Custom, Excise & Service Tax Tribunal
M/S. S.M. Engineering Works vs C.C.E., Jallandhar (Hq. At Chandigarh) on 20 November, 2013
IN THE CUSTOMS, EXCISE & SERVICE TAX
APPELLATE TRIBUNAL
WEST BLOCK NO.2, R.K. PURAM, NEW DELHI 110 066
Date of Hearing 20.11.2013
For Approval &Signature :
Honble Mrs. Archana Wadhwa, Member (Judicial)
Honble Mr. Rakesh Kumar, Member (Technical)
1.
Whether Press Reporter may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
No
2.
Whether it would be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
Yes
3.
Whether Lordships wish to see the fair copy of the order?
Seen
4.
Whether order is to be circulated to the Department Authorities?
Yes
Appeal No. E/1068/2005 -EX[DB]
[Arising out of Order-in-Original No.122/CE/JAL/2004, dated 30.12.2004 passed by the C.C.E., Jallandhar (Headquarter at Chandigarh]
M/s. S.M. Engineering Works Appellant
Vs.
C.C.E., Jallandhar (Hq. at Chandigarh) Respondent
Appeal No. E/1069/2005 -EX[DB] [Arising out of Order-in-Original No.121/CE/JAL/2004, dated 30.12.2004 passed by the C.C.E., Jallandhar (Headquarter at Chandigarh] M/s. Auto Spares (India) Appellant Vs. C.C.E., Jallandhar (Hq. at Chandigarh) Respondent Appeal No. E/1070/2005 -EX[DB] [Arising out of Order-in-Appeal No.120/CE/JAL/2004, dated 30.12.2004 passed by the C.C.E., Jallandhar (Headquarter at Chandigarh] M/s. Juneja Engineering Works Appellant Vs. C.C.E., Jallandhar (Hq. at Chandigarh) Respondent Appeal No. E/3580/2005 -EX[DB] [Arising out of Order-in-Appeal No.224/CE/Jal/2005, dated 25.08.2005 passed by the C.C.E. (Appeals), Jallandhar (Headquarter at Chandigarh] C.C.E., Jallandhar Appellant Vs. Auto Spares (India), Ladowali Road Respondent Appeal No. E/303/2007 -EX[DB] [Arising out of Order-in-Appeal No.329/CE/JAL/2006, dated 31.10.2006 passed by the C.C.E.(Appeals), Jallandhar (Headquarter at Chandigarh] C.C.E., Jallandhar (HQ at Chandigarh) Appellant Vs. M/s. S.M. Engineering Works Respondent Appeal No. E/1083/2007 -EX[DB] [Arising out of Order-in-Appeal No.329/CE/JAL/2006, dated 31.10.2006 passed by the C.C.E.(Appeals), Jallandhar (Headquarter at Chandigarh] C.C.E., Jallandhar (HQ at Chandigarh) Appellant Vs. M/s. Juneja Engineering works Respondent Appeal No. E/3600/2005 -EX[DB] [Arising out of Order-in-Appeal No.224/CE/Jal/2005, dated 25.08.2005 passed by the C.C.E. (Appeals), Jallandhar (Headquarter at Chandigarh] M/s. Auto Spares India Appellant Vs. C.C.E., Jallandhar (Hq. at Chandigarh) Respondent Appearance Mr. K.K. Anand, Advocate - for the appellant Mr. V.P. Batra, DR - for the respondent CORAM: Honble Mrs. Archana Wadhwa, Member (Judicial) Honble Mr. Rakesh Kumar, Member (Technical) Final Order Nos.58342-58348, dated 20.11.2013 Per Honble Mrs. Archana Wadhwa :
All the 7 appeals, 4 appeals filed by the assesses and 3 appeals filed by Revenue are being disposed of by a common order as the issue involved is identical and all the appeals arise out of the same set of facts and circumstances.
2. After hearing both the sides duly represented by Shri K.K. Anand, Ld. Advocate for the appellants and Shri V.P. Batra, Ld. Departmental Representative for Revenue we find that all the 3 appellants are engaged in manufacture of automobile spare parts, diesel generator, DG parts and railway parts. Their factory was visited by the Central Excise officials on 10.09.2003 and after verifications, it was found they were procuring the castings from various casting manufacturers. However, in respect of castings received from M/s. Krishna Engineering Works, it was found that the same were embossed with the brand name of KW and KEWL. According to the Revenue, the appellants were ordering such castings to be manufactured by the casting manufacturers under the brand name of KW and KEWL, which belonged to M/s. Krishna Engineering Works. Such castings were being converted by the appellants into automobile parts, diesel engine parts or diesel generator parts or railway parts and the brand name continued to be remained on the final product. As such, Revenue had entertained a view that the appellant was engaged in the manufacture of their final products under the brand name, which belonged to M/s. Krishna Engineering Works and as such they were not entitled to the benefit of Small Scale Industries Notification.
3. In view of the said belief, the final products lying in the factory as on the date of visit of the officers were put under seizure. The statements of various persons were recorded wherein they admitted the above factual position of procurement of castings already embossed with the brand name of KE and KEWL. Separate set of proceedings were initiated in respect of the seizure part. It is seen that in the case of M/s. SM Engineering Works and M/s. Juneja Engineering Works, the Show Cause Notices issued to the assesses were vacated by the original adjudicating authorities on the ground that no affixation of brand name stand done by the said assessee and the brand name embossed on the castings, which is a raw-material for the appellant, would not result in denial of the benefit of small scale industries exemption to them. The said decision of the original adjudicating authority was appealed against by the Revenue before the Commissioner (Appeals), who upheld the said orders. Hence, the present two appeals by the Revenue against the orders of the Commissioner (Appeals) in the case of M/s. SM Engineering Works and M/s. Juneja Engineering Works.
