Custom, Excise & Service Tax Tribunal
Cce, Bhopal vs M/S. Quantum Instruments & Electronics on 13 February, 2013
CUSTOMS EXCISE & SERVICE TAX APPELLATE TRIBUNAL
PRINCIPAL BENCH, NEW DELHI
Court No. III
Date of Hearing: 02.01.2013
Date of Pronouncement:
E/CROSS/201/2005
E/2136/2005-EX[DB]
(Arising out of Order-in-Appeal No.768-CE/BPL/2004, dated 4.11.2004 passed by the Commissioner, Central Excise, Bhopal)
Honble Mrs. Archana Wadhwa, Judicial Member
Honble Shri. Sahab Singh, Technical Member
1. Whether Press Reporters may be allowed to see : No
The order for publication as per Rule 27 of the
CESTAT (Procedure) Rules, 1982?
2. Whether it would be released under Rule 27 of : Yes
The CESTAT (Procedure) rules, 1982 for
Publication in any authoritative report or not?
3. Whether their lordships wish to see the fair : Seen
copy of the order?
4. Whether order is to be circulated to the : Yes
Department Authorities?
CCE, Bhopal Appellant
Vs
M/s. Quantum Instruments & Electronics, Respondent
Appearance:
Appeared for the Appellant: Shri, S. Jain, Adv.,
Appeared for the Respondent: Shri, Z-U-Alvi, D.R.
Coram:
Honble Mrs. Archana Wadhwa, Judicial Member
Honble Shri, Sahab Singh, Technical Member
Interim Order/106/2013
FO 58312/2013
Per Sahab Singh:
This is in appeal filed by Revenue against the Order-in-Appeal No. 768-CE/BPL/2004 dated 04.11.04 passed by the Commissioner & Central Excise, Bhopal.
2. Brief facts of the case are that M/s. Quantum Instruments & Electronics Bhopal (here in after referred to as Respondent) were manufacturing Electrical Transformers, falling under chapter heading 8504 of the Central Excise Tariff in technical collaboration with Baroda based M/s. Silcher Electronics Ltd. (SEL in short) during the period February, 97 to March, 99 and they were availing small scale exemption in respect of the goods manufactured by them. It was found by the department that they were pasting one sticker on the body of the Transformers displaying the technical specification of the product and also mentioning the fact of Mfgrs. manufactures By Quantum instruments & Electronics, Bhopal in Technical Collaboration with Silcher Electronics Ltd. and also their Logo. Show Cause Notice was issued by the department demanding the duty denying the small scale exemption for the period Feb, 97 to March, 99. The Show Cause Notice was confirmed by the Original Authority and demand of Rs. 2,53,821/- along with interest was confirmed against the respondents and equal amount of penalty was imposed of the respondents. The penalty of Rs. 10,000/- under Rule173Q of the Central Excise Rule was also imposed. The respondent filed on appeal before Commissioner of Central Excise (Appeal), who vide the impugned order has allowed their appeal and the Order-in-Original was set aside. Revenue has filed this appeal against the impugned order in appeal.
3. Ld. DR appearing for the Revenue submits that the stickers pasted on the transformers by the respondents bear the logo of SEL. It is the brand name trade/name of M/s. SEL who is an established manufacture of the same product. The sticker in this case shows the connection between the goods and the SEL M/s. SEL has entered in agreement with respondents in pursuance of which the respondents were given exclusive marketing rights in Madhya Pardesh. He submits that the Commissioner (Appeal) has given benefit to the respondents following the order of the Tribunal in case of HOD laboratories reported in 2004 (172) E.L.T. 458 (Tri. Del.). He submits that in case of M/s. Chopra Alliances reported 2001 (132) E.L.T.-95 (Tri.- Del.) the small Scale exemption was denied to the manufacturer. He also relied upon the decision of the Honble Supreme Court in case of Grasim Industries reported in 2005 (183) E.L.T. 123 (S.C.) when the benefit of small Scale exemption was denied in similar facts of the case.
4. Learned consultant appearing for the respondents submits that as per the technical collaboration agreement with the M/s. SEL the respondents are eligible to use the logo of the M/s. SEL whose name was specifically mentioned in the stickers pasted on the Transformers. As per collaboration agreement they have a right to use the logo of the technical collaborator. The Commissioner (Appeal) has therefore rightly allowed their appeal relying upon the decision of HOD Laboratories (Supra) which is squarely applicable to the case. He submits that the reliance of the Revenue on Chopra Alliances case is not proper as this case was distinguished and considered by the Tribunal in the HOD case.
