Custom, Excise & Service Tax Tribunal
Aar Aar Metal Refinery vs Commissioner Of Central Excise on 21 August, 2017
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL SOUTH ZONAL BENCH CHENNAI Appeal No. E/309/2008 [Arising out of Order-in-Appeal No.21/2008 (M-II) dt. 24.03.2008 passed by the Commissioner of Central Excise (Appeals), Chennai] Aar Aar Metal Refinery Appellant Versus Commissioner of Central Excise, Chennai-II Respondent
Appearance:
Shri M. Karthikeyan, Advocate For the Appellant Shri K.P.Muralidharan, AC (AR) For the Respondent CORAM :
Honble Ms. Sulekha Beevi C.S. Member (Judicial) Honble Shri Madhu Mohan Damodhar, Member (Technical) Date of hearing / decision : 21.08.2017 FINAL ORDER No.41775/2017 Per Bench The facts of the case are that the appellant is engaged in the manufacture of Aluminium and Aluminium Alloy Ingots falling under heading 7601 and they are availing SSI Exemption. The appellant is a proprietary concern owned by Shri R.Krishnan. The mould and dies required for manufacture of the above ingots were obtained by the appellant from M/s. R.K. Metal Industry (RKMI, for short) which is a proprietrix concern owned by Smt. K. Vijaya, W/o of Shri R.Krishnan, who is the Manager in the said unit and the said unit is not availing any SSI Exemption. The said mould and dies bore the marking R K I and accordingly, the ingots manufactured using such moulds and dies also had the marking R K I on it. The appellant was issued with a SCN dated 3.10.2006 proposing to demand duty of Rs.28,99,487/- with interest for the period from October 2001 to August 2006 on the ground that since the ingots manufactured bore the marking R K I which is nothing but brand name of another person viz. M/s. R.K.Metal Industry, the appellant is not entitled for the SSI Exemption. The Additional Commissioner of Central Excise, Chennai II Commissionerate vide his Order in Original No.1/2007 dated 09.01.2007 confirmed the duty demand of Rs.28,99,847/- with interest by invoking extended period and imposed penalty equal to duty. The lower Appellate Commissioner vide his Order in Appeal No.21/2008 dated 24.3.2008 upheld the duty demand with interest and imposed penalty of Rs.25,99,847/-. Hence this appeal.
2. On 21.08.2017, when the matter came up for hearing, on behalf of the appellant, Shri M. Karthikeyan, ld.Advocate reiterated the grounds of appeal and also made oral and written submissions which can be summarized as under :
a) The marking provided for in the mould and dies is not brand or trade name at all and the ingots in question is neither sold by the appellant or by RKMI with any such brand name/trade name.
b) The ingots manufactured and supplied is a raw material used by the customers of the appellant in their manufacturing activity and it does not attract the vice of the SSI exemption notification in this regard.
c) In other words, brand name or trade name is defined as something which is used in relation to such specified goods for the purpose of indicating a connection in the course of trade between such specified goods and some person using such name with or without any indication to the identity of that person.
d) In the instant case goods are never supplied for trade but are for further consumption within the customers' unit and as such the marking available in the ingots is not for the purpose of any indication of a connection in the course of trade as prescribed above.
e) The department has merely gone by the marking available on the product and it has not established whether the marking is a brand name or trade name and if yes, then who is the owner of such name and whether the purpose of using such marking is only for indicating a connection in the course of trade between the product and some person using such brand name.
f) View expressed by the Honble High Court of Delhi in the case of CCE Vs Minimax Industries reported in 2011 (269) E.L.T. 166 (Del.) is very relevant in this regard and is relied upon by them.
g) Ingots manufactured by them bore the markings as R K I only because they had obtained used moulds from R K Metal Industry and used them in the manufacture of ingots but not with any intention to indicate any connection between the ingots manufactured by them to M/s. R.K.Metal Industry. Further, the marking used has not acquired any such reputation that one is able to associate the same mark with the manufacturer. As such, the vice of the SSI Notification is not attracted in this case and the exemption claimed by them is very much legal.
