Customs, Excise and Gold Tribunal - Delhi
Agrico Engg. Works vs Collector Of Central Excise on 13 May, 1994
Equivalent citations: 1994ECR323(TRI.-DELHI), 1994(72)ELT689(TRI-DEL)
ORDER S.L. Peeran, Member (J)
1. The appellants are aggrieved with the order-in-original passed by Collector of Central Excise, Meerut.
2. By this order the ld. Collector has confirmed a duty demand of (i) Rs. 15,0007- basic and Rs. 750.00 (Special) on 200 pcs. of Hydraulic Power Lift Bodies cleared by assessee to M/s. Escorts Ltd. and seized by Central Excise Officers of Faridabad as duty to the above extent had been short paid on such goods under Rule 9(2) of the Central Excise Rules, 1944.
(ii) Imposed Rs. 20,000/- fine on the said seized goods and amount appropriated from Rs. 11 lakhs.
(iii) Ordered for confiscation of 781 pcs. of Hydraulic Power Lift Bodies bearing brand name of Escort valued at Rs. 5,85,780.00 and 19 plates bearing brand name of 'BM.' valued at Rs. 1,14,800.00, seized on 6-3-1990 by Central Excise Officers and held the assessee liable to pay Rs. 80,000/- as fine and the same was appropriated from bond B-11.
(iv) Demanded and confirmed a excise duty amount of Rs. 11,42,843.12 Basic and Rs. 44,953.20 (special) evaded/short paid by the party on the branded tractor parts of such tractor engine capacity of which exceeded 1800 cc cleared by them to M/s. Escorts Ltd., Faridabad during Oct. 1987 to Feb. 1990 under Rule 9(2) read with Section 11A of Central Excises & Salt Act, 1944.
(v) Demanded and confirmed excise duty amount of Rs. 3,02,232.10 basic and Rs. 11,861.65 (special) evaded/short paid by the party on the parts of paper printing machine bearing brand name of 'BM.' manufactured and cleared by the party to M/s. Bandhu Machinery (P) Ltd., Gurgaon during Oct. 1987 to Feb. 1990 under Rule 9(2) read with the provision of Section 11A of Central Excises & Salt Act, 1944.
(vi) Imposed penalty of Rs. 5 lakhs on the party under Rule 9(2) and Rule 173Q of Central Excise Rules, 1944.
3. The facts of the case are that the officers of the Preventive Officers Central Excise, Faridabad, while petroling on Mathura Road, Faridabad intercepted a Truck bearing Reg. No. DLL-6452 coming from Bedarpur Delhi side. On demand, the driver produced GP. 1 No. 102 dt. 5-3-1990 issued by the assessee and other documents. On a physical check, the officers found in the truck 'Hydraulic Power Lift Body' (Tractor parts) used in the manufacture of Tractors (exceeding 1800 cc) affixed with a brand name of 'ESCORT', embossed on the said lift bodies on one side and '041-AEW on the other side. On examining the G.P. 1, it revealed that the party was availing concessional rate of duty as applicable to SSI units at the rate of 10% advance in terms of Notification No. 175/86-C.E., dt.1-3-1986 as amended. On further scrutiny, it revealed that the party was not entitled to the benefit of exemption notification No. 175/86-C.E. as they were affixing the brand name of ESCORT' a brand name of another person, who was not eligible for such exemption in view of amendment brought about the Notification No. 233/87 dt. 22-9-1987. Hence, these goods were confiscated by the officers for contravention of Rule 9(2) and Rule 173Q of Central Excise Rules, 1944.
4. In a follow-up action, the officers visited factory premises on 6-3-1990 and found that the party was engaged in the manufacture of Hydraulic Power Lift Body, wheel reduction housing (Tractor parts) classifiable under sub-heading 8708.00 of Central Excise Tariff, 1985 attracting CEB @ 20% of advance and also parts of papers printing machinery classifiable under subheading 9443.00 of Central Excise Tariff Act, 1985 attracting duty @ 15% advance in their factory located at Hapur Road, Ghaziabad. The party had registered with Directorate of Industries, U.P. and found availing of the benefit of SSI as available under exempting Notification No. 175/86-C.E., dt. 1-3-1986.
