Custom, Excise & Service Tax Tribunal
M/S.Sen &Amp; Pandit Electronics ... vs Coms. C. Ex , Kol - Vii on 13 July, 2018
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE
TRIBUNAL,
EAST REGIONAL BENCH : KOLKATA
Appeals Nos.E/365-367&373/2007
Arising out of Order-in-Original No. 5/Commissioner/CE/KOL-
VII/ADJN/2006-07 dated 23.03.2007 passed by the Commissioner of
Central Excise, Kolkata-VII.
1. M/s Sen & Pandit Electronics Pvt. Ltd.
2. Shri B. B. Roy
3. Shri Kamal Kumar Biswas
4. Shri T. K. Banerjee
...APPELLANT(S)
VERSUS
Commissioner of Central Excise, Kolkata-VII.
...RESPONDENT (S)
APPEARANCE Shri S. Bhowmik Advocate & Shri. I. Banerjee Advocate for the Appellant (s) Shri D. Halder, A.C. (AR) for the Respondent (s) CORAM:
SHRI P. K. CHOUDHARY, HON'BLE JUDICIAL MEMBER SHRI BIJAY KUMAR, HON'BLE TECHNICAL MEMBER DATE OF HEARING;-13.07.2018 DATE OF PRONOUNCEMENT:-20.09.2018 ORDER NO.. FO/A/76670-76673/2018 Per Shri P. K. Choudhary :
The present appeals are arising out of Order dated 23.03.2007 passed by the Learned Commissioner of Central Excise, Kolkata-VII Commissionerate, whereby proceedings initiated by two Show Cause Notices, both dated 06.12.2004, were disposed of.
2. In respect of first Show Cause Notice, it was held that the appellant No. 1 was disentitled to Small Scale Industries (in 2 Appeal Nos E/365-367&373/2007 short "SSI") Exemption benefits for the period October, 1999 to March, 2004 availed under notifications issued from time to time viz. Notification No. 8/99-CE dated 28.02.1999, 8/2000-CE dated 01.03.2000 and 8/2001-CE dated 01.03.2001 etc. Consequently, Central Excise duty of Rs. 52,84,284/- was confirmed against the appellant No. 1 along with interest and equal amount of penalty under various provisions of the Central Excise Act, 1944 (in short "Act"). Personal penalties of Rs. 10,00,000/- and Rs. 50,000/- were imposed on the appellant Nos. 2 and 4 respectively for their acts/ omissions prohibited by Rule 209A of the erstwhile Central Excise Rule, 1944 read with Rule 26 of the Central Excise Rules, 2001/ 2002. As regards the second Show Cause Notice, the Learned Commissioner was of the view that the appellant No.1 had purchased semi-finished goods, upon which further manufacturing had been undertaken at its Sales cum Service Centre and cleared the same in the guise of trading activity. On this count, Central Excise duty demand of Rs. 24,21,120/- was confirmed for the period December, 1999 to March, 2004, along with interest and equivalent penalty against the appellant No. 1 under various provisions of the Act. The appellant No. 3 was also subjected to personal penalty of Rs. 25,000/- under Rule 209A of the erstwhile Central Excise Rules, 1944 read with Rule 26 of the Central Excise Rules, 2001/ 2002.
3. In brief, the facts of the case are:
(i) That the appellant No. 1 is a concern of the Sen & Pandit Group and engaged, inter alia, in the business of manufacturing voltage stabilizers, servo voltage stabilizers, 3 Appeal Nos E/365-367&373/2007 battery inverters, electrical transformers etc. at its factory located at Sonarpur. The appellant No. 1 availed the benefit of SSI Exemption notifications issued from time to time. At its Sales cum Service Centre at 16B, Lake View Road, Kolkata it mostly performed post-sale services, quality control works, trading, affixation of stickers etc. The appellant's sister concern being M/s Sen & Pandit Power Electronics Pvt. Ltd.