5. After hearing both the sides we find that issue involved in the present appeal is whether the respondents are eligible for exemption under Notification No. 1/93-CE as they are mentioning the Logo of M/s. Silchar Electronics Ltd. on the goods. The other issue is whether the extended period can be invoked and interest and penalty is impossible on the respondents. This is fact that the goods R-Core Transformers manufactured by respondents are having a sticker with description manufactured by Instruments & Electronics, Bhopal in Technical Collaboration with SEL and also showing the logo of M/s. SEL. The fact is that the logo of SEL mentioned on the goods indicates a connection between the goods manufactured by the respondents with the Silcher Electronics Ltd. we find that the in case of Grasim Industries (supra) Honble Supreme Court has held that the in context of trade name, a name or any writing would cover the name of the company so long as it is used in relation to the product and is used for the purpose of indicating the connection in course of trade between the product and the other person. The Honble Court in para 13 of the judgment has held as under:
13. As has been set out hereinabove, in this case there s no denial that M/s. Grasim Industries Ltd. were manufacturer of cement. There is also no denial that the purpose of using the words:
Manufactured by Dharani Cements Ltd.
A Subsidiary of Grasim Industries Ltd. Was with an intention of indicating a connection between the product i.e. the cement and M/s. Grasim Industries Ltd. In such cases, clearly the Respondents were using a trade name of some other company with the purpose of indicating a connection in the course of trade between the product and that person. The Respondents were therefore clearly not entitled to the benefit of the Notification. The decision of the Tribunal is therefore clearly erroneous and requires to be set aside.
We find and in the present case the name of Silcher Electronics Ltd. and logo of SEL is mentioned on the goods manufactured by the respondents. The logo indicates a connection between the M/s. SEL and the goods manufactured by the respondents. Following the decision of Honble Supreme Court the respondents therefore are not entitled to the small Scale exemption. We hold accordingly.
6. As regards the suppression of facts we find that Shri. Shaheryar Khan. partner of the respondents in his statement dated 27.07.1999 has stated that they have manufactured the products with logo of SEL from Feb, 97 to May, 97 and stopped use of stickers with logo of SEL from May, 97. We find that on further investigation by the Revenue it was found that respondents continued to use of logo of SEL up to Mar, 99. This stands collaborated by Shri. Nirmal Mitna Managing Director of Bhopal Switchgear (P) Ltd. in his statement dated 01.11.2001. He admitted that they purchased Transformers from the party during the period Aug, 98 to Mar, 99 and those goods were also having the sticker affixed on the Transformers showing the logo of SEL along with description manufactured by Quantum Instruments & Electronics, Bhopal in Technical Collaboration with SEL. Therefore statement given under section 14 of the Act by the partner of the respondents was not true and he suppressed the facts. The Original Authority has rightly invoked extended period and imposed the penalty under section 11AC of the Central Excise Act.
7. In view of the above we set aside the impugned order in appeal and restore the order in original passed by the original authority Revenue Appeal is allowed.
(Order pronounced in the Court on 13/02/2013) Archana Wadhwa Member (Judicial) Sahab Singh Member(Technical) Neha* Per Archana Wadhwa :
8. Having gone through the order passed by my learned brother, I intend to take a different view on the point of limitation, though I agree with the learned brother on the legal issue.
9. After carefully going through the impugned orders, I find that Commissioner (Appeals) has extended the benefit to the respondents by observing as under:-
5 (i) As regards issued framed at (a) above, I find the very same issue gets covered under the latest CEGATs decision in CCE, Indore Vs. HOD Laboratories Ltd. 2004(172) ELT 458 (T) wherein the benefit of exemption under Notfn. No. 01/93 was extended to the appellant, when the logo of manufacturer was affixed alongwith appellants brand name which is also the issue at hand. I therefore extend the benefit under the said exemption notification to the party also and set aside the demand of duty.
10. As seen from the above, the appellate authority has relied upon the declaration of law by the Tribunal in the case of M/s. HOD Laboratories Ltd. The Revenue in their memo of appeal has relied upon the Supreme Court decision in the case of Grasim Industries Ltd., which was delivered in 2005 i.e. subsequent to the Tribunals decision in the case of HOD Laboratories. Apart from that I also note that the law during the relevant period was not very clear and there are many earlier decisions of the Tribunal and of various Courts laying down that affixing some words showing connection with the brand name owner or related to the brand name of the Group, along with the assessees own name will not amount to use of brand name of other person. One such reference can be made to the Honble Supreme Court decision in the case of CCE vs. Vikshara Trading & Invest P. Ltd. [2003 (157) ELT 4 (SC)] as also to Kerala High Court decision in the case of Commissioner vs. Mamma Products [2009 (235) ELT A 147 (Ker)] laying down that where there was common ownership of brand name where product is marketed in exclusively different territories, the same will not be hit by bar of notification. It is a specific stand of the respondent that they were to market the R-Core transformers only in Madhya Pradesh and were eligible to use the SEL for the said territory in terms of collaboration agreement.