5. The physical verification of stocks was carried on in the presence of Shri K.L. Sachdeva, Foreman. On physical verification, it was found that there were 262 pcs. of Hydraulic Power Lift Body duly finished and having brand name of 'ESCORT' engraved on them. Besides, this 519 pcs. of Hydraulic Power Lift Body also engraved with the brand name of 'ESCORT' were lying in finishing room of the factory. Further more, 19 pcs. of plate (parts of paper printing machines) were also found with the brand name of 'B.M.' engraved on them. The statement of Shri K.L. Sachdeva was recorded by the officers.
6. The classification list was examined and it was found that the party had not declared on their classification list that they were manufacturing and clearing Tractor Parts under the brand name of 'ESCORT' and parts of paper printing machines under the brand/Trade name of 'B.M'. The scrutiny of gate pass in form G.P. 1 and R.T. 12s also appeared to show that they had not declared or mention about the use of brand name 'ESCORT' and 'B.M.' either on G.P. 1 or on R.T. 12. It is alleged in the show-cause notice that "It is evident from G.P. 1 No. 102 dt. 5-3-1990, issued by the party that the party had the practice of mentioning 'AEW under the column Marks & Identification in Central Excise Gate passes, while this abbreviation was not so distinctly and noticeably engraved on Hydraulic Power Lift Body as well as engraved the brand name of 'ESCORT' which was prima facie noticeable. But the party appears to have taken care to bring the brand name of 'ESCORTS' on their G.P. 1 under the column 'Marks & Identification' so that it can carry on the practice of clearing branded goods at concessional rate of duty".
The officers carried on the physical verification and thereafter seized the goods with brand names and trade marks. And after a detailed examination, they found the party not being entitled to the benefit of exemption of notification No. 175/86-C.E., dt. 1-3-1986 and hence the show cause notice was issued detailing all the charges and giving details of the goods seized and the amount of duty and differential of duty leviable thereon. The officers also seized documents and recorded the statement of several persons.
6.(i) In their reply dt. 29-10-1990 to the show cause notice the party resisted the claim of the department. They have stated inter alia that they are first manufacturing 'castings' covered under Heading 73.25 out of material covered under Chapter 72. These castings during the process of their manufacture with the aid of the moulds which have the words "Escorts" or "B.M" engraved therein, get embossed thereon with these words. They state that castings with or without Brand name or trade name enjoy exemption under Notification No. 217/86 as amended when used in the same factory as input for the manufacturer of final products, which in their case of parts of Tractor or parts of paper printing machine. They state that castings when produced in other unit are exempted under Notification Nos. 208/83, 90/85 and 202/88-C.E. They have stated that such castings (input) are their subjected to manufacturing process for manufacture of parts of Tractors or parts of paper printing machines. They further state that no embossing, engraving or affixing of any trade name or Brand name is undertaken by them during or after the manufacture of such component parts, and hence the unit as such cannot be said to have affixed any trade name or brand name on its final product vis. part of Tractors or parts of paper printing machine which are produced out of casting (Chapter 73) having embossed thereon the words 'ESCORT' or 'B.M'. They state that it is the raw material i.e. input which has the said words embossed thereon. They state that the Notification No. 175/86-C.E. is not attracted as the unit is not affixing any trade mark or brand name either during the process of manufacture of such parts out of B.M. viz. castings or after the process of manufacturing process or such parts is complete, hence the exclusion Clause (7) of the notification cannot be extended or applied to the product of their unit.
6.(ii) It is further pleaded by them that Notification No. 175/86 also stipulates that nothing contained in this paragraph shall be applicable to the specified goods which are component parts of any machinery or equipments or appliances and cleared from a factory for use as "original equipment parts" in the manufacture of such machinery or equipment or appliances, and the procedure set out in Chapter X of the said rule had been followed. Therefore, they state that the concession granted to components parts of any machinery or equipment or appliances cleared from the factory for use as "OEP" though bearing a trade mark or brand name is still available to them under the said notification. They state that the parts were supplied as "OEP" and all procedure of L-6 Licence had been followed by M/s. Escorts Ltd. under Chapter X also. They were only manufacturing "OEP" of Escorts Ltd. and those of M/s. Bandhu Machinery P. Ltd. who in turn were using these parts as OEP in the assembling of Hydraulic Lifts to be fixed on the Tractors and in the assembly of Paper Printing Machines and hence the benefit of the SSI exemption under Notification 175/86-C.E. cannot be denied to them.