(in short "SPPEL"), also a part of the Sen & Pandit Group, manufactured products similar to those of the appellant No. 1. The two companies, however, are independent legal entities and registered separately under the Income Tax Act, Central Excise Act, Sales Tax Act and Companies Act.
(ii) That on 20.08.2002, search and seizure operations were conducted by the officers of Directorate General of Central Excise Intelligence (in short "DGCEI") at the factory premises of the appellant No. 1 at Sonarpur and at the Sales cum Service Centre, Lake View Road, Kolkata. Several records and documents were seized including specimen labels/stickers which were normally affixed on the appellant No. 1's products. Allegedly, such labels/ stickers carried a Brand Name, the same being exhibited at pages 171-172 of the combined Paper Book. The DGCEI officers also recorded statements of various persons during the course of investigations.
(iii) That the aforesaid investigations resulted in the issuance of two Show Cause Notices dated 06.12.2004. The first Show Cause Notice primarily proposed denying SSI 4 Appeal Nos E/365-367&373/2007 Exemption benefits on the ground that the appellant No. 1 had used a Brand Name ("SEN & PANDIT") on its manufactured products which was actually owned by the sister concern of the appellant No. 1, namely M/s SPPEL. The appellant No. 1 was required to show cause as to why Central Excise duty of Rs. 52,84,284/- should not be demanded for the period October, 1999 to March, 2004 under the proviso to Section 11A(1) of the Act along with interest and equivalent penalty under appropriate provisions of the Act read with the Rules framed thereunder. Personal penalties were also proposed to be recovered from the appellant nos. 2 & 4 for having contravened Rule 209A of the erstwhile Central Excise Rules, 1944 read with Rule 26 of the Central Excise Rules, 2001/ 2002.
(iv) That in the second Show Cause Notice it was alleged that appellant No. 1 used to purchase semi-finished goods, upon which further manufacturing processes were undertaken at the Sales cum Service Centre, Lake View Road, Kolkata and cleared the said manufactured goods without payment of duty in the guise of trading activities. The said Show Cause Notice proposed to demand duty of Rs. 24,21,120/- under the proviso to Section 11A(1) of the Act for the December, 1999 to March 2004 along with interest and equivalent penalty. The appellant no. 3 was required to show cause against the imposition of personal penalty under Rule 209A of the erstwhile Central Excise Rules, 1944 read with Rule 26 of the Central Excise Rules, 2001/ 2002.
5 Appeal Nos E/365-367&373/2007
(v) That after submission of a common reply to the aforesaid Show Cause Notices, personal hearing was held. The Learned Commissioner thereafter passed a consolidated Order-in-Original dated 23.03.2007 and confirmed the demands by holding, inter alia, as follows:
First Show Cause Notice
a) 'SEN & PANDIT' was a Brand Name, as reflected by repeated use of the said expression in the background of the specimen labels/stickers affixed on all the products of appellant no. 1.
b) Statements of Shri Brij Mohan Jha (Manager, Operations), appellant No. 2 (Director), appellant No. 4 (Director), appellant No. 3 (Senior Inspector) and of other officers of the appellant No. 1 indicated that the expression 'SEN & PANDIT' was being used as a Brand Name.
c) The appellant No. 1 was not the owner of the said Brand Name as it had never applied for its registration. On the other hand, the said Brand Name was owned by M/s SPPEL. This was evident from Annexure 32A of the Show Cause Notice which was a copy of M/s SPPEL's letter dated 06.12.2004 showing that it had actually applied for registration.
d) The ownership issue of the aforesaid Brand Name was also clear from the Agreement dated 31.03.2000 between the Sens & Gupta.
6 Appeal Nos E/365-367&373/2007
e) Appellant No.1 had indulged in suppression and/ or mis-statement of facts by failing to disclose their use of the above-mentioned Brand Name and claiming SSI Exemptions.
f) Appellant Nos. 2 & 4 were guilty of having indulged in the act of evasion of duty by the appellant No.1.
