty of Rs. 56,69,872.80p should not be demanded and recovered for the period 26.2.1988 to 24.10.1992. In the said show cause notice mainly 4 issues were raised, namely: (i) That the product 'CRC 2-26' was not a blended lubricating oil and was, therefore, not entitled to the benefit of Notification No. 120/84-CE dated 11.5.1984; (ii) That the product 'CRC Acryform' was not entitled to the benefit of Notification No. 175/86CE dated 1.3.1986 inasmuch as the product carried on it the brand name/trademark of a person not entitled to the benefit of the Notification; (iii) That the respondent-assessee was a dummy or a fagade ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , panel boards and other electrical and electronic gadgets primarily to prevent corrosion and for improving electrical properties. It was also submitted that the respondent-assessee was not entitled to SSI exemption for 'CRC Acryform' since the respondent-assessee manufactured and cleared goods in the brand name of M/s. BBL and also the logo of M/s. CRC Chemicals Europe. Further submission was that DCPL and BBL are related persons and relation led to under valuation of the goods. The respondent-assessee is guilty of suppression of facts warranting invocation of the extended period. 11. Shri D.B. Shroff, learned senior counsel for the respondent-assessee supported the findings and conclusion recorded by the Tribunal and reiterated the case of the respondent-assessee that he is entitled for the benefit of both the Notifications referred to hereinabove. 12. Broadly, the following issues arise for our consideration in these appeals namely: 1. Whether the product 'CRC 2-26' is a blended lubricating oil and thus is entitled to exemption under Notification No. 120/84? 2. Whether the respondent is entit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he requirements of the Bureau of Indian Standards requirements. The Department did not controvert the expert opinion given by the Professor. 14. Be that as it may, the Department itself drew samples on the said products on more than one occasion i.e. in 1984, 1990 and 1993. The Deputy Chief Chemist has given the test reports and communicated the same vide letter dated 3.5.1985 stating that the sample which forms of a liquid is composed of mineral oil and small amount of additives; 1990 analysis has been communicated vide letter dated 15.4.1991 stating that the sample is composed of mineral oils and additives, the percentage of mineral oil is more than 70% and the result of 1993 analysis was communicated vide letter dated 10.1.1994 specifically stating that it is a product primarily used as lubricant though it has anticorrosive properties also. It is well settled and needs no restatement at our hands that the test reports given by the Chemical Examiner are binding upon the Department in the absence of any other acceptable evidence produced by it in rebuttal. In the present case, the Department has neither produced any evidence to rebut the reports of the Che ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... emark 'CRC Acryform' as its own ever since 1987. It had applied to the Trademarks Registrar for registering the trademark as early as in the year 1992. The Trademark Registrar has registered 'CRC Acryform' as respondent's trademark on 14.10.1992 with retrospective effect from the date of use in the year 1987. It is true the registration of the trademark on 14.10.1992 after the commencement of lis between the parties by itself may not be binding on the Department but its evidentiary value cannot be altogether ignored. So far as the CRC Chemicals Europe is concerned it had given an affidavit and a certificate specifically stating that they do not manufacture and have not manufactured or sold any product under the name and style "Acryform" or "CRC Acryform" either in India or abroad and they have not claimed any title, right or ownership in the aforesaid names. This affidavit has been ignored altogether by the Commissioner on the ground that it was procured by the respondent-assessee and it was a false document. There is no evidence made available by the Department that the same trade name or brand name is used by some other company apart from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e categorically mention in the column relating to the process of manufacture as "blending of various anti-corrosive chemicals and solvents with mineral turpentine". It is mentioned that the product is a blended lubricating oil manufactured by blending mineral turpentine oil with anti-corrosive in a base of corrosive oil. The stand taken by the assessee is consistent as is evident from the letter dated 20.3.1985 addressed to the Superintendent of Central Excise that they were the manufacturers of 'CRC 2-26' which was a blended lubricant comprising of various anticorrosive oils and mineral turpentine oil and that the same was fully exempted under Notification No. 120/84. The required information was supplied to the Superintendent of Central Excise when he visited the factory of the respondent-assessee. Samples were again drawn in 1990 and 1993 to determine whether the product was not a lubricating oil. We have already referred to the analysis of the Deputy Chief Chemist who opined that the samples contained mineral oil which was more than 70% and additives. The chemical test reports so obtained by the Department were never put in issue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ord that the Excise Authorities had inspected the manufacture process, collected the necessary information and details from the respondent-assessee and even collected the samples and sent to chemical analysis. The Authorities were aware of the tests and analysis reports of the products manufactured by the respondent-assessee. The relevant facts were very much within the knowledge of the Department Authorities. The Department did not make any attempt to lead any evidence that there was any willful misstatement or suppression of facts with intent to evade payment of duty. 20. For the reasons aforesaid, we are of the view that the Tribunal did not commit any error in holding that the extended period of limitation was not available to the Department for initiating the recovery proceedings under Section 11A (1) of the Act. 21. So far as 'CRC Acryform' is concerned, the allegation was that the respondent-assessee did not mention about the license agreement in the classification lists. But the fact remains the copies of the labels on the product which were furnished to the Department at the time of filing declarations and classification lists contain inform ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ter alia contended that it is a wholly independent and separate company incorporated under the Companies Act, 1956 as early as on 21.5.1983 having two directors, namely Mr. N.J. Danani and his wife. A manufacturing unit was registered as a small-scale unit. It has no borrowings or loans from BBL or any other manufacturing unit. The machineries required for the purposes of manufacturing the products are purchased and owned by the respondent-company. The required raw materials and packing materials for manufacturing and packing the products were always purchased from its own resources and BBL in no manner exercises any supervision or control over the affairs of the respondent-company. 26. It is no doubt true that the registered office of BBL and the respondent-company was located in the same premises. The BBL owns the industrial gala in which respondent's factory exists for which the respondent-company pays market rent for its operation. The BBL before entering into a lease agreement on each occasion obtained a valuation report from an independent Valuer for the purposes of fixing the quantum of rent. The BBL entered into a lease agreement with th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd for expenses incurred by respondent for putting the logo and the name of BBL as also the cost of printing the leaflets, advertisement material provided to BBL." 29. The Tribunal after elaborate consideration of the matter and upon appreciation of the evidence found that BBL was a bulk buyer of the product manufactured by the respondent-assessee and there is nothing wrong in giving 40% discount. It was a normal trade practice. This Court in Metal Box India Ltd. Vs. Collector of Central Excise, Madras [1995 (75) ELT 449 (SC)] held that: "If a special trade discount is given to such a customer who is a buyer of 90% of goods, it would amount to a normal trade practice. At any rate it would not be an impermissible trade practice. In fact such type of concessions are usually given by manufacturers whose goods are lifted by whole-buyers whose availability avoids lot of marketing and advertising costs for the manufacturer and also ensures a guaranteed quantity of sales year after year. In order to keep such a wholesale monopolistic buyer attached to it, if under such circumstances by way of business expediency, the manufacturer offers him a sp ..... 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