6.(iii) They have further pleaded that the said notification is not applicable only where a manufacturer affixes the specified goods with a Brand name or Trade name. They state that word "Affixes" used therein clearly indicates that the specified goods are affixed with a Trade name or Brand name which means that the specified goods must came into existence first and then the trade mark or Brand name is affixed thereon, which is not the position in the present case. They state that in the present case "castings" covered under Chapter 73 are produced and the mark "ESCORTS" OR "B.M." are embossed thereon during the process of manufacture of castings. They state that these castings are not the specified goods and hence they enjoy the exemption when used in the same factory as input for the manufacture of other goods as per Notification Nos. 217/86, 208/83, 90/88 and 202/88 when produced in another unit. They state that they never undertake the activity of affixing any trade mark or brand name on the specified goods. The castings bearing trade mark/brand name if used as R.M. input for manufacture of specified goods cannot be taken as affixing of Trade mark or Brand name on the specified goods.
6.(iv) They have further pleaded that the consignee had issued certificate in respect of all such supplies made to them certifying that the same had properly been used as 'OEP' in the manufacture of Hydraulic Lifts fitted on the tractors. They state that Chapter X procedure is deemed to have been complied as the consignee had also followed MODVAT procedure and complied all the formalities.
6.(v) They pleaded that their unit had been visited by various staff members of CED including audit team, Preventive team and local range staff and that they had also been submitting classification list, which had been duly approved also, after due enquiries and verifications. Thus, all the facts were known to the CED and that there was no mis-declaration/suppression and hence larger period cannot be invoked and the demands were all time barred and also that no penalty was also leviable. . ;
7. The ld. Collector having considered all their submissions rejected the same and upheld the charges levelled against them. As regards the plea of the benefit of Notification No. 217/86-C.E., dt. 2-4-1986 taken up by the party the ld. Collector has held :
"This argument of the party would have sustained provided there had been no direct connection between the party and M/s. Escorts ;Ltd, or M/s. Bandhu Machinery (P) Ltd. Since the party is supplying its products only to these parties and non else, it cannot be said that there is no connection between the two especially when the words "ESCORTS" or "BA5." are embossed in the same factory premises were tractor parts and paper printing machinery parts are made. The plea that the castings enjoy the benefit of exemption under Notification No. 217/86-C.E., dt. 2-4-1986 would not hold good in view of the fact that the brand names embossed on the castings are much more prominent and distinct than the so called brand name' AEW embossing of which is quite indistinctly made on one side of the tractor parts or the Paper Printing Machinery Parts. M/s. Escorts Ltd. and M/s. Bandhu Machinery (P) Ltd. are DGTD units. By prominently showing their brand name on the front side of the parts made for these two DGTD units, they make the indentity of their brand quite insignificant, so even if the party enjoys the benefit of exemption Notification No. 217/86-C.E., dt. 2-4-1986, as amended, it cannot be said by any stretch of imagination that they are not in any way concerned with the brand names of "ESCORT" or "B.M." embossed on the manufacture of tractor parts or paper printing machinery parts manufactured by them.
The party has attempted to justify their act by taking the benefit of the word "affixed" used in the Notification No. 175/86-C.E., dt 1-3-1986, as amended by Notification No. 223/87-C.E., dt. 22-9-1987 and argued that the specified goods mentioned in the Notification must come into existence first and then the trade mark or brand name affixed thereon which is not the case here. In this case castings covered under Chapter 73 are 1st produced and words "ESCORT" and "BM" embossed thereon during the process of casting. These castings are not the specified goods. The specified goods are the tractor parts or paper printing machinery parts, which are engraved with the brand name of "AEW" and which are party's own trade mark. These trade marks are indicated in all clearance documents. This plea of the party, however, cannot be sustained in view of the fact that word "affixing" not only means pasting or physical fixation but it also includes embossing, engraving or printing. It depends on the party's own convenience as to at what stage such embossing, engraving or printing is done by it during the process of manufacture of specified goods. Two main points that are existing in this case are :
(i) that the brand names of other persons viz. M/s. Escorts Ltd. and M/s. Bandhu Machinery (P) Ltd. are prominently displayed on the specified goods and (ii) that these goods are supplied to those persons only whose brand names are used and none-else. Therefore, M/s. Agrico Engineering Works are not eligible to enjoy the benefit of exemption under Notification No. 175/86-C.E., dt. 1-3-1986, as amended by Notification No. 223/87-C.E., dt. 22-9-1987.