Second Show Cause Notice
a) The appellant No. 1 used to purchase semi-finished voltage stabilizers from various vendors and complete the manufacturing processes at the Lake View Road premises. The vendors of appellant No.1 had so stated during investigations.
b) The appellant No. 1 had undertaken technical operations like re-setting the pre-set alignment, setting of feedback resistance, calibrations, affixation of stickers etc. and thereby made the semi-finished products functional and marketable. These processes amounted to 'manufacture' within the meaning of Section 2(f) of the Act. The trading sales shown by the appellant No.1 had to be treated as manufacturing sales attracting Central Excise duty.
c) Appellant No.3 was the key person who had connived with the appellant No.1 to evade duty.
4. The aforesaid Order-in-Original is now challenged before us.
5. Learned counsel, Sri Sanjay Bhowmik, assisted by Sri Indranil Banerjee, appeared and pleaded on behalf of the 7 Appeal Nos E/365-367&373/2007 appellants. The Department was represented by the Learned DR. The appellants have submitted a consolidated written note which is taken on record.
6. Insofar as the allegations relating to Brand Name are concerned, the Learned counsel for the appellants contended as follows:
(i) 'SEN & PANDIT' was not a Brand Name as defined in the SSI Exemption notifications. It was only the first part of the appellant No. 1's full name and, incidentally, shared by M/s SPPEL. The appellant No. 1 had clarified the same in its letter dated 20.08.2004. The appellant No. 1 had every right to use its own full name/ part of full name which could not have disentitled it to SSI benefits.
(ii) The make and appearance of the disputed stickers as also their manner of use proved that the appellant No. 1 had neither used nor intended to use 'SEN & PANDIT' for the purpose of indicating any connection between its own products and M/s SPPEL. The disputed labels/stickers were, at best, decorated logos showing the full name of appellant No. 1 in a stylish manner along with particulars like "AMP", "INPUT", "OUTPUT" "SL. NO." etc.
(iii) Appellant No. 1 had applied for registration of its Brand Names such as "SPEL, "POWERSYS", "SEN & PANDIT Electronics Pvt. Ltd.-SPEL". This was a 8 Appeal Nos E/365-367&373/2007 clear pointer that 'SEN & PANDIT' was never regarded as a Brand Name.
(iv) M/s SPPEL had applied for registration of a different set of logo/ expression i.e. SEN & PANDIT preceded by a Devise (SP). The Learned Commissioner's observation that M/s SPPEL owned the Brand Name (SEN & PANDIT) was totally misconceived. Further, the purported applications for registration filed by M/s SPPEL were still pending. The same is evident from the Departmental communications with the Trade Mark Registry, particularly the letter dated 10.08.2004 written by the Deputy Registrar of Trade Marks, Trade Mark Registry, Mumbai.
(v) The purported Brand Name was, at best, a house-mark falling outside the ambit of the definition of Brand Name contained in the relevant SSI exemption notifications.
(vi) In any event, even if the disputed mark/expression was a Brand Name, then also the appellant No. 1 had an independent right to its use. Just because M/s SPPEL may have had a concurrent right to use the said expression, it did not automatically follow that the appellant No. 1 was using the Brand Name of another person. This proposition is 9 Appeal Nos E/365-367&373/2007 now settled by the decision of Commissioner of Central Excise -vs- Bhalla Enterprises reported in 2004 (173) ELT 225 (SC);
(vii) The Learned Commissioner had erred in construing the Agreement dated 31.03.2000 and wrongly declared the Guptas as legal owners of the purported Brand Name.
(viii) The appellant Nos. 2 - 4 had not physically dealt with the purported offending goods with the knowledge or belief that the said goods were liable to confiscation. Hence, they could not have been visited with personal penalties. In any case, the impugned Order had not held the goods as 'liable to confiscation', in absence whereof Rule 209A of the erstwhile Central Excise Rules, 1944 and Rule 26 of the Central Excise Rules 2001/ 2002 were not invocable.
