Custom, Excise & Service Tax Tribunal
Cce, Chennai vs M/S. Star Drive Bus Duct (P) Ltd on 15 June, 2009
IN THE CUSTOMS, EXCISE & SERVICE TAX
APPELLATE TRIBUNAL
SOUTH ZONAL BENCH AT CHENNAI
Appeal No. E/336/2002
(Arising out of Order-in-Appeal No.46 & 47/2001 (M-III) dated 2.4.2002 passed by the Commissioner of Central Excise (Appeals), Chennai)
For approval and signature:
Honble Smt. Jyoti Balasundaram, Vice President
Honble Shri P. Karthikeyan, Member (T)
1. Whether Press Reporters may be allowed to see the Order for Publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
2. Whether it should be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
3. Whether the Members wish to see the fair copy of the Order?
4. Whether Order is to be circulated to the Departmental authorities?
CCE, Chennai Appellant
Vs.
M/s. Star Drive Bus Duct (P) Ltd. Respondents
Appearance Shri V.V. Hariharan, Jt. CDR for the Appellant Shri M.N. Bharathi, Advocate, for the Respondents CORAM Honble Smt. Jyoti Balasundaram, Vice-President Honble Shri P. Karthikeyan, Member (T) Date of Hearing: 15.06.2009 Date of Decision: 15.06.2009 Final Order No. ____________ Per P. Karthikeyan This is an appeal filed by the Revenue. The respondents M/s. Star Drive Bus Duct (P) Ltd. (SDBL) had manufactured and cleared bus ducts of varying capacities falling under Chapter Heading 8544 of the First Schedule to the CETA, 1985 without paying duty due on them during the period 1995-96 to June 2000. The respondents had also cleared scrap of aluminum, steel and copper without declaring the same in the classification list and without following other Central Excise formalities including payment of duty. A quantity of metal scrap was seized on 29.4.2000 and a quantity of bus ducts seized on 17.6.2000. Three trucks were also seized on 17.6.2000 as they were found laden with bus ducts found to have been cleared without payment of appropriate central excise duty due on them. Adjudicating a Show Cause Notice issued in this connection, the original authority found that the respondents had been clearing bus ducts bearing the brandname STARDRIVE belonging to sister concern of the respondents M/s. Star Drive Engineers Pvt. Ltd. (SDEL). The respondents had cleared bus ducts availing inadmissible SSI exemption. Shri K.L.Thadani, Managing Director of M/s. SDBL and Director of M/s. SDEL was found to have knowingly involved in clearance of excisable goods without payment of duty due. The trucks seized were found liable for confiscation. She confirmed demand of Rs.18,07,417/- from M/s. SDBL towards duty due on bus ducts cleared by it during the material period along with applicable interest. She imposed a penalty of Rs.11,36,572/- on the respondents under Section 11AC of the Act. The seized bus ducts of value of Rs.7,05,000/- were confiscated under Rule 173Q of the Central Excise Rules, 1944 (CER) and offered redemption on payment of a fine of Rs.25,000/-. The seized lorries were confiscated and allowed to be redeemed on payment of a fine of Rs.15,000/- each. She imposed a penalty of Rs.2 lakhs on Shri K.L. Thadani, MD of the respondent-company under Rule 209A of the CER. The scrap seized were confiscated and ordered to be redeemed on payment of fine. She confirmed demand of duty on scrap found to have been cleared by the respondents without payment of duty. In the impugned order the Commissioner (Appeals) vacated confiscation of aluminum scrap seized from the respondents factory. He vacated the demand of duty on bus ducts from the respondents as well as the penalty imposed on it under Section 11AC of the Act. He vacated the order of confiscation of bus ducts and the vehicles. He also vacated the penalty imposed on Shri K.L. Thadani, MD of the respondent-company under Rule 209A of the CER. The appeal filed by the Revenue challenges the demand of duty on bus ducts, applicable interest, confiscation of bus ducts and three trucks, and the penalty imposed on the respondents and Shri K.L. Thadani. It is submitted that the brandname STARDRIVE belonged to SDEL, a sister concern of the respondents, SDBL. SDEL manufactured electrical control apparatus, instruments, electrical conducts and switch boards. The brandname STARDRIVE was registered by SDEL on 22.1.1975; SDBL was set up only in the year 1986. The SSI exemption was not admissible if the assessee used on its goods a brand name belonging to another person in terms of the relevant Notification. The respondents had declared in the classification list filed with the Department at the relevant time that they did not use brand name belonging to any other person. The Managing Director of the respondent-company was also a Director of SDEL which owned the brand name STARDRIVE. The respondents had deliberately misdeclared that they used their own brand name in order to avail the inadmissible benefit in terms of the SSI Notification. The Commissioner (Appeals) had relied on a decision of the Tribunal which was distinguishable on facts from the instant case to vacate the demand, confiscation and penalties on the respondents. The Commissioner (Appeals) had wrongly relied on the clarification issued by the CBEC Circular No. MF(DR) F.No. 213/41/88-CX-6 dated 30.12.88 wherein it had clarified that use of a brandname did not disentitle an assessee for the SSI benefit if the same had been registered for use on a totally different product. In the instant case the brand name STARDRIVE used by the appellants on its product bus ducts had been owned by its sister concern SDEL. The appeal prayed for vacation of the impugned order and restoration of the Order-in-Original.
