M/S. Inder Rubber Industries vs Cce, Chandigarh

CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL PRINCIPAL BENCH, NEW DELHI

Date of Hearing/Decision: 09.04.2015

Excise Appeals Nos. E/1862 and 1863/2005-EX(DB)

[Arising out of Order-in-Appeal No.71/CE/Appeal/Ldh/05 dated 23.02.2005 passed by the Commissioner of Central Excise (Appeals), Ludhiana]

M/s. Inder Rubber Industries Appellant

M/s. Exide Rubber Industries

Vs.

CCE, Chandigarh Respondent

For approval and signature:

Honble Shri Rakesh Kumar, Member (Technical)

Honble Shri S.K. Mohanty, Member (Judicial)

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 Their Lordships wish to see the fair copy of the Order?

4 Whether Order is to be circulated to the Departmental authorities?

Appearance: Rep.by Shri Sudhir Malhotra and Shri A.S. Hasija, Advocates for the appellants.

Shri Ranjan Khanna, DR for the respondent.

Coram: Honble Shri Rakesh Kumar, Member (Technical)

Honble Shri S.K. Mohanty, Member (Judicial).

Final Orders Nos. dated: 9.4.2015

Per Rakesh Kumar:

Both the appellants are manufacturers of tyres and tubes for two wheelers, three wheelers and four wheelers. The period of dispute in the case of M/s. Inder Rubber Industries is from 1.6.97 to 20.03.2002 and the period of dispute in the case of M/s. Exide Rubber Industries is from 12.06.2000 to 27.05.2001. Both the appellants were also availing SSI exemption. While M/s. Inder Rubber Industries were using the brand name of Exide Super & Boxer on the tyres were being manufactured by them and part of the goods were being cleared without putting any brand name, in case of M/s. Exide Rubber Industries, they were putting the brand name Exide on the tyres being manufactured and cleared by them and they were also clearing some quantity without putting any brand name. The Department found that while the brand name Exide belongs to M/s. Exide Industries Ltd. and is registered in their name for use on the batteries, the brand name Boxer belongs to M/s. Bajaj Auto Ltd. and is registered in their name. The Department was accordingly of the view that the goods cleared by the appellants by using the brand name of other persons would not be eligible for SSI exemption. It is on this basis that the show cause notice dated 1.7.2002 was issued to M/s. Inder Rubber Industries for demand of duty amounting to Rs.12,53,859/- for the period from 1.6.97 to 20.03.2002 under proviso to Section 11 A(1) along with interest on it under Section 11 AB of the Central Excise Act and also for imposition of penalty under Rule 173Q of the Central Excise Rules, 1944. The above mentioned show cause notice dated 1.7.2002 also show caused M/s. Exide Rubber Industries for recovery of the duty of Rs.1,85,290/- under Section 11 A of the Central Excise Act, 1944 from them for the period from 12.06.2000 to 27.05.2001 along with interest and also for imposition of penalty on them under Rule 173Q.

2. The show cause notice was adjudicated by the Addl. Commissioner vide order-in-original dated 13.10.2002 by which he dropped the proceedings. The above order of the Addl. Commissioner was reviewed by the Commissioner and the Addl. Commissioner was directed to file appeal before the Commissioner (Appeals) against the order dropping the proceedings. The Commissioner (Appeals) by the impugned order-in-appeal dated 23.02.2005 reversed the order of the Addl. Commissioner and accordingly, he confirmed the duty demands of Rs.10,61,846/- and Rs.1,59,733/- against M/s. Inder Rubber Industries and M/s. Exide Rubber Industries respectively along with interest on it under Section 11 AB and besides this, imposed penalty of Rs.10,61,000/- on M/s. Inder Rubber Industries and of Rs.1,59,000/- on M/s. Exide Rubber Industries under Section 11 AC read with Rule 173 Q and Rule 25(1) of the Central Excise Rules, 2001. Against the above order of the Commissioner (Appeals), these two appeals have been filed.