In support of his submissions, the Learned counsel also cited the decisions of Commissioner of Central Excise v. Sams Techno Mech reported in 2016 (343) ELT 393 (T); Principal Commissioner v. Sams Machines Tools reported in 2018 (360) ELT 458 (Bom.); Nirlex Spares Pvt. Ltd. v. Commissioner reported in 2008 (222) ELT 3 (S.C.).
7. As regards the allegations of having undertaken manufacturing activities at the Lake View Road premises, the appellants submitted that voltage stabilizers were 10 Appeal Nos E/365-367&373/2007 received in fully manufactured condition. Independent vendors had procured raw materials on their own and manufactured the said voltage stabilizers. The appellant No. 1 had consistently maintained that it had purchased finished voltage stabilizers and sold the same from its Lake View Road premises. Functions like testing, quality control, affixation of stickers etc. neither rendered the said voltage stabilizers marketable nor led to the emergence of new products having different commercial identities. The appellant No. 2, in his statement dated 09.04.2003, while answering question Nos. 2 and 5, had categorically mentioned that the appellant No. 1 did not have any manufacturing unit in India except the Sonarpur factory. At the Sales cum Service Centre only post-sale services, quality control works, affixation of stickers etc. had been done. Re- setting of pre-set alignment, setting of feedback resistance etc. had been undertaken solely for quality control purpose and/ or repair of damaged products, which was non-routine in nature.
8. The Learned counsel further thereafter submitted that the purported statements of various vendors relied upon in the Show Cause Notices as well as in the Order-in-Original suffered from numerous inherent contradictions and confusing remarks. In absence of any corroborative evidence, the appellant No. 1 could not have been saddled with liability on the basis of unreliable statements recorded during investigations, as done in the impugned Order. The 11 Appeal Nos E/365-367&373/2007 Department had relied on piecemeal averments and failed to appreciate the context in which the purported statements of the vendors had been given. For instance, Sri Prabir Malakar had acknowledged through his answer to question No. 3 in his statement dated 20.08.2002 that re-setting of pre-set, fitting of feedback resistance etc. had been performed only 'if necessary'. Another vendor, Sri Gautam Das in his statement dated 21.08. 2002, had categorically answered question No. 8 by mentioning that he did not 'know exactly' the further processes performed on the purported semi- finished stabilizers by the appellant No. 1. Yet, most surprisingly in his very next answer, Sri Das stated that technical operations like fitting of feedback resistance etc. had been done at the Lake View Road premises. In this regard, Sri Bhowmik, invited our attention to the English translated statement of Sri Gautam Das. Sri Ashoke Kumar Dasgupta, another vendor, in his statement dated 21.08.2002, had clearly mentioned that he used to supply to the appellant no. 1 transformers which were "suitable to use".
9. The appellants also submitted that the impugned demand is barred by limitation. The imposition of penalties against the appellants under various provisions of the Act and the Rules framed there under was totally unwarranted.
10. The Learned DR reiterated the observations of the Learned Commissioner. He submitted that the appellant No. 1 did not have any concurrent right to use the Brand Name 12 Appeal Nos E/365-367&373/2007 'SEN & PANDIT' which legally belonged to M/s SPPEL. This is borne out from the Agreement dated 31.03.2002 between the Sens and Guptas as also from the fact that the appellant No. 1 had never applied for registration of the aforesaid Brand Name. Insofar as the second Show Cause Notice is concerned, it was submitted that the appellant No. 1 used to perform detailed work in its Sales cum Service Centre at Lake View Road, Kolkata. The said manufacturing processes were performed on semi-finished voltage stabilizers bought from the market. The vendors from whom the purchases had been made had testified to this effect. The Learned DR also submitted that the appellants had engaged in willful suppression and/or mis-statement of facts, for which invocation of the extended period of limitation together with the imposition of penalties had been rightly confirmed. As such, no interference is called for in the impugned Order.
11. Heard both sides and perused the appeal records. We find that the following issues arise for our consideration in the instant appeal :-
I. Whether the appellant no. 1 had used the Brand Name 'SEN & PANDIT' printed on the stickers/ labels which were affixed on its products?
