Customs, Excise and Gold Tribunal - Tamil Nadu
Supercoat Industries vs Cce on 31 January, 2008
Equivalent citations: 2008(128)ECC152, 2008(154)ECR152(TRI.-CHENNAI), 2008(225)ELT477(TRI-CHENNAI)
ORDER P. Karthikeyan, Member (T)
1. M/s. Supercoat Industries manufactured and cleared paints in cartons. They affixed the brand name "SHEENLAC'' on two sides of the cartons and their own product name as well as their address on the cartons. "SHEENLAC" brand did not belong to M/s. Supercoat Industries. As the SSI Notifications No. 1/93 and No. 16/97 did not allow the exemption contained therein if the brand name of another person was affixed on the goods, after due process of law, the original authority demanded duty of Rs. 5.05 lakhs from M/s. Supercoat Industries for the financial year 1997-98 for clearances effected from February'97. In determining the period of clearances using the brand name "Sheenlac" on the cartons, the original authority had relied on the statements recorded from the suppliers of cartons. In the impugned order, the Commissioner (Appeals) affirmed the order of the original authority. The original authority had also imposed equal amount of penalty under Section 11AC and had demanded interest due on the duty not paid. In the appeal before us and during hearing, the appellants have submitted that they were under the bona fide belief that the impugned clearances were eligible for the SSI exemption even though the cartons had carried the brand name of the product and also the brand name of another person. In support of their plea that in the circumstances, larger period could not be invoked, the Ld. Counsel relied on the decision of the Tribunal in CCE, Mumbai-II v. AAREM Enterprises . In the said decision, the Tribunal had held that when the cartons bore the brand name of the manufacturer and the brand name of another person, the chances of the manufacturer entertaining bona fide belief that he was eligible for SSI benefit could not be ruled out. Therefore, larger period was not invokable.
2. The main argument of the appellants is that as per para-4 of the Notification No. 16/97 the SSI benefit is not admissible to specified goods carrying brand name of another person on the goods. In the instant case, the excisable goods are paints. Brand name cannot be affixed on paints. Therefore, the prohibition can be applied only in relation to the primary packing namely the tin containing paint. The restriction cannot be applied if the brand name of another person appeared on the cartons containing several tins of paint. In this regard the Ld. Counsel relied on the decision of the Tribunal in Piccaso Home Products v. CCE, Daman . In the said decision, the facts were that the goods and the primary packing had appellant's brand name. The brand name of another person was affixed on the secondary packing. The Tribunal held that when the mark impugned was at some place which was not under or encompassed under the levy, then such marks have to be ignored for the purpose of the Central Excise law, and the Notification. The Ld. Counsel submitted that the invoices raised by the assessee's distributors showed the brand name "Sheenlac". However, since the goods themselves did not bear the brand name of another person, the impugned goods were eligible for the SSI exemption denied in the impugned order. In this regard, he relied on the judgment of the Apex Court in the case of CCE Jamshedpur v. Superex Industries reported in 2004 (174) ELT 4 (S.C.), wherein the Apex Court observed as follows:
3. 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 Notification would not be lost. We see no infirmity in this reasoning. We, therefore, see no reason to interfere.
3. The Ld. Counsel also relied on the decision of the Tribunal in the case of Pioneer Electronics v. CCE, Coimbatore , wherein, relying on a decision of the Tribunal in the case of Intercity Cable System (P) Ltd. v. Collector upheld by the Apex Court, it was held that it was not obligatory on the part of an SSI unit to disclose, in their Rule 173B declaration, that they were using the brand name of another person on their goods. Therefore, extended period of limitation could not be invoked against the assessee on the ground of non-declaration of use of another person's brand name in the classification list. Department could not allege suppression and invoke larger period.
4. The Ld. SDR submits that in cases where the judicial authorities held in favour of the assessee in cases of assessee using another person's brand name on the packing, the goods involved were materials such as bicycles, generators and not a commodity like paints. He reiterated the reasoning followed by the Commissioner.
5. We have carefully considered the case records and the submissions by both sides. The demand has been made on the basis that the clearances of goods made by the appellants during the period February'97 to March'98 were not eligible for the SSI exemption under Notification No. 16/97 dated 1.4.97 as amended. It was found that the impugned goods bore on them brand name of another person and therefore, in terms of para 4 of the notification, the goods became ineligible for the SSI exemption.
5.1 Para 4 of the Notification No. 16/97 dated 1.4.97 that existed at the material time read as follows:
4. The exemption contained in this notification shall not apply to goods bearing a brand name or trade name, whether registered or not, of another person, except in the following cases:
(a) ...
(b) ...
The exceptions (a) and (b) are not relevant to decide the issue on hand.
In terms of the above paragraph, the exemption is conditional on the goods not bearing the brand name of another person. In the instant case, the goods involved are paints. Therefore, the above stipulation has to be read to mean that the container in which the goods are sold should not carry the brand name of another person. There is no dispute that in the instant case the container (tins) in which the goods are presented for assessment, does not carry the brand name of another person. The brand name "Sheenlac" belonging to the appellant's marketing agency was affixed only on the secondary packing. Secondary packing was used only for convenience of transportation of the goods and is not reckoned for the purpose of determining the assessable value for levy of duty under the Central Excise Act, 1944. In terms of the ratio of Piccaso Home Products (supra) 'when the mark impugned is at some place which is not under or encompassed under the levy, then such marks have to be ignored for the purpose of the Central Excise law, and the Notification'.
In view of this settled legal position, the impugned demand and consequent penalties are not sustainable. Therefore, we set aside the impugned order and allow the appeal filed by M/s. Supercoat Industries.
(Order pronounced in open Court on 31.01.08)