Further both Shri Amrik Singh, Partner of the firm and Shri K.L. Sachdeva, authorised signatory to the unit have categorically admitted in their statements dt. 16-3-1990 and 6-3-1990 respectively recorded under Section 14 of the Central Excises & Salt Act, 1944 that the unit has been manufacturing and clearing tractor parts/parts of paper printing machines under the brand name of "ESCORTS"/ "BM" for the last 6-7 years. The representative of M/s. Escorts Ltd., Faridabad. Shri Amarnath had also admitted in his statement dt. 5-3-1990 that clearances of such branded tractor parts had earlier too been made under the brand name of "ESCORT" by M/s. Agrico Engineering Works to M/s. Escorts Ltd., Faridabad.
I, therefore, held that M/s. Agrico Engineering Works are using the brand name of M/s. Escorts in the tractor parts meant for M/s. Escorts Ltd. and using the brand name of 'B.M.' for paper printing machinery parts meant for M/s. Bandhu Machinery (P) Ltd."
7.(ii) The ld. Collector also rejected the plea of time bar and thus confirmed the demands raised in the show cause notice.
8. We have heard Shri G.L. Rawal, ld. Advocate for the appellant and Shri S.K. Sharma, ld. JDR for the Revenue.
8.(i) While reiterating the pleas made by the assessee before the Collector, Shri Rawal ld. Advocate submitted that the fixing of the name had been done at the time of casting and the goods were not the final products of the assessee and they were neither traded. The party had received the goods from Escorts and BM under Chapter X procedure and hence the explanation VIII of Notification No. 175/86-C.E. is clearly in favour of the assessee. The ld. Collector had failed to examine this point in his findings. The goods were in unfinished stage, when the seizure took place and had not been delivered to the party also hence the calculation of quantum of duty has not been correctly arrived at. He also pointed out that 32 pieces seized did not have any brand name. Further elaborating his arguments on Clause 7 and Explanation VIII of the Notification No. 175/86-C.E. the ld. Advocate submitted that the assessee clearly fall within the mischief of Explanation VII. He pointed out that at the stage when the application of 'Escort' & 'B.M.' took place, they were not specified goods. The term "affixes" referred to Explanation VIII should be taken to mean to apply to affixation only on specified goods. In the present case, the goods having been excepted by Notification Nos. 217/86, 208/83, 90/88 and 202/88, the same cannot be considered as specified goods to be brought within the terms of Clause 7 of the Notification No. 175/86-C.E. He submitted that the names were not affixed in terms of exclusion clause and the exclusion clause had to be strictly read. Explanation referred to future events to follow and not to past events of the goods already having come into existence with the brand name on it. He submitted that the ld. Collector had not all appreciated these arguments. In this context, he relied on the ruling rendered in the case of Trimurti Weld Mesh (P) Ltd. v. Collector of Central Excise as reported in 1993 (64) E.L.T. 419, J.K. Cotton Spinning & Weaving Mills v. Union of India & OtJiers as reported in AIR 1988 SC 191 Para 22.
As regards the time bar, ld. Advocate pleaded that the department had full knowledge of their activity as Chapter X had been followed in the present case. He argued that there non-mentioning of the affixation of the trade name or brand name did not amount to mis-declaration and it cannot be presumed that it had been done with fraudulent or wilful intention to evade duty. He argued that goods were quite bulky and huge in size and its removal were known to the department and hence it cannot be said that the department did not have any knowledge of the affixation of the trade name during the casting stage. On the plea of time bar, he relied on the following rulings :
(i) Collector of Central Excise v. Chempar Drugs & Liniments - 1989 (40) E.L.T. 276 (SC).
(ii) Padmini Products v. Collector of C. Excise -1989 (43) E.L.T. 195 (SC)
(iii) Casting Combines v. Collector of Customs & Central Excise -1989 (42) E.L.T. 501.
(iv) Kiran Spinning Mills v. Collector of Central Excise - 1989 (40) E.L.T. 385.
(v) Collector of Central Excise v. Indian Explosives Ltd. -1988 (36) E.L.T. 124
(vi) Chemicals & Fibres of India Ltd., Bombay v. Collector of Central Excise, Bombay -1988 (33) E.L.T. 551 On the plea that the duty calculation has to be done only after removal, the ld. Counsel relied on the ruling rendered in the case of British India Corporation Ltd., Dhariwal v. Collector of Central Excise, Chandigarh as reported in 1986 (25) E.L.T. 727 at p. 733, 734.
