The benefit of SSI exemption is not available if the goods are cleared using brand name of others.

PJ/Case Laws/2012-13/1479

Case:- KOTHARI POLY EXTRUSION V/S COMMISSIONER OF CENTRAL EXCISE, KOLHAPUR

Citation:- 2013-TIOL-404-CESTAT-MUM

Brief Facts: - The present appeal was filed by the appellant against the impugned order where the demand of Rs.4,83,288/- was confirmed with interest and penalty of equal amount imposed under Section 11AC of the Central Excise Act, 1944. The appellants are engaged in the manufacture of PVC pipes falling under Chapter Heading 39 of the Central Excise Tariff. They were availing small scale exemption under Notification No. 9/1998-CE dated 2.6.1998. Revenue officers visited the factory premises of the appellant and it was found that appellants were clearing the goods with the brand name “Kothari” which belongs to M/s Kothari Industries. During the investigation, it was also found that the brand name “Kothari” was registered in the name of Kothari Industries under Patent and Trademark Act. A Show Cause Notice was issued demanding duty after denying the benefit of exemption on the ground that the appellants were clearing the goods with the brand name of others. The adjudicating authority confirmed the demand and imposed a penalty. The appellant filed appeal before the Commissioner (Appeals). The Commissioner (Appeals) dismissed the appeal. Hence, the appellant filed this appeal.

Appellant’s Contention: - The appellant contended that the demand is confirmed after denying the benefit of Notification No. 9/98-CE for the period March 99 to July 1999. With effect from 1.4.1999 Notification No. 9/99-CE came into force and earlier Notification was rescinded. Hence the demand after 1.4.1999 by denying Notification No.9/1998-CE is not sustainable. Further, they contended that they were clearing the goods under the brand name of Kothari Pipes. The contention is that they were clearing the goods under different brand name. Hence the benefit of Notification cannot be denied. Hence the demand is not sustainable. They are also entitled for the benefit of cum-duty price.

Respondent’s Contention: - The respondent argued that the appellant filed declaration in the year 2000 claiming the benefit of Notification No. 9/1998-CE and they want to deny the same on the ground that the goods manufactured by the appellants were cleared with the brand name which is registered in the name of M/s Kothari Industries. The Revenue heavily relied on the decision of the Hon'ble Supreme Court in the case of CCE vs. Rukmani Pakkwell Traders reported in2004(165) ELT 481 (SC) = (2004-TIOL-51-SC-CX) to submit that even a part of brand name of another person indicating the connection in the course of trade would be sufficient to deny the benefit of SSI notification.

Reasoning of Judgment: - The Hon’ble CESTAT held that the brand name (Kothari) is registered in the name of M/s Kothari Industries under the Patent and Trademark Act. The appellants were manufacturing and clearing the goods under the brand name of M/s Kothari Industries. This fact is admitted by Mr. Amol Palia who is a partner in the appellant's firm as well as a partner of M/s Kothari Industries. As the appellants were clearing the goods under the brand name of M/s Kothari Industries, therefore, in view of the decision of the Hon'ble Supreme Court in the case of CCE vs. Rukmani Pakkwell (supra), the appellants are not entitled for the benefit of SSI Notification. Further they find no merit in the contention of the appellant that Notification No.9/1998 was rescinded and a new Notification came into force i.e. 9/1999-CE dated 1.4.1999 and the demand after 1.4.1999 by denying the Notification No.9/1999-CE is not sustainable. As the appellant himself claiming the benefit of Notification No.9/1998-CE in the declaration filed in the year 2000. They find that the Revenue denied the SSI notification on the ground that the appellants were clearing the goods in the brand name which does not belong to them and registered in the name of M/s Kothari Industries. The provisions of Notification No.9/1999-CE are also the same. In view of the above, they find no merit in the appeal except that the appellants are entitled for cum-duty price.

Decision: - The appeal was disposed off.

Comment:-The analogy drawn from this case is already well settled position of law that small scale industries exemption is not available if the assessee uses brand name of other.

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PJ/Case Laws/2012-13/1479

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