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TMI Blog2025 (1) TMI 534X X X X Extracts X X X X X X X X Extracts X X X X ..... The use of brand name SaBARI in the instant case can be termed as fortuitous, there being no intention on the part of the appellant to use the said brand name to show a connection with the Assessee s goods and such other person - the Appellant is entitled to SSI exemption under Notification No. 08/2003 as amended. Quantification of duty payable - HELD THAT:- It appears that invoice wise sale turnover for all the years has been arrived at by the investigation. But the reasons for not allowing deductions towards Bought out items, value of supplies to SEZs and post manufacturing expenses are not forthcoming. As such, for quantification of the duty, the issue is remanded to the Original Adjudicating Authority for arriving at the taxable turnover allowing the benefit of the SSI exemption. Invocation of Extended period of limitation - HELD THAT:- The Sabari brand name was registered for different items by different persons and there is no clash of interest while using this brand name for manufacture and sale of kitchen appliances by the Appellant. The arguments that the Appellant is of genuine impression that he is eligible for SSI exemption is acceptable. As such, there is no justifica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act) appropriating Rs.4,48,558/- paid towards the said demand, and imposing equal penalty on Appellant-A1 under Section 11 AC of the ACT and Rs.5,00,000/- on Appellant-A2 under Rule 26 of Central Excise Rules, 2002 (Rules). 2. Facts briefly stated are that, the Appellant-A1 was engaged in the manufacture and clearance of various kitchen equipments under their brand name SaBari which was used on all their manufactured products since 01.01.2004. They have also mentioned the brand name in their invoices, products and brochures. The Appellant-A1 was availing the benefit of SSI Notification No. 8/2003-CE dated 01.03.2003. DGCEI conducted an investigation during January 2014, and it was alleged that appellant was using the brand name SaBari , which belonged to others and hence not eligible for SSI exemption and therefore liable to pay duty during the period from March 2010 to December 2014. A Show Cause Notice was issued to Appellant A1, seeking to deny the SSI exemption and demand duty of Rs.99,42,427/- under Section 11A(1)/11A(4) of the Act along with applicable interest and to impose penalty under Section 11 AC of the Act read with Rule 25 of the Rules and to impose penalty on Appella ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such value was excluded, the turnover would be less than Rs.1.5 crores for all the years. However, for 2013-14 and 2014-15, appropriate duty was paid after crossing exemption limit of Rs.1.5 crores by including the excludable turnover. Therefore, there is no more duty liability on their part. 4.1 The Ld. Counsel Shri S. Durairaj representing the Appellants reiterated the averments in the Grounds of Appeal and further submitted that usage of brand name should indicate a connection during the trade to fall under the definition of brand name as defined in Explanation A of Notification No. 8/2003-CE dated 01.03.2003 and that the impugned order failed to adduce any evidence to establish the connection with another person in whose name, this brand name was registered. 4.2 The Ld. Counsel submitted that they have been using the brand name since 01.01.2004, which was designed by them without any objection from others. It was pointed out that in 2014, Appellants applied for registration of trademark and an additional application was also made and no objection was raised by others including the Commissioner of Central Excise/Dept under Section 21 of Trademark Act, 1999. Registration was gran ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eration in these appeals are: - i. Whether the Appellant A1 is entitled to SSI exemption under Notification No. 8/2003 as amended, when they were using the brand name of others? ii. Whether the duty demand is hit by limitation? 8. We find that the instant appeals are against the impugned order dated 23.2.2016 demanding duty of Rs.99.42 lakhs from the Appellant A1 and imposing penalty of Rs.99.42 lakhs. The impugned order has also imposed a penalty of Rs.5,00,000/- on the Managing Director (A2). The period is from March 2010 to December 2014. The benefit of Notification No. 8/2003-CE dated 01.03.2003 was denied by alleging that the appellants were using the brand name SaBari , which reportedly belongs to others and so duty was demanded denying the benefit of SSI exemption. 9. The question for determination is whether the Appellant A1 is entitled to exemption of Notification No. 8/2003-C.E. as amended. Under this Notification certain goods were exempted from payment of excise duty upto the aggregate value of clearances of Rs.1.5 crores in a financial year subject to certain specified conditions detailed therein. However, the exemption is not available if the goods bore a brand name o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... earing No. 213/41/88-CX.6, dated 30.12.1988 which, inter alia, purports to clarify as follows: - 2. The facts of the case are that a small scale unit A are the owners of the trade mark HOTLINE with respect to the commodity gas stoves. The same trade mark HOTLINE is also owned by another company B but for the commodity television. The company B was however not eligible for exemption under Notification 175/86, dated 1-3-1986. The position thus was that the trade mark HOTLINE was simultaneously owned by two manufactures, one eligible for exemption under Notification No. 175/86, dated 1-3-1986 but not the other. The Assistant Collector denied the company A exemption under notification No. 175/86, dated 1-3-1986 on the ground that the trade mark/brand name belonged to the company B which was not eligible for the said exemption. For this the Assistant Collector relied on the amendment carried out to Notification No. 175/86, dated 1-3-1986 by Notification No. 223/87, dated 22-9-1987 inserting paragraph 7 in the former notification. 