3. On the other hand, Ld. A.R supports the impugned order. He further points out that Shri R. Krishnan, Manager of R.K. Metal Industry is the husband of proprietrix of RKMI and is also the proprietor of the appellant. He submits that Shri R. Krishnan had admitted in his statement that ingots manufactured at appellants premises bore the markings R K I and that moulds are owned by RKMI.
4. Heard both sides and have gone through the facts of the case. No doubt, the issue that comes for appellate decision is whether clearances of ingots with the marking R K I will attract the mischief of brand name of another person and in consequence rendering said clearances ineligible for the benefit of SSI Notification No.8/2001-CE dt. 1.3.2001. For a better understanding of the issue, it would be useful to analyze the concerned provisions of the notification. A combined reading of para 3 (b) and para-4 of the notification brings out that clearances bearing the brand name or trade name, whether registered or not, of another person (except in certain cases covered in para-4) are ineligible for the grant of exemption under the notification.
4.2 For the purpose of SSI notification, the Explanation thereto defines "brand name" / "trade name" as under :
Explanation For the purposes of this notification,-
(A) brand name or trade name means a brand name or a trade name, whether registered or not, that is to say, a name or a mark, such as symbol, monogram, label, signature or invented word or writing which is used in relation to such specified goods for the purpose of indicating, or so as to indicate a connection in the course of trade between such specified goods and some person using such name or mark with or without any indication of the identity of that person;
4.3 We thus find that clearances of specified goods become ineligible for SSI notification benefit for the reasons of (i) having brand name or trade name of another person whether registered or not of another person and (ii) such brand name/trade name (name, or a mark, symbol, monogram etc.) is used in relation to such specified goods for the purpose of indicating, or to indicate a connection in trade between said goods and the person using such name or mark. Both these qualifications at (i) and (ii) above, will then necessarily be present to render the concerned goods ineligible for the SSI notification benefit.
4.4 In the case before us, no doubt, appellant was manufacturing ingots from the moulds obtained from RKMI whose proprietrix is wife of the proprietor of the appellant. Interestingly, however, as per facts on record, RKMI themselves were not availing any SSI exemption .
4.5 However, from the records, we are not able to locate any evidences unearthed by the department to show that although the ingots were made by the appellant, the invoices were issued in the name of RKMI or for that matter, ingots were sold only to the customers of the latter and on their instructions. There is no allegation that the appellant was a dummy unit or a unit set up only to sell goods of RKMI under their trade mark. Nor have the appellants sold the ingots as representing the production or sales of RKMI. There is also no evidence by way of statements of customers or any other corroborative evidence to indicate that there is any connection perceived in the trade, or, amongst the buyers, between ingots sold by the appellant, to RKMI. In fact, the Annexure-B to SCN on page 22 of the appeal, giving the details of relied upon documents, does not indicate any such statements of customers or any other corroborative evidence. Nor is any such connection brought out in the main body of the SCN.
4.6 On the other hand, appellants have submitted a number of certificates / letters from their customers confirming that ingots purchased by them are used as raw materials and that they had not purchased ingots from the appellant because of any brand name / trade name value.
4.7 Appellants have also contended before both the lower authorities that the mark R K I is not brand name owned by RKMI or any other person and that RKMI have also never claimed any ownership over the said marks.
4.8 In the event, we are of the considered opinion that use of the moulds by appellant bearing the mark R K I is only on account of the fact that these moulds were obtained from RKMI. This being so, the impugned clearances cannot be treated as clearances bearing a brand name / trade name for the purpose of indicating a connection in the course of trade between the said goods and RKMI. In arriving at this conclusion, we draw sustenance from the ratio of the decision of Honble Delhi High Court in the case of CCE Vs Minimax Industries - 2011 (269) ELT 166 (Del.) also relied upon by ld. Advocate, where on similar facts, the Honble High Court held that there is no violation of condition IV of Notification No.1/93-CE.
5. In view thereof, we hold that the impugned order will not sustain and will have to be set aside, which we hereby do. Appeal is allowed with consequential benefits, if any, as per law.
(Operative part of the order pronounced in court)
(Madhu Mohan Damodhar) (Sulekha Beevi C.S)
Member (Technical) Member (Judicial)
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Appeal No.E/309/2008