2. During hearing the learned counsel for the respondents submitted that the respondents had been under the bonafide belief that it could avail the SSI exemption for clearances of bus ducts bearing the brandname STARDRIVE. The confusion about admissibility of SSI exemption when an assessee used a brandname belonging to another person was clarified only in the decision of the Tribunal in the case of CCE Vs. Fine Industries 2002 (146) ELT 53 (Tri. LB). Vide Circular No. 52/52/94-CX dated 1.9.1994 the CBEC had clarified that if a brandname was not owned by any particular person, the use thereof would not deprive a unit of the benefit of small scale exemption scheme. This clarification applied to the goods specified in Notification No. 1/93-CE. The brandname STARDRIVE was registered by SDEL for various products but not for use on bus ducts. In the circumstances longer period of limitation could not have been validly invoked by the original authority to confirm the demand of duty against them on the bus ducts.
3. The learned Jt. CDR submits that the respondents had deliberately furnished incorrect information in the classification list filed during the material time that they were not using brandname of any other person on bus ducts. The Managing Director of the respondent-company was also a Director of the sister concern SDEL and the respondents had knowingly availed inadmissible SSI exemption and cleared bus ducts without payment of duty due thereon. The order of the original authority deserved to be sustained.
4. We have carefully considered the facts of the case and the rival submissions. The appeal filed by the Revenue challenges the impugned order as regards the demand of duty, order of confiscation and penalty in relation to the offence of clearance of bus ducts without payment of excise duty. During the material period the Notification No.1/93-CE dated 1.3.93 extended exemption to first clearances of specified goods of specified value subject to, inter alia, the condition that the goods did not bear a brandname belonging to another person. There is no dispute that the brand name STARDRIVE was registered by SDEL for use on various products manufactured by it. This brand name was in use by SDEL since 1975 and one of the products manufactured by it is bus ducts. In the circumstances the bus ducts manufactured and cleared by SDBL during the material period were not eligible to avail the SSI exemption in terms of Notification No. 1/93-CE. The respondents had declared in the classification list filed with the Department for the clearance of the impugned goods that they did not use a brand name belonging to any other person on the excisable goods manufactured and cleared by it. Shri K.L. Thadani, MD of the respondent-company was also a Director of SDEL and was obviously aware of the mis-declaration and the evasion of excise duty involved on clearances of bus ducts by the respondents. In the circumstances we find that invocation of longer period to confirm the demand by the original authority was legally proper. The demand of interest on the duty due, confiscation of the three trucks, fine ordered as well as the orders of penalty under Section 11AC on SDBL and the penalty ordered under Rule 209A on Shri K.L.Thadani were also in accordance with law.
5. In passing the impugned order the Commissioner (Appeals) found that the original authority had erred in presuming that the brandname STARDRIVE belonged to SDEL. We observe that the Commissioner (Appeals) made this inference on the basis that SDEL had registered the brand name STARDRIVE in respect of other products and not bus ducts. As the brandname STARDRIVE was registered in the name of SDEL way back in 1975 and had been used by them for marketing various products including bus ducts, we have no doubt that the use of the same brandname by the respondents disentitled the impugned clearances to the SSI exemption. The Commissioner (Appeals) also relied on a clarification issued by the Board on the scope of Notification No. 223/87 dated 22.9.87 which had contained a similar restriction as in the SSI Notifications in question as regards use of anothers brandname. The CBEC had clarified that use of brandname used by another person to market a product of a different class did not disentitle an assessee to the exemption under Notification No. 223/87-CE dated 22.9.87. He also relied on a decision of the Tribunal reported as 1993 (65) ELT 69 (Tribunal) wherein it was held that SSI exemption under Notification No. 175/86 could not be denied when the brandname Masterpiece was used by two manufacturers for different products namely clocks and watches. We find that the clarification of the CBEC as well as the decision of the Tribunal relied on by the Commissioner (Appeals) dealt with the implication of use of the same brand name on two different products by different manufacturers. We find that the clarification and the ratio does not apply to the facts of the subject case.
6. The respondents argument that they were under the bonafide belief that they could legally avail SSI exemption till the confusion was cleared by the decision of the Tribunal in CCE Vs. Fine Industries (supra) is also not acceptable for the reason that the said decision dealt with the implication of a manufacturer using a brand name similar to the brand name belonging to another person and the admissibility of SSI exemption when an assessee used brand name of another person manufacturing identical goods. No judicial authority is brought to our notice which had held earlier to the LB decision that a manufacturer could avail SSI benefit if he used the brand name of another assessee manufacturing identical goods. No basis is brought out to substantiate the claim of bonafide belief. Therefore, the plea of bonafide belief, we find is without merit. Moreover, longer period of limitation was validly invoked as the respondents had wilfully mis-represented facts in the statutory declaration made under Rule 173 of the CER.
7. In the circumstances we find that the impugned order vacated the order of the original authority without valid grounds. We, therefore, set aside the impugned order to the extent it relates to bus ducts and restore the order of the original authority. The appeal filed by the Revenue is allowed as above.
(Operative portion of the order was pronounced
in open court on 15.6.2009)
(P. KARTHIKEYAN) (JYOTI BALASUNDARAM)
Member (T) Vice President
Rex
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