13 Appeal Nos E/365-367&373/2007 II. If at all any Brand Name has been used, whether the same was owned by M/s SPPEL, appellant no. 1's sister concern?
III. Whether the appellant No. 1 had undertaken manufacturing activities at the Lake View Road premises?
IV. Whether the Show Cause Notices dated 06.12.2004 are barred by limitation?
Before we delve into the factual matrix of the matter, it would be worthwhile to refer to the definition of Brand Name as given in the relevant SSI Exemption Notifications, which runs as under:
" "brand name" or "trade name" shall mean brand name or 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; " (Emphasis added) - Vide Notification Nos. 8/99-C.E. dated 28.02.1999, 8/2000-C.E. dated 01.03.2000 etc. 14 Appeal Nos E/365-367&373/2007 From the aforesaid definition it is clear that only such marks would constitute Brand Names/Trade Marks which are used for indicating or so as to indicate a connection in the course of trade between the goods on which exemption is sought and some other person using such name or mark. The manner of use of such Brand Name/Trade Name as also the intention of the supposed user are, therefore, essential factors to be kept in mind. This is the principle emerging from the decisions of Bhalla Enterprises and Nirlex Spares, (supra).
We may observe that in the impugned Order it was held that the disputed label/sticker was a Brand Name since the expression "SEN & PANDIT" had been used repeatedly in the background in addition to the company name and other details. The said Brand Name was affixed on all products of the appellant No. 1 in a prominent manner. Here, we are constrained to hold that the aforesaid observation is contrary to the admitted factual position of the present case. The sticker/ label with the purported Brand Name is only about 2" x 2" inches in size and bears other details like full name of appellant No. 1, R.V.S., SL. NO., AMP, INPUT - OUTPUT etc. It is an undisputed fact that the said sticker was affixed on the rear side of the voltage stabilizers but not found on the outer cover of the boxes in which the said goods were sold. A specimen of the said sticker/label (original) was produced by the appellants during the course of hearing. We find that the appearance 15 Appeal Nos E/365-367&373/2007 of the said disputed sticker/ label and the manner in which the same was printed and used are not indicative of a Brand Name. It is difficult to conceive that a manufacturer would want to use his Brand Name by affixing it in on a non- conspicuous part of its products, such that the same fails to attract the attention of the average consumer. A Brand Name adds value and recognition to a manufacturer's products only when the appropriate information is conveyed to the market, sine quo non for which is that the concerned Brand Name would have to be publicized.
12. In the present case, nothing of the sort has been done. On a fair appraisal of the sticker/ label, we must hold that the words 'SEN & PANDIT' printed thereon do not qualify as Brand Name/ Trade Name.
13. That the appellant No. 1 had never intended to use the disputed expression as a Brand Name is also supported by the fact that it had already applied for registration of Brand Names/Trade Marks like "SPEL", "POWERSYS", "SEN & PANDIT ELECTRONICS PVT. LTD. - SPEL" etc. The said fact had been stated by the appellant No. 1 in its letter dated 06.10.2004, which appears at page 134 of the combined Paper Book. It is seen that the appellants' submissions based on this letter have not been countered.