8.(ii) Countering the arguments of ld. Advocate, Shri S.K. Sharma, ld. JDR submitted that the goods cleared from the factory were M.V. Parts and at the time of removal these finished parts were having trade/brand name. He submitted that the party had not placed their terms of contract to see whether the names had been affixed at the stage of goods or at the specified goods stage. Relying on the ruling of the Hon'ble Supreme Court rendered in the case of Bhor India Ltd. v. Collector of Central Excise -1989 (40) E.L.T. 280, he pleaded that the goods were capable of being sold and being marketable the benefit of Notification No. 175/86 was not available to the party. As argued that the finished goods could not come into existence with a process of casting & machining. The other process of moulding, pressing, bending etc. were all a continuous process and thus embossing were also a process of manufacture of the final product cleared from the factory.
As regards the invokation of larger period, the ld. DR submitted that the party had not declared in classification list about the embossing of Trade/Brand name of "Escort" & "B.M.". The party had given mentioned "AEW" in G.P. 1 to give an impression that the said mark belonged to them. This being a positive act and hence suppression was quite manifest on record. As the party were working in SRP, the deptt. had accepted their classification lists and declarations and that by itself did not constitute knowledge to the department of the facts of their process of manufacturer and embossing of names. In support of his contention, he relied on the rulings rendered in the following cases :
(i) Jaishree Engineering Ltd. v. Collector of Central Excise -1989 (40) ELT. 214;
(ii) Sree Hanuman Metal India v. Collector of Central Excise, Delhi - 1984 (18) E.L.T. 652;
(iii) R.G. Nagpri & Sons v. Collector of Central Excise -1989 (39) E.L.T. 303.
In counter reply Shri Rawal, ld. Advocate relied on the ruling rendered by Hon'ble Supreme Court in the case of Mohinder Gill's as reported in AIR 1978 S.C. 851.
9.(i) We have carefully considered the submissions made by both the sides and perused the records. The main question that arises for our consideration is as to whether the appellants are entitled to the benefit of the exemption Notification No. 175/86-C.E., dt. 1-3-1986 by virtue of its Clauses 7 and 8 read with Explanation VLII and if not are the demands time barred and whether the party is entitled for any other relief.
9.(ii) It is the case of the appellant that the embossing of the brand/Trade name 'Escorts' and 'B.M.' are done at the stage of the casting and all the goods which are castings covered under Heading 73.25 manufactured out of material covered under Chapter 72 are exempted from the purview of Notification No. 217/86-C.E., dt. 2-4-1986, even when used in the same factory as input for the manufacture of final product which in this case are parts of Tractor or Parts of Paper Printing machine. They say that if they had removed the castings with or without brand/trade name, then the goods would have been exempted under Notification Nos. 208/83,90/88 and 202/88. Instead the same had been used again as input for manufacture of M.V. parts. Therefore, it is their case that already exempted goods affixed with brand/trade name are different from the goods specified for the purpose of Notification No. 175/86-C.E., and that they had not affixed on the specified goods i.e. M.V. parts with brand name or trade name as the castings had already been affixed with the brand/trade name. The second plea is that the goods had been received under Chapter X and the same were not traded and sold in market directly but used as "OEP" and hence question of bringing within the mischief of Clause 7 of the Notification No. 175/86-C.E. does not arise. On a careful examination of this plea, there is force in the arguments of the appellants. The Revenue has not disputed the emergence of casting and casting products and its exemption under the Notification No. 217/86-C.E., dt. 2-4-1986. The ld. Collector held that "this argument of the party would have sustained provided there had been no direct connection between the party and M/s. Escorts Ltd. or M/s. Bandhu Machinery Pvt. Ltd." but the ld. Collector rejects their pleas as the party had been supplying only to those parties and non else and hence held that "it cannot be said that there is no connection between the-two especially when the words 'ESCORTS' or 'B.M' are embossed in the same factory where tractor parts and paper printing machinery parts are made".
It follows that the ld. Collector has rejected the plea for exemption, as the party had captively consumed the exempted castings in the manufacture of M.V. Parts. This is not a correct reading and application of the Notification No. 176/86-C.E., dt. 1-3-1986 especially in the context of the "OEP" manufactured and supplied under Chapter X, which are duly exempted the said notification. As rightly pointed out by the ld. Advocate, this vital point has not been examined by ld. Collector. The effect of the exclusion clause of the Notification No. 176/86-C.E. has to be read together with Clauses 7 & 8 and Notification No. 217/86 as amended.
10. Notification No. 176/86-C.E., dt. 1-3-1986 as amended exempts the excisable goods of the description specified in the annexure given in the notification and those falling in the schedule to the Central Excise Act, 1985 and they are referred to as the "specified goods".