11. The demand in the present period stands raised by way of issuance of Show cause notice on 21.12.01 for the period February, 1997 to March, 1999 i.e. admittedly beyond the period of limitation. The question required to be addressed in the present appeal is as to whether during the same relevant period the appellant was under any bonafide belief that such affixation of words on the transformers along with their own name would amount to use of brand name by other person or not. My Learned brother has referred to a statement of partner recorded on 27.7.99 indicating that they were using the logo of SEL only till May, 1997 whereas the evidence has revealed that the same was being used right up to March, 1999. Even if the said statement regarding affixation of SEL is found to be incorrect in terms of period for which such SEL brand was affixed, the issue required to be addressed is as to whether the said statement, in any manner, would reflect upon the assessees understanding of all the previous related declaration of law. i.e. as to whether such use would amount to use of brand name of another person thus making them disentitled to benefit of small scale exemption notification.
The justification for invocation of longer period of limitation would depend upon the fact of suppression, misstatement etc. with an intent to evade payment of duty. The above statement made by the partner relates to some factual discrepancies and in no way reflects that they were aware of the fact of non-availability of SSI exemption notification on account of use of somebody elses brand name and still continued to clear the goods with a guilty mind to evade duty.
If we go through the provisions of Section 11 A the language used is suppression, fraud, collusion, willful default with an intent to evade payment of duty. The said phrases used in section 11A(1) has been the subject matter of various decisions of Honble Supreme Court. In the case of Pushpam Pharmaceuticals Company reported in [1995 (78) ELT 401 (SC)], it stands observed by the Honble High Court that word suppression having been used in the company of such strong words as fraud, collusion, willful default has to be construed strictly and it has to be a deliberate act. Similar views stand expressed by the Honble Supreme Court in the case of CCE vs. Chemphar Drugs & Liniments [1989 (40) ELT 276 (SC)].
12. When viewed in the light of declaration of law by the Honble Supreme Court, the circumstances available to the revenue for invocation of longer period of limitation have to be a deliberate malafide action on the part of the assessee and not a mere statement as regards the period for which the logo of SEL was affixed. Whether there can be some bonafide belief on the part of the assessee to entertain a view that they were entitled to avail the benefit of notification or not is to be gathered from the circumstances. When during the relevant period, the declaration of law by the higher authorities was to the contrary, it can be reasonably presumed by the assessee and a reasonable belief can be entertained by him that such affixation of logo and any writing of words would not amount to use of brand name of a third person.
13. Apart from the above, I find that Commissioner himself has granted relief to the respondents. When an officer of the level of Commissioner (Appeals) can interpret the notification in a manner different than the one adopted by the Revenue, and can grant relief to the assessee, I find no reasons to hold that the assessee could not have entertained a belief in the similar fashion. At this stage, I would like to refer to a Final Order in ST Appeal No. 386/2008 in the case of CCE, Indore vs. M/s. Jas Enterprises. Originally there was difference of opinion between two Members & whereas Member (Judicial) has observed that inasmuch as the Commissioner (Appeals) had set aside the order of original adjudicating authority, the issue involved was capable of two different interpretations of the notification and as such there could be a bonafide belief on the part of the assessee. It was further observed that complexity of the notification which has already resulted in passing of favourable order by Commissioner (Appeals), cannot be understood by a common person, who is not very well conversant with the legal interpretation. Where an expert officer has himself interpreted the notification in such a manner so as to extend the benefit to the assessee, no fault can be attributed to the assessee to understand the law in that particular manner. Said view of the Member (Judicial) was not concurred with Member (Technical) who held that there was suppression on the part of the assessee and the matter has to be decided in reference to the appellants action and not with reference to the actions of the Commissioner (Appeals). The third Member. Concurred with Member (Judicial) by observing as under:
.The very fact that on the issue of eligibility for exemption under this notification, the Commissioner of Central Excise (Appeals) has held that the Respondent is located within a academic Institutions and the Tribunal has taken a contrary view on the same issue, shows that on this issue, two views were possible. In this factual background, I am of the view that just because the Respondent has not interpreted the Notification in accordance with the Revenues interpretation of the notification and the Respondent as per his understanding of the exemption notification was not paying service tax and had not obtained service tax registration, his conduct can not be treated as deliberate violation of the provisions of the Finance Act, 1994 and of the Rules made there under. Therefore while the penal provisions of section 78 are not attracted, the penalty imposable under section 77 is liable to be waived under section 80. I, therefore, agree with the view of learned Member (Judicial) that in the circumstances of the case, penalty on the Respondent under section 77 & 78 of the Finance Act 1994 is not warranted.