14. Furthermore, we find that the expression 'SEN & PANDIT' is the first part of the appellant No. 1's full name, which also happens to be a part of the full name 16 Appeal Nos E/365-367&373/2007 of M/s Sen & Pandit Power Electronics Pvt. Ltd. The said expression cannot be held as descriptive enough to indicate a connection in the course of trade between the products of appellant No. 1 and its sister concern, M/s SPPEL. In fact, the said label indicates the actual manufacturer's name, name of the product, model No., voltage capacity etc. The sticker/label produced before us merely creates an impression that the product in question is manufactured by M/s Sen & Pandit Electronics Pvt. Ltd., the appellant No. 1. No person can be penalized for using one's own name on one's products, notwithstanding that a third party may have been equally entitled to use the said name/ part of name. This is especially so when the name/ mark is not shown to have belonged to any particular person. As authorities for such propositions we rely on the decisions of Bhalla Enterprises, supra and Pethe Brake Motors Ltd. v. Commissioner reported in 2005 (179) ELT 57 (T). The appeal filed by the Department against the latter decision was dismissed by the Hon'ble Supreme Court in Commissioner v. Pethe Brake Motors reported in 2015 (320) ELT A341 (SC). We are further fortified in our views by the decisions of Sams Techno Mech and Sams Machines Tools, cited by the appellants. Paragraph 5 of the decision of Sams Techno Mech, supra, approved by 17 Appeal Nos E/365-367&373/2007 the Hon'ble Bombay High Court, is instructive and quoted below:
"5 . . . . . . . It is recorded by the first appellate authority that the name plate contains details, such as name of the manufacturer in full , name of the product, model, sr. no., address, telephone no., fax no. and e-mail no. The first appellate authority has recorded the findings to the fact that there were no words or letters which would indicate that "SAMS" is a brand name affixed on such machines. The said particular name plates were produced before us and on perusal of the same, we find that the said label does not indicate that the machines are cleared with a brand name 'SAMS'. In fact the said label indicates exactly the manufacturer's name and details which is Sams Techno Mech and Sams Tool Machine as the case may be. We find that the first appellate authority was correct in holding that if the department wanted to deny the exemption notification on the ground that the brand name or their name is of another person, they must prove the case and the respondent cannot be asked to prove that trade name/brand name does not belong to any other person. "
18 Appeal Nos E/365-367&373/2007 Therefore, in the light of our findings stated before, there is no denying that the appellant No.1 had neither intended to use 'SEN & PANDIT' as its Brand Name nor was the said expression capable of indicating any connection in the course of trade between the appellant No.1's products and M/s SPPEL. The mischief of using a Brand Name defined in the relevant SSI Exemption notifications is not attracted in the facts and circumstances of the present case.
15. In the impugned Order, the Learned Commissioner has relied on Tarai Food Ltd. v. Commissioner reported in 2006 (198) ELT 323 (S.C.) and Commissioner of Central Excise v. Grasim Industries Ltd. reported in 2005 (183) E.L.T. 123 (S.C.). We are of the opinion that the decision of Grasim Industries Ltd., supra is actually in favour of the appellants. In the said decision, the Hon'ble Supreme Court held, inter alia, held that SSI exemption benefit was available to such parties who did not associate their products with some other person, quite like the present appellant No. 1. Expanding on the meaning of the terms "that is to say" contained in the relevant notification, the Hon'ble Apex Court was pleased to hold that Brand Name/ Trade Name was to be understood in context of the words which followed. Even a signature or an invented word or any writing was sufficient to constitute Brand Name when used in relation to the product for the purpose of indicating a connection between the product in question and the other person. Similarly, we could not read the Tarai Food Ltd. decision as having laid down any ratio 19 Appeal Nos E/365-367&373/2007 which helps the Revenue's case. In this decision, the Hon'ble Supreme Court was pleased to hold that Brand Name connoted such a mark, symbol, design or name, which was unique to the particular manufacturer, and when used on a particular product established a connection between the product and the manufacturer. The principles laid down by the said decision, if applied correctly to the case at hand, do not detract from our conclusions noted above. We have already held that 'SEN & PANDIT' appearing on the purported labels/stickers was not descriptive enough of serving as any Brand Name. This is more so when the said purported label/sticker is considered in totality.
16. We have also taken note of the letter dated 20.08.2004 from the appellant No. 1 wherein it was clarified that the appellant did not have any practice of using Brand Name, registered or unregistered. The purported incriminating statements recorded during the course of investigations cannot be given a pedestal higher than the admitted facts of the case. Even otherwise, the authority below was under an obligation to verify as to whether the said purported statements were in consonance with the true facts. Having gone through the various statements appearing at the combined Paper Book we do not find that the appellant No.1 can be said to have used a Brand Name belonging to its sister concern. We also find that the term 'Brand Name' was used by the statement-makers concerned loosely and without any reference to the SSI notifications. The appellant 20 Appeal Nos E/365-367&373/2007 No.1 had provided the necessary clarifications to the Department vide its letter dated 20.08.2004. We see no reason to disbelieve the appellants.
