Custom, Excise & Service Tax Tribunal
Dhandapani Power Systems (P) Ltd vs Commissioner Of Central Excise on 10 November, 2016
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL SOUTH ZONAL BENCH BANGALORE Appeal(s) Involved: E/713/2003-DB [Arising out of Order-in-Appeal No. 106/2003 dated 30/04/2003 passed by the Commissioner of Central Excise, Bangalore] For approval and signature: HON'BLE SHRI S.S GARG, JUDICIAL MEMBER HON'BLE SHRI ASHOK K. ARYA, TECHNICAL MEMBER 1 Whether Press Reporters may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982? No 2 Whether it should be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not? Yes 3 Whether Their Lordships wish to see the fair copy of the Order? Seen 4 Whether Order is to be circulated to the Departmental authorities? Yes Dhandapani Power Systems (P) Ltd. No. 26D, Veerasandra Industrial Area, Anekul Taluk, Bangalore 561 229 Appellant(s) Versus Commissioner of Central Excise Bangalore Post Box No. 5400, C.R. Building, Bangalore 560 001 Respondent(s)
Appearance:
Shri S. Raghu, Advocate 543, 12th Cross, 8th Main, J.P. Nagar, 2nd Phase, Bangalore 560 078 For the Appellant Shri N. Jagdish, AR For the Respondent Date of Hearing: 04/07/2016 Date of Decision: 10/11/2016 CORAM:
HON'BLE SHRI S.S GARG, JUDICIAL MEMBER HON'BLE SHRI ASHOK K. ARYA, TECHNICAL MEMBER Final Order No. 21122 / 2016 Per: S.S GARG The present appeal is directed against the impugned order passed by the Commissioner (Appeals) dated 30.04.2003 vide which the learned Commissioner upheld the Order-in-Original and also imposed equal penalty under Section 11AC and also demanded interest under Section 11AB of the Central Excise Act. Briefly the facts of the present case are that the appellants are engaged in the manufacture and clearance of electrical capacitors classified under subheading 8532. On 01.07.2000 officers of the Preventive, visited the unit and scrutinized the records, declaration under Section 173B and other documents and tentatively held the view that the use of name Dhandapani and the logo belonging to K. Dhandapani & Co. Ltd. would amount to use of brand name of another company and hence benefit of SSI exemption would not be available. Thereafter a show-cause notice dated 12.06.2001 was issued alleging contravention of provision of Rule 9(1), 49, 54, 173B, 173C, 173F, 209A read with proviso to Section 11A (1) of Central Excise Act 1944 for the period July 97 to July 2000 seeking to demand differential duty of Rs. 14,79,640.28 under Rule 9 of the Central Excise Rules 1944 read with provisions of Section 11A of the Central Excise Act along with penalty and interest. Appellant strongly reputed the allegations in the show-cause notice by submitting that M/s. K. Dhandapani and Company are not manufacturing or marketing that particular product electrical capacitors and they are only traders and therefore the benefit of SSI exemption cannot be denied and further the appellant has been permitted to use the brand name of Dhandapani and Company which amounts to assignment of the brand name in favour of the appellant. The appellant also stated that under a bona fide belief, the appellant did not declare the brand name in their classification and they had no intention to suppress the fact to evade the payment of duty and thereafter immediately on their own voluntarily paid Rs. 14,79,640.28 on 17.07.2000 and 28.07.2000. After considering the submissions of the appellant, the Additional Commissioner confirmed the demand of differential duty along with penalty and interest but did not impose any penalty on Shri T.N. Sreedharan, Joint Managing Director of M/s. Dhandapani & Co. Ltd. and Shri Upendra Raju, D.G.M of M/s. Dhandapani Power Systems under Rule 209A of Central Excise Rules, 1944 and the Additional Commissioner also held that as per the amended provisions to Section 11AC of Central Excise Act, 1944, if the amount demanded under Section 11A(1), interest demanded under Section 11AB are paid by the assessee within 30 days of communication of this order, the penalty imposed under Section 11AC shall be reduced to 25% of the duty demanded under Section 11A provided the reduced penalty is also paid within the period of 30 days. Aggrieved by the said order, the appellant filed an appeal before the Commissioner (Appeals) who upheld the order of the lower authority and also imposed equal penalty. Aggrieved by the said order, the appellants have filed the present appeal.