14. In view of the above majority decision, it stands held that where the notification or a particular provision of law is capable of two different interpretation, and when Commissioner (Appeals) has himself interpreted the law in a particular manner, the assessee cannot be held guilty of any malafide. In the present case, as already discussed, the earlier decisions prior to the Grasim Industries were in favour of the assessee, which also stand followed by Commissioner (Appeals) and as such, it cannot be held that the assessee was guilty of any mis-statement or suppression of fact with intent to evade payment of duty.
15. As such, I am of the view that demand having been raised beyond the period of limitation is barred by limitation and on the above ground the Revenues appeal fails.
(Archana Wadhwa) Member(Judicial) Difference of Opinion
(i) Whether the appeal filed by Revenue is to be allowed as held by Member (Technical) Or
(ii) The Revenues appeal is to be rejected on the ground of demand being barred by limitation as held by the Member (Judicial) (Archana Wadhwa) Member (Judicial) (Sahab Singh) Member (Technical) ss Per Rakesh Kumar:-
16. The Respondent are manufacturer of various types of Transformers including a type of Transformers called R-Core Transformers. The Respondent sometime in 1997, entered into a Licensee manufacturing agreement for manufacture of R-Core Transformers with M/s. Shilchar Electronics Limited, Baroda (hereinafter referred to as SEL) under which the Respondent received know-how and technical assistance from M/s. SEL for manufacture of R-Core Transformers. In terms of the agreement, the Respondent also had non- exclusive rights in the state of Madhya Pradesh for marketing of Transformers manufactured by them by using the technology provided by SEL and they were also to pay royalty to SEL at the rate of 1% of the sales. The Respondent were availing of SSI exemption in respect of goods manufactured by them including R-Core Transformers being manufactured in terms of the licensee manufacturing agreement with SEL, Baroda. Sometime in year 1999, it was found that the R-Core Transformers being manufactured by the Respondent in terms of licensee manufacturing agreement with SEL, Baroda were having a sticker affixed on them which, in addition to the Respondents own brand name Quantum, also had the logo of SEL along with the words manufactured by Quantum Instrument & Electronics Limited, in technical collaboration with M/s. Shilchar Electronics Limited, Baroda printed on them. The Department was of the view that the Respondent were using the brand name and logo of other person and, hence in respect of R-Core Transformers being manufactured by them, they would not be eligible for SSI exemption. On this basis, the Show Cause Notice dt. 21.12.01 was issued to them for demand of allegedly short paid duty of Rs.2,53,821/- in respect of clearances of R-Core Transformers during the period from Feb.97 to March99 along with interest and also for imposition of penalty on the Respondent under Rule 173Q. The Show Cause Notice was adjudicated by the Additional Commissioner vide order-in-original dt. 21.05.05 by which the above mentioned duty demand was confirmed along with interest and penalty of equal amount was imposed on the Respondent under section 11AC and another penalty of Rs.10,000/- was imposed on them under section 173Q. On appeal being filed against this order to Commissioner (Appeals), the Commissioner (Appeals) vide order-in-appeal dt. 04.11.04 set aside the order relying upon the Tribunals judgment in case of CCE Indore Vs. HOD Laboratories Ltd., reported in 2004(172) ELT-458 (Tri.) wherein it was held that when a manufacturer clears the goods manufactured by him by affixing his own brand name along with logo of the promoter/ marketing agent, the benefit of SSI exemption under Notification No. 1/93-CE can not be denied.
16.1 The Revenue filed appeal against the above judgment of Commissioner (Appeals) wherein the Revenue relied upon the Tribunal judgment in case of Chopra Appliance reported Vs. CCE, Delhi, reported in 2007 (132) ELT- 95 (Tri. Del.)
17. The Revenues appeal was heard on 02.01.13. While Honble Member (Technical) taking note of the facts that the goods, in question, manufactured and cleared by the Respondent were having not only the logo of M/s. SEL printed on them but also the words Manufactured by Quantum Instruments Electronics Ltd., Bhopal in technical collaboration with Shichlar Industry Ltd., which in view of Apex Courts judgment in case of Grasim Industries Ltd., reported in 2005 (183) ELT-123(SC) has to be treated as use of another persons brand name and for this reason that Respondent were not eligible for SSI exemption in respect of R-Core Transformers, and that the extended period of limitation under proviso to section 11 A(1)of Central Excise Act, 1944 is also applicable, as the Respondent suppressed the relevant fact of using the brand name and logo of SEL, Baroda on their goods from the Department, allowed the Appeal, Honble Member (Judicial) in a separate order recorded by her, while agreeing with the view of Honble Member (Technical) on the issue of availing of SSI exemption, dis-agreed on the issue of limitation, observing, that since during the period of dispute, there were conflicting judgments of the Tribunal on this issue, the Respondent cannot be accused of wilful suppression of facts with intent to evade the payment of duty and therefore longer limitation period under proviso to section 11A(1) is not applicable and the duty demand is time barred. Thus while Honble Member (Technical) allowed the Revenues appeal, Honble Member (Judicial) rejected the Revenues Appeal.