17. We also observe that the appellant No. 1's sister concern, M/s SPPEL had never used or had applied for registration of the Brand Name 'SEN & PANDIT'. By one letter dated 06.10.2004 addressed to the Senior Intelligence Officer, DGCEI, M/s SPPEL had stated that it had applied for registration of particular Brand Names being :-
1. 695691 for SP Devise with "SEN & PANDIT"
2. 923649 for SP Devise with "SEN & PANDIT"
3. 923650 for SP Devise with "SEN & PANDIT POWER".
The Revenue's entire case is based on the premise that M/s SPPEL was the owner of the Brand Name used by the appellant No. 1. The very fact that M/s SPPEL had applied for an altogether different set of Brand Names/ Trade Marks has been ignored while passing the impugned Order. The lower authority seems to have been misled while concluding that M/s SPPEL was the owner of Brand Name i.e. 'SEN & PANDIT'. If that be the case then we must hold that the Learned Commissioner's observation is devoid of substance. The allegations in the first Show Cause Notice, as confirmed in the Order-in-Original, fall flat when one bears in mind the correct factual position. It would also necessarily follow that M/s SPPEL could not have been regarded as the owner, legal or otherwise, of the logo/ mark 'SEN & PANDIT'.
21 Appeal Nos E/365-367&373/2007
18. There is another aspect of the matter which deserves a brief discussion. The Learned DR had argued that M/s SPPEL is the legal owner of the Brand Name since it had applied for registration of the said Brand Name being 'SEN & PANDIT'. This argument, however, does not inspire confidence. It is not a fact that simply by having applied for registration, ownership rights were conferred on the appellant No. 1's sister concern. We had specifically enquired as to whether the registration applications filed by M/s SPPEL, which have been shown as pending, had been subsequently registered by the Trade Mark Registry. No affirmative reply was received in this regard. This apart, we have pointed out that M/s SPPEL had applied for a different set of logos/ expression which are not identical to the one for which SSI Exemption is sought to be denied. Thus, it cannot be countenanced that simply by virtue of having applied for registration, M/s SPPEL had become the legal owner of the purported Brand Name 'SEN & PANDIT'. It had not been shown that M/s SPPEL had the exclusive right to use the afore-mentioned expression to the exclusion of others, much less the appellant no. 1. We, accordingly, answer issues no. I and II in favour of the appellants and against the Revenue.
19. Now, we turn to the issue no. III. On a careful examination of the impugned Order, it is noticed that the Learned Commissioner had concluded that the appellant no. 1 had engaged in manufacturing activities 22 Appeal Nos E/365-367&373/2007 at its Sales cum Service Centre at Lake View Road by placing reliance on certain statements recorded during the course of investigations. It is seen that the impugned Order has solely relied on the aforesaid statements without any corroborative evidence such as test report etc. in respect of the voltage stabilizers purchased from the vendors. Nor was any opinion sought from the Trade or market as to the exact nature of the goods, i.e., whether the said stabilizers were functional or not. We would like to state that when the Department alleges that a person has engaged in manufacturing within the scope of the Act, the onus lies on the Department to prove its case with positive evidences. Such onus cannot be shifted unto the person charged with the allegation of having undertaken manufacturing activities so as to require him to disprove the Department's allegations. When the Department solely relies on statements taken during the course of investigation, it must also be proved that such statements are admissible in law and otherwise reliable.
