Customs, Excise and Gold Tribunal - Tamil Nadu
Shyam Printing And Marketing Devices vs Commr. Of C. Ex., Chennai on 8 February, 2002
Equivalent citations: 2002(81)ECC298, 2002(142)ELT348(TRI-CHENNAI)
ORDER S.L. Peeran, Member (J)
1. This appeal arises from Order-in-Original No. 77/94, dated 6-1-95 by which the Commissioner of Central Excise has confirmed a demand for larger period by invoking Rule 9(2) of Central Excise Rules read with proviso to Sub-section (1) of Section 11A on the allegation that appellants had been manufacturing and selling Self Inking Rubber stamps with the brand name "PERMA" which goods were seized under a Mahazar from the factory premises on 29-9-92 and statements of various persons were recorded. The allegation is that the said item falls under the Heading 9611.00 and the appellants evaded payment of duty and had suppressed the vital information regarding usage of brand name, receipt of goods under Rule 173H and by clearing the goods under parallel set of invoices.
2. The Commissioner has relied on the statements made by the proprietor and the officials of the appellants to hold that they had an understanding with the foreign company by name M/s. Porlon Corporation, USA and were affixing their brand name "PERMA" on their products and this fact had been admitted by Shri A. Vijayakumar Reddy in his statement dated 22-6-93 which is corroborated by the statement given by Shri R. Dayakar, Financial Controller and Shri Anoop Kumar, Assistant Sales Manager of Cochin Branch and Mr. R. D. Sanjeevi, Area Manager of Pune branch.
3. The ld. Commissioner has noted that since they have used the brand name of the foreign company, therefore they are not entitled to the benefit of the terms of the Notification No. 175/86 as per Para 7 thereof and explanation (viii) appended thereto. He has also relied on the judgment of Festo Control (P) Ltd. v. CCE, Bangalore, reported in 1994 (72) E.L.T. 919. He has also given a finding on the issue of suppression and time bar and held that there is deliberate withholding of information and suppression of material facts on record with regard to the use of brand name, therefore the benefit of SSI notification is not available to them. Thus by invoking larger period, the demands for the period 1988-89 to 1992-93 under Rule 9(2) of Central Excise Rules read with Sub-section (1) of Section 11A has been confirmed to the extent of Rs. 41,35,842/- besides imposition of penalty of Rs. 4 lakhs under Rule 173Q.
4. With regard to goods cleared under parallel invoices, the duty demand of Rs. 23,817/-, the appellants are not contesting the amount of Rs. 23,817/- which has been confirmed on the allegation of clearances under parallel set of invoices and those remanufactured and cleared without payment of duty even defective stamps received.
5. We have heard ld. Counsel, Shri R. Raghavan for the appellants and Shri G.S. Menon, ld. SDR for Revenue.
6. The contention of the ld. Counsel is that Rule 9(2) cannot be invoked as the said rule pertains to clearances made, on the allegation of clandestine removal surreptitiously without due intimation to Department and without payment of duty. In the present case, it is his contention that they had filed classification lists and the goods had been cleared under RT-12 returns and on invoices, on due payment of duty. The Department was fully aware of the fact of appellants having manufactured the goods under the brand name of "PERMA". He produced a show cause notice dated 20-10-86 issued by the Department making this very allegation that "Pre-Inked Stamps" called in the market as "PREMA-STAMPS" had been manufactured and cleared. This show cause notice also relied on various statements taken from various persons and as relied in these proceedings and had alleged about clearances made under false set of invoices and duty demand had been raised for the period April, 1985 to October, 1985 on the allegation that appellants had attempted to keep the value of clearances within the exemption limit under tariff item 68 and destroyed certain records relating to production of 'pre-inked stamps'. He produced a copy of Order-in-Original No. 20/87, dated 22-5-87 by which the Commissioner had adjudicated proceedings and had imposed a penalty of Rs. 67,000/- under Rule 173Q of C.E. Kules besides confirming duty demand of Rs. 1,00,000.02 under Rule 9(2) and in terms of proviso to Sub-section (1) of Section 11A. Also an amount of Rs. 48,180.39 had been confirmed under the same provisions supra. The Counsel argued that the Department was fully aware of the use of the brand name and therefore they cannot allege that appellants have suppressed any fact with the Department about the such use of brand name. He also filed copy of the certificate of registration issued by Registrar of Trade Marks under Trade and Merchandise Marks Act, 1958, registering the said brand name in appellant's name. It is his contention that appellants held a bow fide belief that when they were owning the brand name and got the same registered in their name, and that the department officials were fully aware of its use, therefore, they were not required to give any further information. The Department cannot allege suppression to invoke larger period. It is his further plea that circumstances of use of brand name owned by them and incidentally also by the foreign company even if they had entered into in collaboration would be eligible for the benefit of notification as they were SSI unit. He pointed out that this was the disputed question of law and Tribunal judgments were both for and against the parties on this issue, till the issue was sorted out before the Larger Bench. Therefore, it cannot be alleged that appellants have suppressed material facts with an intent to evade duty. He also contended that when there was no deliberate attempt to evade duty, larger period was not invokable and in this regard referred to several judgments wherein it has been held that intention to evade duty is required to be proved before confirmation of duty demands for larger period. He submits that the plea of bona fide belief and benefit of doubt should have been given to the appellants. He therefore contended that mere fact of the appellant's proprietor and others having given statements of use of brand name of foreign company by itself will not disentitle them from claiming the benefit of SSI exemption notification as the said brand name had been registered in their own name and they were the owners thereof.