18. On account of difference between Honble Member (Technical) and Honble Member (Judicial), the matter was placed on before the Honble President who assigned this matter to the undersigned for decision. The points of difference referred for decision by the third member is as under:-
(i) Whether the appeal filed by Revenue is to be allowed as held by Member (Technical);or
(ii) The Revenues appeal is to be rejected on the ground of demand being barred by limitation as held by Member (Judicial).
19. Today when this matter of difference of opinion was called for hearing, none representing the Respondent appeared. On earlier occasions also this matter had been listed for hearing on several times but, none representing the Respondent had appeared. In view of this, so far as the Respondent are concerned, this matter is being decided the ex-parte.
20. Heard Sh. M.S.Negi, the learned DR, who pleaded that it is not disputed that the Respondent were using the logo of SEL, Baroda, the manufacturer of R-Core Transformers, besides the printed words manufactured by Quantum Instrument & Electronics, Baroda in technical collaboration with SEL, Baroda, that the fact of using the logo of SEL, Baroda on the Transformers being manufactured by them was never disclosed by them to the Department, that eligibility for SSI exemption is dependent upon whether or not the goods manufactured and cleared by the manufacturer are affixed with the brand name/logo of another person, that when the Respondent were using the logo of SEL, Baroda on their products ,they should have disclosed this fact to the Department and non disclosure of this fact would amount to suppression of relevant facts with intent to evade the duty, that there was no confusion or controversy on the point of dispute in this case, as the Tribunal in case of Chopra Appliance reported Vs. CCE, Delhi, reported in 2007 (132) ELT- 95 (Tri. Del.) has held that when the goods manufactured by an assessee were cleared by affixing the brand name/logo of another person, he would not be eligible for SSI exemption, even if along with the other persons brand name/logo, the manufacturers own brand name is also affixed on the goods, that this judgment is squarely applicable to the facts of this case, that the Tribunals judgment in cases of Commissioner of Custom & Central Excise, Indore Vs. HOD Laboratories Ltd., reported in 2004 (172) ELT- 458 (Tri. Del.) and CCE, Mumbai Vs Ark Laboratories reported in 2005 (180) ELT-164(Tri. Mumbai) wherein it was held that when along with manufacturer's brand name, the brand name/logo of the promoter/marketing agent of the goods is affixed on the goods, the SSI exemption cannot be denied, are not applicable to the facts of this case, that in this case, it cannot be said that there were conflicting judgments of courts or Tribunal on the issue of eligibility of the goods for SSI exemption, that from the facts of this case it is clear that there was no scope for the Respondent to entertain bona fide belief regarding eligibility of the R-Core Transformers being manufactured by them for SSI exemption, as the same were affixed with the logo of another person- SEL, that the Apex Courts judgment in the case of Continental Foundation Joint Venture reported in 2007 (216) ELT-177(SC) is not applicable to the facts of this case and that in view of the above submissions the order passed by the Honble Member (Judicial) is not correct.
21. I have considered the submission of the learned DR and have gone through the records in this case. The un-disputed facts are that the Respondent in terms of their agreement with SEL, Baroda manufactured R-Core Transformers by using the technology developed by SEL and also their technical assistance. There is also no dispute that the R-Core Transformers being manufactured by the Respondent have a stickers affixed on then on which in addition to the brand name Quantum of the Respondent, the logo of SEL, Baroda is also printed alongwith the words manufactured by Quantum Instrument & Electronics, Baroda in technical collaboration M/s. Shilchar Electronics Limited, Baroda. The Commissioner (Appeals) set aside the Additional Commissioners Order by relying upon the Tribunals judgment in case of HOD Laboratories Ltd.(Supra) wherein relying upon the Tribunals judgment in case of Ark Laboratories reported in 2005 (180) ELT-164, it was held that when the goods manufactured by M/s. HOD Laboratories Ltd. were affixed with their own brand name along with the brand name of the promoter/marketing agents of the goods, the SSI exemption cannot be denied. In this case SEL, Baroda, who had provided the technology and technical assistance to the Respondent for manufacture of R-Core Transformers in terms of an agreement with them can not be said to be the promoter or marketing agent of the Respondent and as such the judgments of the Tribunal in case of HOD Laboratories Ltd.(Supra)and Ark Laboratories (Supra) are not applicable at all. This is a case of use by a manufacturer of another persons brand name/logo along with his own brand name. The Tribunal in case of Chopra Appliances, reported in 2007 (32) ELT-95 (Tri.) has clearly held that when the LPG Stove manufactured by the Appellant were cleared by affixing his own brand name along with brand name SKN of another manufacturer of LPG Stove, the SSI exempt would not be available. In my view the Tribunals judgment in case of Chopra Appliance (Supra) is squarely applicable to the facts of this case.