Clause 7 of the notification reads :
"7. The exemption contained in the notification shall not apply to the specified goods where a manufacturer affixes the specified goods with a brand name or trade name (registered or not) of another person who is not eligible for the grant of exemption under this notification.
Provided that nothing contained in the paragraph shall be applicable in respect of the specified good cleared for have consumption before 1-10-1987.
Explanation VIII -"Brand name" or "trade name" shall mean a brand name or trade name, whether registered or not, that is to say a name or a mark, such a 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 same person using such name or mark with or without any indication of the identity of that person.
In the annexure to the notification S. No. 4 in amended Notification No. 47/88-C.E., dt.1-3-1988 refers to "all other goods specified in the said Schedule, other than the following namely". In S. No. (iv) "cast articles of iron & steel not specifically described in Chapter 72 or 73" is mentioned. These goods are specifically described in Chapter 73.25 of the Central Excise Tariff as 'cast articles of iron & steel'. Hence they are excluded from S. No. 4 as they fall within the meaning of "cast articles of iron & steel". In amending Notification No. 231/88, dt. 7-7-1988 S. No. (i) of the S. No. 4 of notification, includes all goods falling under Chapter 73. Thus for the entire period casting products were not covered under Notification 175/86 as specified goods. It follows that the castings products are not already exempted and hence they are not included in Annexure of this notification and that they are not specified goods. Hence the affixing of the Brand name/Trade name at the stage of casting are not within the purview of Notification 175/86-C.E., dt. 1-3-1986.
Therefore, the Clause 7 and Explanation VIII refers to specified goods. Here specified goods are MV Parts. Admittedly, no trade mark or trade brand name is affixed on the specified goods. Further, the goods are cleared under Chapter X Procedure and utilised as "OEP" by the consignees. Such goods are also exempted from payment of duty, if they had been received under L-6 licence and Chapter X procedure had been followed. Thus, mere captive use of exempted goods with brand name for manufacture of specified goods would not attract the application of the Notification 175/86-C.E., dt. 1st March, 1986. The Notification No. 175/86-C.E., dt.1-3-1986 applies to goods described in the Annexure to the notification. The castings products are not included in the notification and hence the affixing of the brand name has not occurred during the manufacture of specified goods namely MV Parts. The MV Parts have been cleared under Chapter X procedure and its formality is within the full knowledge of the department. The department is also fully aware of exempted casting products being manufactured in the appellants factory and therefore the appellants contention has to be accepted and the mischief of clause 7 and Explanation VIII of Notification No. 175/86-CE., dt.1-3-1986 is not attracted in the present case. As rightly pointed out by the ld. Advocate, the exclusion clause in a notification has to be strictly construed and by its clear reading it has to be held that the affixing of trade mark brand/trade name has not been affixed on the specified goods.
The Tribunal has already expressed similar view in the case of Trimurti Weld Mesh Pvt. Ltd. (Supra) in Paras 5.2, 5.3, 5.4 and Para 6 which are reproduced herein below:
* * * * * *
11. As the appellants have succeeded on merits, the question of examining other question does not arise. Thus, the appeal is allowed with consequential relief.
ORDER P.C. Jain, Member (T)
12. I have carefully gone through the order proposed by my learned brother, Shri S.L. Peeran, Judicial Member but I regret I am unable to agree with him.
13. Since the facts have already been set out by him, I would not recapitulate them.
14. First contention of the learned advocate for the appellant is that brand name has been embossed at the stage of castings which are to be later finished by the appellant after machining into parts of tractors to be supplied to Escorts Ltd. and parts of printing machines supplied to M/s. Bandhu Machinery (P) Ltd. Learned advocate has submitted that castings by themselves are separate tradeable commodity. Para 7 of Notification No. 175/86 excludes the benefit of notification to specified goods embossed with a trade name of a person who is not entitled to the benefit of the said notification. The specified goods in the present case, submits the learned counsel, are motor vehicle parts or printing machinery parts. Affixation of brand name has, not, therefore, been done according to him on the specified goods and therefore, he submits that provisions of para 7 of the notification do not come in his way.
15. I have given utmost consideration to the aforesaid plea but I do not agree with the same. Castings in the present case are produced by the appellant in the course of manufacture of the specified goods, namely, motor vehicle parts and printing machinery parts. Castings are not traded by the appellant. They are captively used by him in the course of manufacture of motor vehicle parts and printing machinery parts. Brand name or trade name has been defined in Explanation VII to the said notification as meaning "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".