2. We have heard the learned counsel for the parties and perused the records.
3. The learned counsel for the appellant submitted that the impugned order is not sustainable in law as the learned Commissioner has straightaway concluded that the appellants are not entitled to SSI exemption since they have affixed the brand name and logo of others, without appreciating the fact that the noticee was permitted to use the brand name of M/s. Dhandapani & Co. which amounted to assignment of brand name in favour of the appellant. The Commissioner has also failed to consider that M/s. Dhandapani & Co. are not engaged in the manufacture of capacitors and are only traders. He further submitted that the appellant is a manufacturing company and all the customers recognize the product as that manufactured by appellant only and the marking of logo is inconsequential in view of the definition of brand name and therefore the denial of exemption is unjust and illegal. He further submitted that the appellant under bona fide belief declared in their classification list that they did not use other brand name since K. Dhandapani & Co. were not manufacturers and had assigned the use of brand name/logo to the appellants. Therefore they had no intention to suppress or evade payment of duty. In support of his submission, he relied upon the following authorities:
a) Taj Serpent Eggs Factory Vs. CCE, Madurai [1996 (85) E.L.T. 78 (Tri.)]
b) Swadesh Industries Vs. CCE, Chandigarh-I [2001 (129) E.L.T. 730 (Tri.-Del.)]
c) CCE, Chandigarh Vs. Fine Industries [2002 (146) E.L.T. 53 (Tri.-LB)]
d) CCE, Chandigarh Vs. Bhalla Enterprises [2004 (173) E.L.T. 225 (S.C.)]
e) Janta Rubber Distributors Vs. CCE, Calcutta [2000 (125) E.L.T. 671 (Tri.)]
f) Namtech Systems Ltd. Vs. CCE, New Delhi [2000 (115) E.L.T. 238 (Tri.)]
g) Mentha & Allied Products Ltd. Vs. CCE, Meerut [2004 (167) E.L.T. 494 (S.C)]
h) CCE, Trichy Vs. Grasim Industries Ltd. [2005 (183) E.L.T. 123 (S.C.)]
4. On the other hand the learned AR strongly defended the impugned order and submitted that the appellant has admitted that they are using the brand name Dhandapani and also the logo of M/s. Dhandapani and Co. and therefore they are not entitled to the SSI exemption. Moreover they have not declared this material fact in the classification submitted to the department and therefore they have willfully suppressed the material information with intent to evade payment of duty. He further submitted that the appellants have been enjoying the benefit of SSI exemption by using the brand name and the logo which does not belong to them. In support of his submission, the learned AR relied upon the following authorities:
a) CCE, Delhi Vs. ACE Auto Comp. Ltd. [2011 (263) E.L.T. 3 (S.C.)] In this case the Honble Supreme Court held that use of brand name of another person is not eligible for SSI benefit, as long as the goods indicate connection between the goods manufactured and the company owning the Brand name.
b) CCE, Chandigarh-II Vs. Bhalla Enterprises [2004 (173) E.L.T. 225 (S.C)] The Honble Supreme Court held that SSI exemption Brand name of another person even if used in respect of goods of other class or kind, benefit of SSI exemption not available as object of the notification is to grant benefit only to those industries which otherwise do not have the advantage of others brand name.
c) CCE, Trichy Vs. Rukmani Pakkwell Traders [2004 (165) E.L.T. 481 (S.C)] In this case the Honble Supreme Court held that SSI exemption Brand name of another person unregistered and not in respect of any particular goods on use of such a brand, assessee would not be entitle to benefit of exemption.
5. After considering the submissions of both the parties, we find that the appellants have used the brand name and the logo belonging to K. Dhandapani and Co. and they have not declared the same in their classification and therefore they have concealed the factual information from the department and therefore they are not entitle to SSI exemption. As far as imposing equal penalty is concerned, we find from the record that the appellant has deposited 14,17,640.28 before the issue of show-cause notice and the same was appropriated by the Order-in-Original and the learned Additional Commissioner has given them the opportunity to deposit the penalty of 25% along with interest within 30 days and the appellant has deposited the same within the stipulated period and therefore as per the provisions of law if the interest and penalty is deposited within 30 days from the date of the order then the proceedings shall stand concluded and the appellant is not required to pay the equal penalty. In this case as per the appellant, the order of the Additional Commissioner was received on 09.01.2002 and the appellant on 08.02.2002 paid penalty amount of Rs. 3,69,910/- (Rupees Three Lakhs Sixty Nine Thousand Nine Hundred and Ten only) and interest amount of Rs. 2,10,300/- (Rupees Two Lakhs Ten Thousand and Three Hundred only) and as such have wholly complied with the order. Therefore in view of the compliance of the order of the Additional Commissioner, it was not justify for the Commissioner (Appeals) to impose equal penalty and the learned Commissioner (Appeals) has failed to take note of this deposit by the appellant. Therefore to that extent the order of the learned Commissioner is modified and the amount of duty, interest and penalty deposited by the appellant are sufficient to discharge their entire liability. With this modification, the impugned order is upheld and the appeal of the appellant is dismissed.
(Order pronounced in open court on 10.11.2016) (ASHOK K. ARYA) TECHNICAL MEMBER (S.S GARG) JUDICIAL MEMBER iss