21.1 In the case of Grasim Industries Ltd. reported in 2005(183) ELT-123 (SC) decided by the Apex Court, the dispute was regarding availability of exemption Notification No. 5/98-CE to the cement manufactured by M/s. Dharani Cement Ltd., which is a subsidiary of M/s. Grasim Industries Ltd. The cement plant of Dharani Cement Ltd. was using vertical shaft kiln and its installed capacity was not exceeding 300 MT per day /99000 MT per annum. The benefit of concessional rate of duty under the notification was available subject to certain conditions, one of which was that the cement bags/packages do not bear brand name or trade name, whether registered or not, of another person. The bags in which the cement was packed were having - manufactured by Dharani Cement Ltd., a subsidiary of Grasim Industries Ltd printed on them. The point of dispute was as to whether the use of the above words on the cement bags was to be treated as use of brand name or trade name of Grasim Industries Ltd. The Apex Court in the above judgment held that use of the above words on the cement manufactured by Dharani Cement Ltd. has to be treated as use of the brand name or trade name of M/s. Grasim Industries Limited and accordingly the Apex Court held that the Cement manufactured by Dharani Cement Ltd. would not be eligible for Exemption Notification No. 5/98-CE. According to Honble Member (Technical), this judgment of the Apex Court is also squarely applicable to the facts in this case, as the name SEL, Baroda and logo of SEL mentioned on the goods manufactured by the Respondent indicate connection between SEL and the goods manufactured by the Respondent.
21.2 While Honble Member (Judicial) does not dis-agree with the above findings of the Honble Member (Technical), she is of the view that during period of dispute, the law on the point of dispute in this case was not clear and hence extended limitation period under Proviso to section 11A(1) would not be applicable. In this regard she has referred to the judgment of the Tribunal in case of HOD Laboratories (Supra)and also Apex Courts judgment in case of CCE Vs. Vikshara Trading and Investment Pvt. Ltd. reported in 2004 (156) ELT-41 and also the judgment of Honble Karnataka High Court in case of Commissioner Vs. Mammo Products reported in 2009 (235) ELT-A-147.
21.3 However, as discussed above, the point of dispute in the case of HOD Laboratories (Supra) was whether SSI exemption is available when the manufacturer, on the goods manufactured by him, in addition to his own brand name also affixed the brand name/logo of the promoter/marketing agents of the goods and as such the Tribunals judgments in case of HOD Laboratories(Supra) and Ark Industries (Supra) are not relevant at all to the issue involved in this case.
21.4 As regards the Apex Court judgment in case of CCE Vs. Vikshara Trading and Investment Pvt. Ltd.(Supra), the point of dispute in this case was as to whether SSI exemption would be available when the goods manufactured by a manufacturer are affixed with brand name/logo of another person who uses that brand name/logo on different class of goods. Thus the issue involved in the case of Vikshara Trading and Investment Pvt. Ltd. decided by the Apex Court is totally different from the issue involved in this case.
21.5 In the case of Commissioner Vs. Mammo Products (Supra) decided by Honble Karnataka High Court, the brand being used by M/s. Mammo Products on the goods being manufactured by them was jointly owned by them with another person and it is in these circumstances that the Tribunal held that the M/s. Memo Products would be eligible for SSI exemption and this judgment of the Tribunal was upheld by Honble Karnataka High Court. Thus issue involved in the case of Commissioner Vs. Mammo Products(Supra) is also totally different from the issue involved in this case.
21.6 There were conflicting judgments on the issue as to whether the use of additional words with the brand name of another person, like use of brand name Tata Ace by M/s. Ace Auto on their products [Apex Courts judgment reported in 2011(263)ELT-3(SC)], or the brand name Mahaan Tastemaker by M/s. Mahaan Dairy on its products [Apex Courts judgment reported in 2004(166) ELT-23(SC)] would disqualify the manufacturer from SSI exemption in respect of the goods on which such brand name has been used. This issue was settled by the judgments of the Apex Court in cases mentioned above. But the present case is not a case of use of hybrid brand name i.e. adding one own brand name or some additional word to the brand name of another person, as in this case, the Respondent on the goods manufactured by them, have in addition to their own brand name Quantum also affixed the logo of MEL, Baroda along with the words manufactured by Quantum Instruments & Electronics Ltd., in technical collaboration with M/s. Shilchar Electronics Ltd., Baroda.
21.7 From the above discussion of various judgments referred to para 9 of the order of Honble Member (Judicial), it will be seen that on the issue involved in this case whether SSI exemption would be applicable to the Respondent when the Respondent, in addition to their own brand name, also used the logo of the other person (SEL) on the goods, there is only one judgment of the Tribunal, which is in case of Chopra Appliances(Supra)and that judgment is against the Respondent. Thus it cannot be said that on the issue involved in this case there were conflicting judgments.