7. Ld. SDR contended that all the points raised by the ld. Counsel has been done for the first time before the Tribunal. Even the SCN dated 20-10-86 and the OIO No. 20/87, dated 22-5-87 had not been placed before the Commissioner. He pointed out that plea of bona fide belief also was not raised before the original authority and therefore they should not be permitted to take advantage before the Tribunal by making submissions for the first time. He pointed out from the statement and read out para-29 of the Order wherein the proprietor Shri Vijayakumar Reddy had admitted that brand name "PERMA" is owned by M/s. Porlon Corporation, USA and that statement had been corroborated by other persons as noted supra and that there was no retraction from their statements. As the brand name of the foreign company had been used, it clearly disentitles them from benefit of SSI notification. He also referred to findings in para-29.8 and in Para 32 of the Order.
8. Countering the arguments, ld. Counsel submitted that the submission now made were all facts which are available with the Department and known to Department and the facts are not brought to the notice of the Department for the first time. He also reiterated the submission made and contended that there is no nexus between foreign brand name and the name used by them as they were not the same as the one which was used by American Company was "PERMA", while their brand name as "PERMA STAMP" with a different design and ownership being held by them.
9. On a careful consideration of the submissions, and on perusal of the show cause notice, we notice that proceedings against the appellants have been initiated under Rule 9(2) on the premise that appellants clandestinely removed the goods without bringing to the notice of the Department the use of brand name as well as the fact that they had suppressed about such use and about removals. The fact remains that appellants had been paying duty on the clearances over and above the exemption limit under the said notification. The Rule 9(2) would be applicable only when there is clandestine removal without payment of duty and therefore it cannot be said under the present context that there was clandestine removal. However the allegations have also been made under the proviso to Sub-section (1) to Section 11A on the ground that they had used the foreign brand name "PERMA" owned by M/s. Porlon Corporation. This statement of appellant's proprietor and other persona are also relied. The question which is required to be considered is as to whether the Department was aware of these material facts and on account of Department being aware of the use of the said brand name, larger period cannot be invoked in the present case? Counsel has filed, although for the time, the show cause notice dated 20-1-86 and the order confirming the demands made by the Commissioner by his Order-in-Original No. 20/87, dated 22-5-87. However, the fact remains that Department initiated proceedings on this very allegation. The Commissioner has not examined this question of material facts which were within the knowledge of the Department. Therefore, it is but proper that the matter is sent back to the Commissioner to re-examine the issue on time bar as the appellants contend that the Department was fully aware of facts as per show cause notice of 20-10-86 culminating in OIO No. 20/87. It has also been stated that there was bona fide belief held by them that merely because the foreign company also had similar brand name "PERMA" that by itself does not disentitle them from claiming the benefit and in view of the fact that ownership of the said brand name was held by them and had got it registered under the Trade and Merchandise Marks Act, 1958. This plea had not been raised before the Commissioner as pointed out by ld. SDR also. In the interest of justice, the appellants should be given an opportunity to establish that they held bona fide belief and Department was aware of all material facts and larger period cannot be extended in the present case. Appellants have shown that what is being demanded is only the short levy. There is no allegation of clandestine removals and demands under Rule 9(1) is not sustainable. When Rule 9(2) is not maintainable and demands cannot be confirmed unless it is shown by the Department that there was material suppression of facts pertaining to use of foreign brand name and hence proviso to Sub-section (1) of Section 11A could be independently invoked. In view of the fresh facts having been brought to our notice, we are of the considered opinion that the matter is required to be sent back for de novo consideration. The Commissioner shall examine the issue of time bar and also the plea that they are the owners of said brand name and the trade name is different from the mark used by the foreign company. The issue is left open for appellants to demonstrate both aspects of the matter. Thus, the impugned order is set aside and matter remanded for de novo consideration. The ld. Commissioner shall take into consideration the pleas now made with regard to earlier proceedings initiated by SCN dated 20-10-86 culminating in OIO No. 20/87, dated 22-5-87 cited supra. Appellants shall be given an opportunity to present their case with any other documentary evidence in support of their case. The Commissioner shall pass a detailed speaking order. Ordered accordingly.