As regards the proceedings relating to the seizure in the case of M/s. Auto Spares (India), the original adjudicating authority upheld the demand. The said order was appealed against by the assessee before the Commissioner (Appeals), who upheld the demand but reduced the penalty. Accordingly, the order of the Commissioner (Appeals) stands appealed against by the assessee against the confirmation of demand as also by the Revenue against reduction of penalty.
4. In the above factual background, Show Cause Notices were issued to all the three assesses on 24.06.2004 raising demands of duties for the past period ranging from 01.07.1999 to 31.03.2003 on the ground that as they have used the brand name of KEWL or KW belonging to M/s. Krishna Engineering Works, they were not entitled to the benefit of small scale industries notifications, during the relevant periods. The said demand was contested by the appellant on merits and on the point of limitation. However, Commissioner did not accept the said pleas of the appellants and confirmed the demand of duty of Rs.55,91,573/- against M/s. S.M. Engineering Works, Rs.52,84,424/- against M/s. Auto Spares India and Rs.62,30,803/- against M/s. Juneja Engineering Works. He also imposed penalties of identical amounts on all the three appellants.
Hence, the present appeals by the appellants.
5. After hearing both the sides, at length, we find that he issue required to be decided in the present appeal is as to whether the assesses, who are using the already embossed castings, as inputs, in the manufacture of their final products are to be denied the benefit of small scale industries notifications or not. The reasoning of the adjudicating authority is that the appellants final products manufactured by them go to the market along with the brand name, which is already embossed on the castings and as such hit by the bar of provisions of small scale industries notifications, which deny the benefit to the specified goods bearing brand name or trade name of another person. The adjudicating authority has also observed that these castings were being manufactured by other casting manufacturers along with the brand name under the instructions and orders of the appellant. As such, he has held the denial of the small scale industries notifications.
6. On the other hand, the appellants contention is that the disputed issue was the subject matter of various Tribunal decisions wherein it was held that the brand name already embossed on the inputs procured from outside will not amount to use of brand name in the manufacture of the final product.
Reference has been made to the Tribunal decision in the case of Texind Corporation Pvt. Ld. Vs. C.C.E., Mumbai reported in 2001 (103) E.L.T. 622 (Tri. Mumbai), wherein while dealing with Notification No.1/93-CE, Tribunal observed that mere manufacture of final product out of imported components already bearing the foreign manufacturers brand name would not be hit by debarring the clause of Notification No.1/93-CE. Similarly, in the case of Jain Trading Co. Vs. C.C.E., Ahmedabad reported in 2006 (193) E.L.T. 96 (Tri. Mumbai), the Tribunal held that brand name of other manufacturer affixed on patterns by casting manufacturer at the stage of casting itself and the conversion of such castings into manufacture of valves will not amount to use of brand name in the manufacture of valves. In the case of Keramos Vs. C.C.E., Delhi reported in 2003 (154) E.L.T. 980 (Tri. - Del.), it was held that plain tiles, bought by the assessee for manufacture of printed tiles, do not attract prohibition of brand name under Para 4 of Notification No.8/99-C.E. when such tiles, after printing and decoration, are sold in the market with the brand name of original manufacturers of plain tiles remained on the reverse side.
7. Though the Ld. Advocate submits that subsequent decisions either of the Tribunal or of the Hon'ble Supreme Court of India have elaborated on the law relevant to brand name and have held that the presence of brand name in the final product would amount to giving an impression to the general public about the connection of the brand name with the final product but there is no direct decision reversing the above judgement on the point of use of brand name on the procured inputs. In any case, he submits that as during the relevant period there were decisions as detailed above, which were holding the field in favour of the assessee and as such the longer period of limitation would not be available to the Revenue.
8. We agree with the Ld. Advocate on the point of limitation as discussed in the preceding paragraphs, there are plethora of decisions of the Tribunal holding that the presence of brand name of another person on the inputs/raw-materials used for manufacture of final products, when no affixation of any brand name being done by the manufacturers would not amount to use of brand name of another person. These decisions are sufficient for the appellant to entertain a bona fide belief of non-use of brand name so as to be entitled to the benefit of Small Scale Notifications. It stands held by the Hon'ble Supreme Court in the case of Menhta Allied Products reported as 2004 (167) E.L.T. 494 (SC) that when divergent views are expression difference decisions, the extended period of limitation cannot be invoked. As such, without going into the merits of the case, we allow all the 3 appeals filed by the assesses against the impugned order of the Commissioner confirming the demand and imposing penalties upon them, on the point of limitation itself.
9. As regards the Revenues appeals and the appeal filed by M/s. Auto Spares (India) against the confirmation of demand, Ld. Advocate appearing for the assesses submits that in as much as the amount involved in all the appeals are much on the lower side, he is not contesting the same and submits that the demands involved in these appeals be confirmed, without any contest from him. However, as regards penalties, he submits in as much as it was a bona fide belief, the penalties be set aside.
10. In view of the above, we hold that the demands confirmed in the seizure cases would be confirmed against the assesses as not being contested, however, penalties involved in the case of M/s. Auto Spares (India) is set aside and in other two cases, as no penalties imposed by the original adjudicating authority, Revenue appeals in respect of penalties are being rejected. It may be made clear even at the cost of repetition, the Revenues appeal against the confirmation of duties are allowed and appeal of M/s. Auto Spare India against confirmation of duty is rejected.
11. All the 7 appeals are disposed of in the above manner.
(Dictated and pronounced in the Open Court) (Archana Wadhwa) Member (Judicial) (Rakesh Kumar) Member (Technical) SSK -3-