20. At paragraph No. 25, the impugned Order has referred to the statements given by Shri K. K. Biswas, appellant No. 3, wherein it had been purportedly admitted that after bringing the semi-finished stabilizers and inverters to the Lake View Road premises, appellant no. 1 was subjecting the said goods to further technical 23 Appeal Nos E/365-367&373/2007 operations like re-setting of pre-set alignment, setting of feedback resistance, calibrations, control of voltage etc. The Department submitted that such technical operations were necessary for making the said semi- finished stabilizers complete and functional. We have previously gone through the statements dated 09.04.2003 and 10.04.2003 of the appellant No. 3. We do not concur with the Department's view that Shri K. K. Biswas had given an impression that the appellant no. 1 used to perform 'manufacturing' activities at the Lake View Road premises. While answering question no. 5 in his statement dated 09.04.2003, Shri K. K. Biswas had clearly stated that only post-sale service, repairing, quality control works etc. were being undertaken at the aforesaid premises. We quote below the relevant parts of the said statement dated 09.04.2003:
".. Q.5 :- You have mentioned earlier that the office of M/s Sen & Pandit Electronics Pvt. Ltd. at 16B, Lake View Road, KOL-29 is a service centre and sales office, please define what short of work is done in your service centre and also what facility of servicing/ manufacturing are available in that section of office .
Ans: - In the office at 16B, Lake View Rd, Kolkata-29 a portion is separated and marked as Service Centre
24 Appeal Nos E/365-367&373/2007 where some people are used to sit and are engaged in the job of all shorts of Repairing Work required to be done for the Voltage Stabilizers, Inverters, Servo Controlled Voltage Stabilizers already sold to different Customers within the Warranty period and beyond of Warranty period. In this Service Centre Quality Control Work is also being done for Voltage Stabilizer, Servo Stabilizer, and Inverter etc. The Equipment and tools like voltammeter, variac, soldering iron, solder etc. along with all other required equipment are available in the Service Centre."
While answering question no. 2 in the above- mentioned statement dated 09.04.2003, Shri K. K. Biswas had categorically stated that they did not have any other unit in India except the Sonarpur unit. On the other hand, it had been stated that the company used to get different types of stabilizers manufactured from 'outside manufacturers' called vendors.
21. The impugned Order has also placed reliance on, inter alia, the statement dated 20.08.2002 of Sri Prabir Malakar, statement dated 21.08.2002 of Sri Gautam Das and statement dated 21.08.2002 of Sri Ashoke Kr. Dasgupta, all of whom were 'vendors'. These statements have lead the Ld. Commissioner to believe that the said 25 Appeal Nos E/365-367&373/2007 vendors, as a practice, used to supply non-complete stabilizers whereas the appellant no. 1 used to apply its technical knowhow and complete the manufacturing process to make the said products functional and marketable. We have gone through the afore-mentioned statements given by the vendors closely. There are numerous inherent contradictions in the aforesaid statements of the vendors, namely Shri Prabir Malakar, Sri Gautam Das and Sri Ashoke Kr. Dasgupta. Such unreliable and/or contradictory statements cannot for the sole basis of the impugned demands.
22. As we observe that the Adjudicating Authority has not conclusively established that the post-sale activities, repairing works, quality control, affixation of sticker amounted to 'manufacture' within the meaning of Section 2(f) of the Act, the confirmation of demand of Central Excise duty of Rs. 24,21,120/- is held as unsustainable in law and set aside. Issue no. 3 is, thus, answered in favour of the appellants.
23. In view of the above discussions, we do not find it necessary to go into the issue no. 4. At this juncture it would be appropriate to hold that the appellants could not have been visited with any penalty.
24. To sum up:
i) The appellant No. 1 cannot be said to have used any Brand Name. Even otherwise, it has not been proved 26 Appeal Nos E/365-367&373/2007 that the expression 'SEN & PANDIT' was a Brand Name of which the appellant's sister concern, namely M/s SPPEL was the legal owner.
ii) No significant manufacturing activities had been undertaken at the Lake View Road premises.
25. We, therefore, set aside the impugned Order-in- Original and allow the appeals with consequential benefits, if any, to the appellants.
(Pronounced in the court on...20.09.2018.) (BIJAL KUMAR) (P. K. CHOUDHARY) MEMBER TECHNICAL MEMBER (JUDICIAL) T.K.