22. In terms of proviso to Section 11A(1) of the Central Excise Act, 1944, longer limitation period of five years from the relevant date is applicable for recovery of duty not levied or paid or short levied or short paid or erroneously refunded in cases when such non levy/non payment or short levy/short payment or erroneous refund has occurred due to fraud, collusion or any wilful mis-statement or suppression of facts or contravention of any of the provisions of this Act or of the Rules made there under with intent to evade the payment of duty. Honble Supreme Court in case of CCE Vs. Chemphar Drugs & Liniments reported in 1989 (40) ELT-276 (SC), and Padmini Products Vs. Collector of Central Excise reported in 1989 (43) ELT-195 (SC) has held that something positive other than more inaction or failure on the part of the manufacturer or conscious or deliberate withholding of information, when the manufacturer knew otherwise, is required for invoking the longer limitation period of five year under proviso to Section 11AC(1). In the case of Pushpam Pharmaceuticals Company Vs. CCE, Bombay reported in 1995 (78) ELT- 401 (SC) the Apex Court interpreting the expression suppression of facts in the proviso to Section 11AC(1) held that since this expression has been used in the company of such strong words as fraud collusion on wilful default this expression has to be interpreted strictly and mere omission to disclose the correct information is not suppression of facts, unless it was deliberate to escape from payment of duty and that when the facts are known to both the parties, omission by one to do what he might have done and not that he must have done, does not render it suppression. The Apex Court in case of Continental Foundation Joint Venture reported in 2007 (216) ELT-177(SC) and Jaiprakash Industries Ltd. reported in 2002 (146) ELT-481(SC) has held that when on account of various circulars operating at different point of time or conflicting judgments of Tribunal or Courts on some issue, there was scope for entertaining doubt, the extended period of limitation under proviso to Section 11AC(1) cannot be invoked.
22.1 In this case, as discussed above, it cannot be said that there were conflicting judgments of the Tribunal or the Courts on the issue unvalued in this case, as various judgments mentioned in the order of Member (Judicial) involved issue which are totally different from the issue involved in this case. In view of the clear and unambiguous provisions of the relevant SSI exemption notification which dis-entitled the goods affixed with the brand name or trade name, whether registered or not, of another person from the benefit of this exemption, there is little scope for doubt on the question of the eligibility of SSI exemption of the R-Core Transformers affixed with the logo of M/s SEL, Baroda, even if the words manufactured by M/s. Quantum Instruments & Electronics Ltd. in technical Collaboration with M/s. Shilchar Electronics Ltd., Baroda are ignored. The question arises as to whether in the circumstances of the case, the extended period cannot be invoked or not. In this regard, the factual position is that:-
(a) availability of SSI exemption in respect of the goods manufactured by a manufacturer depends upon whether or not the goods are affixed with brand name or trade name, whether registered or not of another person and, therefore, when a manufacturer manufacturing the goods on which he affixes the brand name or logo of another person and in respect of such goods, he avails SSI exemption, in the ER-1 Return filed by him or by direct communication, he is expected to disclose to the Jurisdictional Central Excise Authorities the use of brand name/logo of another person on the goods, as this is a most important information input for the Assessing Officers who are required to scrutinize the Returns filed by him; and
(b) in this case, the fact of use of logo of SEL, Baroda on the R-Core Transformers manufactured by the Respondent had neither been disclosed in ER-1 Return filed by them or by any other communication.
When some information is absolutely necessary for determining whether the duty self assessed by the Assessee on some goods manufactured by him is correct or not and that information is not provided, it would amount to suppression of facts with intent to evade the duty and burden would shift to the assessee to prove his bona fide.
In the system of self assessment under Rule 6 of the Central Excise Rules, 1944, in which the Assessee himself assesses the duty payable by him on the goods cleared during a month and the role of assessing officers is to scrutinize the return filed by the Assessee containing detailed information about the duty self assessed, it is the responsibility of the Assessee to furnish full and complete information and if he is availing of some exemption which is subject to fulfillment of certain conditions, he is expected to state clearly in the return as to whether he fulfills the conditions or not. Simply mentioning in the ER-1 Returns about availment of some conditioned exemption notification without mentioning anything about fulfillment of the condition of the notification would amount to wilful suppression of facts if subsequently, it is found that the condition of exemption notification had not been fulfilled.
