Custom, Excise & Service Tax Tribunal
M/S Northern India Tiles Corporation vs Cce, Delhi Ii on 26 February, 2013
IN THE CUSTOMS, EXCISE & SERVICE TAX
APPELLATE TRIBUNAL
West Block No. 2, R.K. Puram, New Delhi 110 066.
Principal Bench, New Delhi
COURT NO. II
Excise Appeal Nos. 3789 to 3790 of 2010
Excise Appeal Nos. 3789 to 3790 of 2010
For Approval and signature:
Honble Mrs. Archana Wadhwa, Member Judicial
Honble Mr.Sahab Singh, Technical Member
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1. Whether Press Reporters may be allowed to see
The order for publication as per Rule 27 of the
CESTAT(Procedure) Rules, 1982?
2. Whether it would be released under Rule 27 of
the CESTAT (Procedure) rules, 1982 for
publication in any authoritative report or not?
3. Whether their lordships wish to see the fair
copy of the order?
4. Whether order is to be circulated to the
Department Authorities?
M/s Northern India Tiles Corporation Appellant
Versus
CCE, Delhi II Respondent
Appearance Shri B.L. Narasimhan , Advocate for the appellant.
Smt Ranjana Jha, Authorized Representative (DR) for the Respondent.
CORAM : Honble Ms. Archana Wadhwa, Member (Judicial) Honble Shri Sahab Singh, Member (Technical) DATE OF HEARING : 26/02/2013.
DATE OF DECISION : 26/02/2013.
Final Order No. 55836-55839 Dated : 2013 Per. Archana Wadhwa :-
The facts leading to these four appeals are, in brief, as under.
1.1 M/s Northern India Tiles Corporation (hereinafter referred to as NITCO) is a partnership firm engaged in manufacture of various types of tiles - Mosaic tiles, interlocked tiles, kerb stones etc. chargeable to Central Excise duty under sub-heading 6807.90 of the Central Excise tariff. The partners of NITCO are Shri A.N. Talwar (HUF), Shri P.N. Talwar, Shri Vijay Talwar and Shri Pawan Talwar of which Shri Pawan Talwar is also the authorised signatory. NITCO avail SSI exemption under Notification No. 8/03-CE. The period of dispute is from 1/4/03 to 31/12/2005. They were paying duty on the value of clearances during a financial year which was in excess of the exemption limit. The tiles are sold under the brand name NITCO. The brand name NITCO is registered in the name of the appellant firm since 1964. The department was of the view that since the brand name NITCO is also used by other group companies which are controlled by Talwar family, the appellant company is not eligible for the benefit of SSI exemption as the combined turnover of all the group companies is more than Rs. 3,00,00,000/- (Rupees Three Crore). On this basis three show cause notices dated 16/7/04, 23/3/05 and 30/1/06 were issued to the appellant company (NITCO) and its authorised signatory Shri Pawan Talwar for
(a) recovery of allegedly short paid duty amounting to Rs. 30,96,867/- alongwith interest under Section 11AB in respect of clearances during the period from 1/4/03 to 31/3/04, 1/4/04 to 31/12/04 and 1/1/05 to 31/12/05 ;
(b) imposition of penalty on the appellant firm under Section 11AC ; and
(c) imposition pf penalty on Shri Pawan Talwar under Rule 26 of the Central Excise Rules, 2002.
1.2 The above three show cause notices were adjudicated by Additional Commissioner, Central Excise, Delhi II vide order-in-original dated 31/8/09 by which
(a) total duty demand of Rs. 30,96,867/- was confirmed against the appellant firm alongwith interest under Section 11AB ;
(b) penalty of equal amount was imposed on the appellant firm under Section 11AC ; and
(c) penalty of Rs. 2,25,000/- was imposed on Shri Pawan Talwar under Rule 26 of the Central Excise Rules, 2002.
1.3 Appeals filed by the appellant firm and Shri Pawan Talwar against the above order were dismissed by CCE (Appeals) vide order-in-appeal No. 465-466/CE/D-II/10 dated 24/8/2010. Hence the present appeals.
2. Heard both the sides.
3. Shri B.L. Narasimhan, Advocate, the learned Counsel for the appellant, pleaded that the show cause notices themselves mention that the brand name NITCO is registered in the name of the appellant firm since 1964, that in view of this, SSI exemption cannot be denied to the appellant firm as they are clearing the goods under their own brand name and not in the brand name of other person, that just because other group companies are using the brand name NITCO owned by the appellant firm, the benefit of SSI exemption cannot be denied to them, that other group companies using the brand name NITCO are paying duty without availing SSI exemption, that the show cause notice does not even discuss any evidence whatsoever in support of its allegation that other group companies are owned by the appellant firm, that denial of SSI exemption is without any basis, that there is no justification for imposition of penalty on the appellant firm or its partner/authorised signatory Shri Pawan Talwar, that the appellants have a strong case and the impugned orders be set aside and appeal be allowed with consequential relief.
4. Mrs. Ranjana Jha, the learned Senior Joint Departmental Representative, opposed the appellants plea by reiterating the findings of the Commissioner in the impugned order.
5. We have carefully considered the submissions from both the sides and perused the records.
6. After appreciating the submissions made by both the sides we find that the allegation made in the show cause notice were in respect of clubbing the clearances of various units of the Talwar family. However, the adjudicating authority dropped the said allegation by observing that separate exemption limit is available to each unit and the other units being limited companies, their value of clearance cannot be clubbed with the value of clearances of the noticee for the purpose of computing the aggregate value of clearance for home consumption. However, he observed that in as much as the appellant was using the brand name NITCO that is also being used by other companies, the benefit of small scale Notification No. 8/2003-CE dated 1.3.2003 is not available to the appellant. Accordingly, he confirmed the demand and imposed penalties.