3. The matter has been examined by the Board. It is observed that as per section 8 of the Trade and Merchandise Marks Act, 1958, a trade mark can be registered ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tangen Immuno Diagnostics (2015) 11 SCC 761, wherein this Court while considering an earlier judgment in Bhalla Enterprises (supra) has noted the observations made therein, as under: The apprehension of the assessees that they may be denied the exemption merely because some other traders even in a remote area of the country had used the trade mark earlier is unfounded. The notification clearly indicates that the assessee will be debarred only if it is uses on the goods in respect of which exemption is sought, the same/similar brand name with the intention of indicating a connection with the assessees goods and such other person or uses the name in such a manner that it would indicate such connection. Therefore, if the assessee is able to satisfy the assessing authorities that there was no such intention or that the user of the brand name was entirely fortuitous and could not on a fair appraisal of the marks indicate any such connection, it would be entitled to the benefit of exemption. An assessee would also 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 such name. 13. On noting the afor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssions made by the Department representative before the CESTAT, the controversy between the parties would now have to be examined. As already noted, the show cause notice proceeded on the basis that the appellant(s) herein was using the brand name of SUNCA as it had imported moulds from M/s. Mikura Impex, which had a brand name of SUNCA, but the said line of argument was given up by the Department representative before CESTAT. It was contended that the brand name SUNCA, in fact, was a registered brand name of M/s. Sun Fat (Holding) Co. Ltd., which was a manufacturer of re-chargeable lamps and batteries and in the instant case the appellant was also in the same line of manufacturing, namely, the manufacturing of emergency lamps. Therefore, there was a usage of a well known brand name SUNCA by the appellant(s), although it was registered by M/s. Sun Fat (Holding) Co. Ltd., which did not make a difference to the denial of the benefit of exemption to the appellant(s). The said contention of the Department representative found favour with the CESTAT and on that basis the appellant(s) herein was denied exemption under the Notification in question. We have quoted in detail the observation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the benefit of exemption to the appellant(s) herein. In the circumstances, we hold that the show cause notices were issued on an erroneous premise inasmuch as the Department itself had changed its line of arguments before CESTAT. Therefore, the show cause notices are quashed, the order of the CESTAT is set aside and the order of the Appellate Commissioner is restored Thus, it has been held by the Apex Court that if there is no intention to disclose any business connection or that the use of the brand name is entirely co-incidental or fortuitous and on a fair appraisal of marks no connection could be established, then the Assessee would be entitled to the benefit of exemption. In order to avail the benefit of SSI Notification, the Assessee needs to establish that his product is not associated with other person who is the brand owner. The Assessee must have affixed the brand name of another person on his goods with the intention of indicating a connection between the Assessee s own goods and the goods of another person to become disentitled for the benefit of the exemption. The Assessee would also be eligible for exemption benefit if the brand name belongs to Assessee himself. 13. On ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n computed and paid the appropriate duty after availing the SSI exemption limit of Rs.1.5 crores for the years 2013-2014 and 2014-2015. Whereas the impugned Order-in-Original No. 03/2016-Commr. dated 23.02.2016 had demanded duty of Rs.99,42,427/- for the years from March 2010 to December 2014 alleging that they are not eligible for the SSI exemption under Notification No. 8/2003-CE dated 01.03.2003 as they were using the brand name of others. In view of these submissions by the Appellant, it is required to arrive at the taxable turnover for the disputed period on the basis of financial statements, records and documents submitted by the Appellant. It appears that invoice wise sale turnover for all the years has been arrived at by the investigation. But the reasons for not allowing deductions towards Bought out items, value of supplies to SEZs and post manufacturing expenses are not forthcoming. As such, for quantification of the duty, the issue is remanded to the Original Adjudicating Authority for arriving at the taxable turnover allowing the benefit of the SSI exemption. 16. The Ld. Advocate Shri S. Durairaj has also argued on invocation of extended period. He has submitted that t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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