22.2 Apex Court in case of Dharampal Satyapal Vs. CCE, New Delhi reported in 2005 (183) ELT (241) (SC) in para 22, 23 & 24 had held as under:-
22. It was urged that the assessee was under a bona fide impression that no duty was leviable on the goods; the full quantity of disputed goods was used captively and, therefore, proforma credit/Modvat credit was available in respect thereof and, therefore, there was no intent to evade payment of duty. In support of the aforestated submissions, it was urged that suppression or breach of rules by itself would not amount to intention to evade; that some positive act of deliberate suppression or breach of rules was required to be shown by the department; that, if the assessee showed that credit available to it was equal to the demand then there may not be the case of intention to evade payment of duty. In this connection, reliance was also placed on the judgments of this Court in Amco Batteries Ltd. v. Collector of Central Excise, Bangalore reported in 2003 (153) E.L.T. 7; Padmini Products v. Collector of Central Excise reported in 1989 (43) E.L.T. 195; and Formica India Division v. Collector of Central Excise reported in 1995 (77) E.L.T. 511.
23. We do not find merit in the above contentions. In this matter, we are concerned with the application of the above judgments to the facts of this case. The words wilfulness and intent in Section 11A are expressions of mental state at the time of manufacture and clearance of the goods. The situs of the levy of central excise is on manufacture. Pricing and value of clearances are matters specially within the knowledge of the assessee. As stated above, the assessee herein was in the business of manufacture of chewing tobacco and its preparations for last couple of years. In the course of business, the assessee had dealt with similarly situated traders. It was fully aware that those traders who produced similar compounds had their units licensed or registered and yet the assessee herein did not take steps to get the above two units, in which the impugned compound (kimam) was manufactured, registered or licensed. As stated above, it has been buying a similar kimam from various traders.These circumstances constituted evidence of suppression brought on record by the department in answer to which it was contended on behalf of the assessee that they were under a bona fide impression that the compound was not excisable and that the benefit of proforma and modvat credit together with the benefit of exemption under Notification No. 121/94, dated 11-8-1994 was substantially equal to the demand for duty herein and, therefore, there was no intention to evade payment of duty.
24. We do not find any merit in these submissions. As stated above, the adjudication in this case was confined to the question of excisability and concealment of the existence of two units in which the compound (kimam) was manufactured. No explanation has been given by the assessee for not disclosing the affairs of these units, particularly when the assessee was in business for couple of years and when the assessee had been dealing with other traders who operated from licensed factories. It was for the assessee to explain the reasons for not getting the units registered or licensed. It was for the assessee to explain its failure to maintain the records under the 1944 Act and rules there under. In each of the above decisions, we find that there was substantial compliance of the rules under the said Act. In each of the decisions the findings indicate technical non-compliance and not total non-compliance of the rules. It was for the assessee to explain the basis of its alleged bona fide impression. In this connection, no evidence was put before the commissioner about receipt and utilization of the compound in the manufacture of Tulsi Zafrani Zarda. No evidence was led to show that the amount of proforma/modvat credits was equal to the duty demanded, although it was urged that after 3/94, the liability to duty on inputs stood shifted to the final product.
22.2.1 Thus in term of the above judgment of Apex Court the words wilful and intent in proviso to section 11A(1) are expression of mental state of the Assessee at the time of manufacture and clearance of the goods and the mental state of the assessee at the time of manufacture and clearance of the goods has to be determined on the basis of totality of the circumstances in which the non levy/non payment or short levy/short payment has taken place. Such circumstances may be like:-
(a) Language of the notification availed or its condition or of some statutory provision being ambiguous creating scope for doubt;
(b) Conflicting judgments of Tribunal or High Courts or different Circulars of the Board operating at different points of time creating scope for doubt for Assessee; etc. Applying the ratio of the above judgment of the Apex Court to the facts of the present case, since in this case the Respondent were availing of SSI exemption and for assessment of duty payable by a unit availing of SSI exemption, the fact as to whether or not the unit is using the brand name/ logo of another person is a necessary input for the Assessing Officer to determine as to whether the duty self assessed, as reported in the ER-1 Returns, is correct or not and since in this case the Respondent, while using the logo of SEL, Baroda, had not informed the Department in this regard and since the language of SSI exemption on the point of use of another persons brand name/logo is absolutely clear and unambiguous and on the issue involved in this case, there were no conflicting judgments or circulars, the Respondent omission to inform the Department about use of logo of M/s. SEL, Baroda on the R-Core transformers being manufactured by them cannot be said to be bona fide, as no evidence has been produced by them to prove their bona fide.
23. In view of the above discussion, I hold that the R-Core Transformers manufactured by the Respondent and which were being cleared by them by affixing the brand name and logo of their collaborator SEL, Baroda were not eligible for SSI exemption and extended limitation period under proviso to Section 11A(c) is applicable to the facts of this case. Accordingly I agree with the judgment recorded by Honble Member (Technical).
(Order Dictated in the open court)
(Rakesh Kumar) Member(Technical)
S.Kaur
Final Order No.
23. In view of the majority order, the impugned order is set aside and Revenues appeal is allowed.
Archana Wadhwa Member (Judicial) Sahab Singh Member(Technical) ss ??
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