7. For better appreciation of the observations and findings made by the original authority, we reproduce the relevant part of the impugned order:
I find that there are evidence on record and as admitted vide statements that the Nitco trade mark was registered in the name of M/s Northern India Tiles Ltd., Mumbai are also using the same for manufacturing and selling of ceramic/mosaic tiles; that the sale proceeds of M/s Nitco Tiles Ltd, Mumbai are over 100 crores; that all the companies are using similar trade mark except for colour and size which is registered in the name of M/s Northern India Tiles Corporation. It is admitted fact that group companies are different legal entities and present composition of partners/directors in M/s Northern India Tiles Corporation is entirely different. I find that each one is using the Nitco brand name or trade mark belonging to another legal person. As regards their contention that M/s Nitco Marble & Granite Pvt Ltd established in 1984 as partnership firm is also using Nitco brand name for tiles; that it was agreed upon in 1986 to pay an annual royalty of R. 50,000/- for the use of brand name Nitco by M/s Nitco Marble & Granite Pvt Ltd to M/s Northern India Tiles Corporation. I find that cited instance of royalty agreement with M/s Nitco Marble & Granite Pvt is their private arrangement to claim tittle for the brand Nitco but I find that no such royalty agreements are in existence with other user of the brand Nitco among their group companies and nowhere the noticee has disputed this position. Accordingly, I observe that the brand name is being used by all their group companies and many of them have not claimed benefit of exemption Notification No. 8/2003-CE dated 1.3.200. I hold that each of the group company may be a different legal entity but none of them individually is the owner of brand Nitco as aforesaid. The clearance of other group companies bearing the brand name or trade name of another person which are ineligible for the grant of this exemption in terms of paragraph 4 are not required to be clubbed in terms of para 3(a) of the notification itself.
Therefore, I see no merits in the case for clubbing the value of clearances of the group companies with the clearances made by the Noticee in terms of para 2 of the Notification No. 8/2003-CE dated 1.3.2003. In this regard, I also find that the issue for earlier period is settled in favour of the noticee vide order in original No. 73/05-06 dated 13.1.2006 which has been accepted by the department. However, I find that the noticee is using the brand Nitco belonging to another person and in use by the group companies, so the exemption contained in the Notification ibid shall not apply to the clearances of specified goods manufactured by the noticee in terms of para 4 of the Notification No. 8/2003-CE dated 1.3.2003 itself. The noticee was required to declare that they have manufactured the specified goods using the brand name/trade name of another legal person and they were not the real owner of the brand name/trade name of another legal person and they were not the real owner of the brand name/trade name Nitco as claimed by them.
8. As is seen from above, the original adjudicating authority has observed that brand name Nitco belongs to the appellant firm and was registered in their name since 1964. In spite of commissioner making the above observations and arriving at the above findings, he has disallowed the benefit of Notification No. 8/2003-CE dated 1.3.2003 by observing that noticee is using the brand name Nitco of other person. However, he has not arrived at any finding as to who is that another person to whom the said brand Nitco belongs.
9. In fact we find that even subsequently as per the certificate given by the Trade Marks Authority, the registration of brand name Nitco in the appellants name stands extended by the authorities for a further period of ten years with renewal date as 13.2.2006.
10. We also further find that Commissioner (Appeals) has also not denied the fact that the brand name Nitco is owned by the appellant but he observed as under:-
Now coming to the issue of brand name Nitco as owned by the appellant and purported to be used by other companies and findings of the adjudicating authority with reference to Tribunals decided in the case of Carborandum Universal Ltd Vs CCE Calcutta reported as 2008 (228) ELT 394 (Tri Chennai0 and Commissioner of Central Excise Trichy Vs Grasim Industries Ltd 2005 (183) ELT 12 (SC) and denying them the benefit of SSI Notification on the basis of clubbing and exceeding their specified limit, I find that the very findings of the adjudicating authority as based on the investigations carried out in the instant case and use of brand name, are appropriate and proper so as to denying them the benefit of SSI exemption.
11. We note that Notification No. 8/2003 denies exemption to specified goods manufactured by an assessee bearing brand name or trade name of another person who is not entitled to the benefit of notification in question. In the present case, there are clear findings by the original adjudicating authority as also by the Commissioner (Appeals) that the brand name Nitco belongs to the present appellant.
12 Even otherwise, we are convinced that the brand name belonged to the appellant as is clear by the certificate issued by the Trade Marks Authority. In such a case, the denial of benefit of exemption Notification on the ground that other companies are also using the said name is not in accordance with the notification. Just because the said brand name Nitco which is owned by the appellant is being used by other companies, the appellant cannot be denied the benefit of SSI exemption. In any case, learned Advocate informs us that all other group companies who are using the said brand name Nitco are not availing the benefit of SSI exemption and are clearing their final products on payment of duty. However, we are not concerned with the duty liability of other group companies who are not before us. In as much as the brand name Nitco belongs to the appellant himself, the denial of SSI benefit on the ground of use of the same by other group companies cannot be upheld. We, accordingly, set aside the impugned order and allow all the four appeals with consequential relief to the appellants.
(Order dictated and pronounced in the open court.) (Archana Wadhwa) Member (Judicial) (Sahab Singh) Member (Technical) MPS* ??
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