Customs, Excise and Gold Tribunal - Delhi
M/S. Chopra Appliances vs Cce, Delhi on 9 May, 2001
Equivalent citations: 2001(76)ECC418, 2001(132)ELT95(TRI-DEL)
ORDER
V.K. Agrawal
1. The issue involved in this appeal, filed by M/s Chopra Appliances, is whether they were affixing the excisable goods, manufactured by them, with the brand name of another person, making them ineligible for the benefit of exemption from payment of duty under Notification No. 1/93-C.E., dt. 28-2-1993.
2. Shri K.K. Anand, ld. Advocate, submitted that the Appellate manufacture LPG stoves under their own brand names 'Snap' and 'Trendy'; that along side these brand names, they were also mentioning 'A SKN Product'; that since their goods were bearing their own brand names, they were availing the exemption under Notification No. 1/93-C.E.; that however the Dy. commissioner, Central Excise, under Adjudication Order No. 83/97 dt. 26-11-1997 confirmed the demand of duty amounting to Rs. 2,37,819/- under Section 11A(1) of the Central Excise Act for the period from 1994-95 to 1996-97, imposed a penalty of Rs. 2 lakhs and confiscated the goods worth Rs. 4,51,200/- seized from their premises with an option to the Appellants to redeem the same of payment of fine of Rs. 1 lakhs, holding that the brand name "SKN" belongs to M/s SKN Gas Appliances, engaged in the manufacture of LPG stoves and the words "A SKN PRODUCT" tend to indicate a connection in the course of trade between the LPG stoves and M/s SKN Gas Appliances Ltd. The ld. Advocate further, submitted that as they are manufacturing goods under their own brand name, provisions of Para 4 of Notification No. 1/93 are not applicable; that the words "A SKN Product" were written in small letters and were not prominent at all; that these words indicate nothing in the course of trade; that the brand name of M/s SKN Gas Appliances is 'SKN' and not 'A SKN Product'; that any customer who would buy the stove would buy as 'SNAP' OR 'TRENDY'; that moreover the goods bear also their name as manufacturer. He also mentioned that as no sample of the impugned goods was shown to the Commissioner (APPEAL), his findings in the impugned Order that 'a person looking at the gas stove may miss the brand name but cannot miss the Words "A SKN PRODUCT" is erroneous.
3. The ld. Advocate relied upon the decision in the case of C.C.E., GOA Vs. Christine Hoden (1) Pvt. Ltd., 1999 (113) ELT 591 (T) wherein it was hold that "mere indication of the foreign company's name does not create any association in the course of trade between the goods and the foreign Company" when the goods are sold under the Trade name owned by the Manufacturer. Reliance was also placed on the following decisions:
(i) Palsons Drugs & Chemical Industries Vs. CCE 1998 (98) ELT 665
(ii) Om Enterprises Vs. C.C.E., Pune 2000(118) ELT 127,
(iii) Chemguard Coatings Pvt. Ltd Vs. C.C.E., Chennai, 2000 (116) ELT 43
(iv) Emkay Investments Pvt. Ltd Vs. CCE 2000(124) ELT 741
(v) Dharni Cement ltd. Vs. CCE, Trichy 2000(124) ELT 840.
4. Finally the ld. Advocate mentioned that extended period of limitation under Proviso to Section 11 A(1) is not invokable as the Appellants did not commit any fraud, mis-statement of suppression of facts; they had no intent to evade payment of duty as they were clearing the goods under their own brand name; that accordingly there was no reason for confiscation of goods and imposition of penalty; that in any case both redemption fine and penalty is very much on the higher side.
