Customs, Excise and Gold Tribunal - Delhi
M/S Kesha Sales (P) Limited vs Cce, Meerut on 14 March, 2001
Equivalent citations: 2001(131)ELT59(TRI-DEL)
ORDER
C.N.B. Nair
1. The appellant is a Small Scale manufacturer of weighing scales. The goods are manufactured under an agreement with Terraillon of France. Small scale units were eligible to exemption under Notification No.175/86, subject to the condition that goods bearing the brand name of another person would not be eligible for the exemption. In the impugned order, the appellant has been directed to pay duty on the weighing scales manufactured by them on the ground that they bore the brand name, "Terraillon" which belonged to the French company. This demand is under challenge in the present appeal.
2. During the argument of the case today, the Consultant for the appellant submitted though it is true that the appellant was using "Terraillon" on his weighing scales, no evidence has been brought on record that "Terraillon" was a brand name of the French company. He submitted that "Terraillon" was only a house mark. The Learned Consultant also submitted that the demand in this case was beyond time limit inasmuch as the demand was not raised within six months. His contention is that the appellants were under the bonafide belief that the use of brand name of another person would not make them inelligible for exemption. This was so because the High Court of Allahabad had stayed the operation of the provision relating to denial of exemption to the goods having the brand name of another person. Apart from these submissions, the Learned Consultant also stated that the duty demand in the present case is excessive inasmuch as entire sales realisation has been treated as assessable value while computing the duty and no modvat credit has been allowed in respect of imported inputs.
3. As against the aforesaid submissions made on behalf of the appellants, the Learned DR submitted that the objection regarding the use of brand name cannot be taken by the appellant at stage inasmuch as in their reply the show cause notice they had admitted that they were using the brand name "Terraillon" belonging to their foreign supplier. With regard to time bar, he submitted that the appellant had nowhere mentioned in their declaration filed to the Central Excise authorities that the were using the brand name of another person. Infact, the proforma of the declaration specifically asked whether the goods were manufactured under the brand name of another person as a job work. The appellant only mentioned "not applicable" while filing the declaration. The Learned DR submitted that the Tribunal has held in the case of Sonoma Aromatics (P) Ltd., Vs. CCE, Bangalore reported in 1994 (5) RLT 460 (CEGAT-C) that non declaration of brand name would amount to suppression of facts. He also submitted that this decision of the Tribunal has been confirmed by the Apex Court (reported in 1997 (93) ELT A70). Ld. DR therefore, submitted that the extended time limit for issue of the notice was correctly invoked in the present case.
4. We are not able to accept the appellants plea with regard to the use of brand name. The appellants have admitted in their reply to the show cause notice that they are using brand name of "Terraillon" which belong to the French Foreign company. Their defence in the proceedings was that the use of brand name of a foreign company, which do not operate in India, would not make the goods ineligible for the exemption. This defence of the appellant is no more good in law inasmuch as this Tribunal held in the case of M/s Namtech Systems Ltd. Vs. CCE, New Deli 2000 (115) ELT 238 that the use of a brand name of a foreign company would also bring the goods within the scope of the exception in respect of branded goods in Notification No. 175/86. The appellant's defence raised on the ground of bonafide belief also is not acceptable in the present case inasmuch as the stay order of the Allahabad High Court in petition filed by other parties could not be treated as a decision of the High Court on the question of eligibility to exemption. Bonafide belief regarding a legal proposition cannot be based an interim order of stay granted to some other person. The judgement of the High Court on the subject was delivered only in 1994 and that decision was reversed by the Supreme Court in 1996. The period of demand in the present case is of 1991. In these circumstances, the appellant's plea regarding time bar also can not find favour.
5. With regard to assessable value, it is settled law (Srichakra Tyre case reported in 1999 (32) RLT 1) that sales realisation by an assessee should be treated as cum duty price and assessable value should be worked out after excluding the elements towards duty etc. from the sale price. The appellant's claim for modvat credit also is required to be considered. The case is required to go back for re-computation of duty after taking into account both these grounds. Propotionate reduction in penalty will also be appropriate.
6. In view of what has been stated above, the appeal is disposed of by way of remand. The Adjudicating Authority shall re-compute the duty and refix the penalty in the light of our observations.
(Pronounced & dictated in the open Court).