3. Heard both the sides.

4. Shri Sudhir Malhotra, Advocate, ld. Counsel for the appellants pleaded that during the period of dispute i.e. from 1.6.97 to 20.03.2002, in view of the judgments of the Larger Bench of the Tribunal in the case of CCE, Chandigarh Vs. Fine Industries reported in 2002 (146) ELT 53 (T-LB), when a manufacturer availing of SSI exemption used brand name belonging to another person which was registered in the name of that person for the goods different from the goods being manufactured by assessee unit, the benefit of SSI exemption cannot be denied, that Apex Court in the case of CCE, Chandigarh-II vs. Bhalla Enterprises [2004 (173) ELT 225 (SC)] has held that SSI exemption cannot be denied to an assessee if he uses a brand name belonging to himself, although someone else is equally entitled to use that brand name, that in view of this, the appellants were under bonafide belief that they are eligible for the SSI exemption even though they were using the brand name of Exide and Boxer belonging to other persons, that it is only in the year 2004 that the Apex Court in the case of CCE, Chandigarh-I Vs. Mahaan Dairies reported in 2004 (166) ELT 23 (SC) held that the use of the brand name of another person would disentitle manufacturer for SSI exemption even if the brand name is registered in the name of another person in respect of a different product, that in view of this, the longer limitation period would not be available to the Department for recovery of short paid duty and also there would be no case for imposition of penalty.

5. Shri Ranjan Khanna, ld. Departmental Representative, defended the impugned order by reiterating the findings of the Commissioner in the impugned order and pleaded that the issue involved in this case stands decided against the appellant by the Apex Courts judgment in the case of Mahaan Dairies (supra), wherein the Apex Court held that when a manufacturer uses the brand name belonging to another person, he would not be eligible for SSI exemption and it makes no difference whether the goods on which the trade name is used are the same as the goods in respect of which the trade name is registered and even if the goods are different, so long as the trade name of some other person is used, the benefit of SSI exemption would not be available, that the judgment of the Apex Court in the case of Bhalla Enterprises (supra) does not help the appellants, in any manner, as this is not the case where the use of the brand name was entirely fortuitous and could not on a fair appraisal indicate any such connection, that in this case, the appellants were using the brand name of M/s. Exide Industries Ltd. and M/s. Bajaj Auto Ltd., and it is not the case where the brand name was being used by an unknown trader or manufacturer in some remote areas, that the Apex Court in the case of CCE, Delhi Vs. Ace Auto Comp. Ltd. reported in 2011 (263) ELT 3 (SC) has taken the same view that the use by an assessee of the brand name of another person would disentitle him from availing SSI exemption even if the goods, in respect of which the brand name is registered in the name of another person, are different from the goods being manufactured by the assessee, that in view of this, the benefit of SSI exemption has been correctly denied, that as regards limitation, he relies upon the Tribunals judgment in the case of CCE, Bhopal Vs. Quantum Instruments & Electronics reported in 2014 (302) ELT 113 (Tribunal-Delhi) inasmuch as in this case, the appellant had not disclosed the full facts to the central excise officers about the goods being manufactured by them and the brand name being used by them on those goods and that in view of this, there is no infirmity in the impugned order.

6. We have considered the submission from both the sides and perused the records.

7. In this case, both the appellants were using the brand name belonging to other persons M/s. Inder Rubber Industries were using the brand name Exide Super while the brand name Excide belongs to M/s. Exide Industries Ltd. and also the brand name Boxer belonging to M/s. Bajaj Auto, M/s. Exide Rubber Industries were using the brand name Exide belonging to M/s. Exide Industries Ltd. The goods being manufactured by the brand name owners were different from the goods being manufactured by the appellants on which these brand names were being used. In this factual background, in view of the Apex Courts judgment in the case of ACE Auto Comp. Ltd. (supra) and Mahaan Dairies (supra), the benefit of SSI exemption would not be available. Therefore, the Commissioner (Appeals)s order denying the SSI exemption to the appellant has to be upheld. However, as regards the question of limitation is concerned, we find that during the period of dispute, there were a series of judgments of the Tribunal and also Larger Bench of the Tribunal in the case of Fine Industries (supra), wherein it was held that use by an assessee of the brand name belonging to another person would not result in denial of SSI exemption, if the goods being manufactured by the assessee are different from the goods being manufactured by the brand name owner and in respect of which the brand name is registered. In view of this, we hold that there was scope for doubt in the mind of assessee regarding availability of SSI exemption and hence, in view of the Apex Court judgement in the case of Continental Foundation Joint Venture Vs.CCE reported in 2007 (216) ELT 177 (SC), the longer limitation period of 5 years from the relevant date would not be available and for the same reason, there would be no justification for imposition of penalty on the appellant under Section 11 AC. We have gone through the judgment of the Tribunal in case of Quantum Instruments & Electronics (supra) is not applicable to the facts of this case.

8. In view of the above discussion, while the Commissioner (Appeals)s order denying the SSI exemption is upheld, the duty demand would be confined only to normal limitation period. The imposition of penalty under Section 11 AC is also set aside. The appeals are partly allowed. The Original Adjudicating Authority is to quantify the demand on the branded goods within the normal limitation period.

(Rakesh Kumar)

Member (Technical)

( S.K. Mohanty )

Member (Judicial)

Ckp.

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