15.1 When the castings are not traded at all it cannot be held that the brand name or trade name embossed on castings is with a view to indicate a connection in the course of trade between castings and some person using such name or mark. It is, therefore, apparent that the brand or trade name embossed no doubt at the stage of castings is for the purpose of indicating a connection between the Escorts Ltd. and Bandhu Machinery (P) Ltd. and the specified goods here in this case i.e. motor vehicle (tractor) parts or printing machinery parts respectively.
15.2 The aforesaid reason makes it immaterial whether the castings are specified or not specified in Annexure to Notification 175/86.
15.3 As regards the contention that goods have been supplied for original equipment parts and therefore, the proviso to Para 7 of Notification 175/86 would come into play and as such the provisions of main para 7 would not come in the way of the appellant, I find that this plea is not tenable since it has not been substantiated by the appellant as to under which exemption notification the parts manufactured by the appellant under consideration in this case were moved under Chapter X of the Central Excise Rules, 1944 because in order to avail the provisions of Chapter X of the Central Excise Rules an exemption notification is a pre condition.
15.4 Reliance by the appellant's learned advocate on Tribunal's judgment in the case of Trimurti Weld Mesh (P) Ltd. referred to by my learned brother is not correct because that judgment of the Tribunal relates to case where embossing was done on the castings by another manufacturer and para 7 of the notification places an embargo on affixation of the trade mark by the manufacturer concerned. In the present case it is not in dispute that the appellant himself who is the concerned manufacturer has affixed the trade mark on the castings.
15.5 In my view, therefore, the appeal is liable to be rejected. I order accordingly.
Sd/-
(P.C.Jain)
Dated : 24-8-1993 Member (T)
16. Point of difference of opinion has arisen between the two Members which is as follows :-
(1) Whether in the facts and circumstances of the case, benefit of Notification 175/86 would not be available to the appellant in view of the provisions of Para 7 of the said notification.
Sd/- Sd/-
(P.C. Jain) (S.L. Peeran)
Dated: 25-8-1993 Member (T) Member (J)
ORDER
S.K. Bhatnagar, Vice President
17. This matter has been referred to me by the Hon'ble President on account of difference of opinion between two Ld. Members on the following point:
"Whether in the facts and circumstances of the case, benefit of Notification 175/86 would not be available to the appellant in view of the provisions of para 7 of the said notification".
18. I have accordingly heard both the sides.
19. During the hearing both the sides reiterated their respective points of view including the case law and my attention was drawn in particular to the judgment and orders reported in AIR 1976 SC 1503, AIR 1953 SC 148, AIR 1960 JK 6, 1992 (60) E.L.T. 160 and 1993 (63) E.L.T. 326 by the Ld. Counsel and 1985 (21) E.L.T. 231 by the ld. DR.
20. I have considered the above submissions carefully. I observe that Ld. DR's arguments have strong force. Admittedly, the brand names have been affixed on castings used in the manufacture of motor vehicles parts and printing machinery parts by the same manufacturer. That for technological reasons or otherwise it was considered as proper by the manufacturers to emboss them at the casting stage is in my opinion, immaterial because they were intended to show the connection in the course of trade between specified goods and the person to whom the brand name or trade mark belong.
21. Looking it at slightly differently the affixing of mark at the casting stage by itself had no commercial significance at that stage. In the instant case since the goods were not traded but utilised by the same manufacturer in manufacture of specified goods. Therefore, they assumed trade significance only upon becoming motor vehicles parts or printing parts as it was only this stage onwards that they show the connection between the brand name or trade mark owner and the goods specified in Notification No. 175/86. Therefore para 7 of the Notification become relevant and applicable.
22. The arguments that casting were themselves excisable items does not change the position in the facts and circumstances of this case, because, as noted above the commercial connection comes into picture only at the motor vehicle parts or printing parts stage. It was to take care of this type of situation that provision was apparently incorporated in the Notification. Any other interpretation therefore, would defeat the very purpose and intention of the Notification.
23. In view of the above position, I agree with the opinion of Ld. Member (Technical) in this respect that the benefit of Notification No. 175/86 was not available to the appellant in view of provisions of Para 7 of Notification No. 175/86. The reference is answered in these items.
Sd/-
(S.K. Bhatnagar)
Dated : 3-2-1994 Vice President.