5. Countering the arguments, Shri M.P. Singh, ld. DR., submitted that it is not in dispute that the impugned goods manufactured by the Appellants were affixed with words "A SKN Product" that "SKN" admittedly is the brand name of M/s SKN Gas Appliances Ltd; that besides using brand name of another person, they have made a positive statement that the products manufactured by them are "SKN Products". The ld. DR, further, emphasised that the Appellants themselves in their appeal before the Commissioner (Appeals mentioned that they were one of the manufacturing unit of SKN Group and mentioning of words 'A SKN Product' was only to indicate or a reference relating to the group; that thus they themselves have mentioned that these words were used to indicate a relation with SKN Group. The ld. D.R. referred to the decision in the case of U.O.I. Vs. Paliwal Electricals (P) Ltd., 1996 (83) ELT 241 (SC) wherein the Apex Court held that "It a small manufacture who affixes the brand name of trade-name of an ineligible manufacturer (...), the very reason d'etre for grating the exemption disappears. The exemption is designed to enable the small manufacturer to survive in the market in competition with the ineligible manufacturer but if he joins, or identifies himself with, the ineligible manufacturer, his goods become one with the goods of such ineligible manufacturer. They become indistinguishable. In the market, they will be understood as one and the same goods. They no longer, need the benefit under the Notification."
6. The ld. DR, also distinguished the case, relied upon by the ld. Advocate. For example he mentioned that in Chemguard Coating case, name of the foreign company was mentioned which has supplied the technology and had licensed the Appellant therein the manufacture the goods in accordance with the Technology ; that in Om Enterprises case, a metal plate was affixed which contained the information i.e. the name of the Company which would do marketing and servicing of fans and not like the present matter where a relation is intended with the brand name "SKN" belonging to other. He concluded his submissions by saying that extended period of limitation is invokable as the Appellants were manufacturing and removing the goods without obtaining registration certificate and without accounting the goods in statutory records and without payment of duty and as such suppressed the facts from the Department; that considering the amount of duty not paid and value of goods under confiscation, neither the quantum of penalty nor the amount of redemption fine is on the higher side. In reply, the ld Advocate mentioned that as SKN Gas Appliances Ltd. are eligible for SSI notification, they were not ineligible manufacturer and as such the ratio of the decisions in Paliwal Electricals is not applicable to the facts of the present matter; that further in their case the impugned goods are not being supplied by the Appellants to an unit in organised sector as was the case in Paliwal Electrical's case.
7. We have considered the submissions of both the sides. On query from the Bench, the ld. Advocate replied that "SKN" is the brand-name of M/s SKN Gas Appliance Ltd, who also manufacture gas stoves. Paragraph 4 of the Notification No. 1/93-CE clearly provides that benefit of the Notification shall not apply to the specified goods where a manufacturer affixes them with a brand name of trade name of another person. As the brand name 'SKN' appears along with other words on the product of the Appellants irrespective of the fact that the letters used are smaller than those used in mentioning their own brand name, the mischief of Paragraph 4 is attracted and the Appellants will not be eligible for the benefit of the exemption contained in Notification No. 1/93-CE. The use of these words "A SKN PRODUCT" clearly indicate a connection in the course of trade between the impugned goods and M/s SKN Gas Appliances Ltd. As rightly pointed out by ld. D.R., the Appellate Authority had mentioned that these words were to indicate a reference relating to the group. The Supreme Court in Paliwal Electricals case gave the reason d'etre for not extending the benefit of small scale exemption to the goods affixed with the brand name of another person. The Court observed that once the brand name of other person is affixed, the goods become indistinguishable and once he become one with his competitor," the need for supporting crutches disappears. There is no reason why in such a case the State should forgo the revenue due to it under the Act." The ld. DR has distinguished the decisions relied upon by the ld Advocate, we also notice that in Dharni Cement Ltd, brand name of another Company was not used, only the name of the holding company was mentioned. We, therefore, find no infirmity in the impugned Order in denying the benefit of exemption contained in Notification No. 1/93 to the impugned goods and accordingly uphold the demand of duty.
8.It is not in dispute that the fact of manufacture and removal of goods was not brought to the notice of the Department and as such vital facts were suppressed. Consequently the extended period of limitation is attracted in the present matter for demanding duty. As the excisable goods were manufactured and cleared without following the Provisions of Central Excise Act and Rules, the goods have been rightly confiscated and Penalty is also imposable on the Appellants. However, taking into consideration all the facts and circumstances of case, we are of the view that a reduction in quantum of penalty and redemption fine is warranted. Accordingly we reduce the Penalty to Rs. 20,000 and we also reduce the redemption find to Rs. 20,000/-.
But for these notifications, the Appeal is rejected.