24. We have heard both the sides on the limited question of time bar, as the finding on the same had not been given in the main orders, by both the Members. Shri G.L. Rawal, ld. Advocate for the appellant reiterated his argument on the time bar which has already been noted in the maid order. It is his plea that the party were under the bona fide belief that they were embossing brand name 'Escort' on the Hydraulic Power Lift Bodies (tractor parts), in the course of the manufacture, when the actual casting was done. It is his plea that the appellants' understanding was that they were not embossing the brand name on the specified goods. There was no intention to defraud the exchequer. The departmental officials had been visiting to factory for physical verification of the goods. The full description in the classification list was not given to show the word "Escort" and it did not mean that the appellants were suppressing the required information, as was required, to be given to the department. He argued that the department has not shown any positive evidence from which it would be inferred that the appellants had no intention to defraud the Revenue. He, further, submitted that the appellants were not to pay the duty in any event, as the duty was required to be paid by M/s. Escorts and as such appellants were not to gain anything by not disclosing the details of embossing the brand name on the said parts. He submitted that the registers have been signed after the inspection of goods. The mark 'Escort' is so prominent and big that it is impossible to have loss sight off within the course of inspection. He submitted that there has been no findings on the plea raised by them in their reply on the visit of the officials and regular inspection of the goods. In that event of the matter, he submitted that larger period cannot be extended to present matter. He relied on the Hon'ble Supreme Court's rulings rendered in the case of Padmini Products v. Collector of Central Excise as reported in 1989 (43) E.L.T. 195 and that of Collector of Central Excise v. Chemphar Drugs & Liniments as reported in 1989 (40) E.L.T. 276.
25. Ld. SDR Shri B.K. Singh has submitted that the registers had not been shown at the time of inspection and that the audit parties were not required to examine the goods. Even otherwise, the visit was for physical verification and for mere accounting purpose and they were not to check and inquire into the availability of the exemption of Notification or not. Ld. SDR emphasised that the classification list did not indicate about the discloser of the mark or brand name of Escort being embossed on the goods and therefore, the positive intention of evading duty by the appellants is quite apparent. He relied on the following rulings :
(i) Jaishri Engineerings Co. (P) Ltd. v. Collector of Central Excise -1989 (40) E.L.T. 214;
(ii) Kiran Spinning Mills v. Collector of Central Excise -1989 (40) E.L.T. 385; (iii) R.G. Nagori & Sons v. Collector of Central Excise -1989 (39) E.L.T. 303;
(iv) Shree Hanuman Metal Industries v. Collector of Central Excise, Delhi -1984 (18) E.L.T. 652;
(v) Limenaph Chemicals v. Union of India -1993 (68) E.L.T. 77.
26. We have carefully considered the submissions made by both the sides and have perused the records. The appellants have contended inter alia in their reply to the show cause notice that the M/s. Escorts and M/s. Bandu Machinery were receiving the goods from the appellants and this fact is known the department. They have also taken a plea in Para 7 of their reply to show cause notice that the deptt. officials were regularly visiting their factory and making inquiries and verification of the goods produced by them. During the course of the hearing, ld. Advocate wanted to produce records to demonstrate that there has been regular visits and inspections of the goods. This is a matter which is in the realm of facts and only a proper inquiry would reveal as to whether there had been conscious and positive suppression of facts or that the department was also aware of the appellant's embossing the brand name 'Escort'. The ld. Collector in his order at page 17 has observed that there might have been inquiry made by the proper officer at the time of approving of the classification list, however, he has not accepted the plea of the appellants that there has been no misdeclaration or suppression in the matter. As stated by us that this aspect of the matter requires further verification and inquiry and in view of the absence of any clear finding in the light of documents relied by the appellants, it is but proper that the matter pertaining to extension of larger period is remanded to the original authorities for de novo adjudication. Ordered accordingly.
Sd/- Sd/-
(P.C. Jain) (S.L. Peeran)
Dated: 13-5-1994 Member (T) Member (J)
FINAL ORDER
In view of the majority order on the applicability of the exemption Notification No. 175/86-C.E., dt. 1-3-1986, the appeal is disposed of in the following terms:
(1) The benefit of Notification No. 175/86-C.E., dt. 1-3-1986 is not available to the appellant in view of the provisions of Para 7 of the said Notification.
(ii) On the extension of larger period the matter is remanded to the lower authorities for de novo adjudication in the light of findings given in the order.
In the result, the appeal is disposed of in the above terms.