By TIOL News Service

NEW DELHI , FEB 20, 2017: A demand of Rs.39.30 lakhs was confirmed against the appellant with imposition of an equivalent penalty. Seized goods were also confiscated along with imposition of redemption fine of Rs.1 lakh.

As the order of the original authority was upheld by the Commissioner(A), the appellant is before the CESTAT.

The matter pertains to admissibility of benefit of exemption under SSI Notification No. 8/2003-CE. The appellant is affixing the brand name "Autopal" on the said goods, though the said brand name is registered in the name of another entity of their group companies, which is known as "Autolite India Ltd."

The lower authorities had denied the SSI exemption on the ground that the goods manufactured by appellant are branded goods.

Before the CESTAT, the appellant submitted that though the brand was registered in the name of "Autolite India Ltd." it is used by all other group companies and it was permitted as their family business was being conducted through this brand name; that each company of the family was using the said brand name as a matter of rightas "Family Settlement"; that the brand "Autopal" is the property of all the brothers, who owned different companies dealing in parts of motor vehicles. The appellant also emphasized that the demand is time barred as there is no suppression and clandestine removal of goods and that they were under a bonafide belief that they are not liable to pay duty.

The AR supported the order of the lower authorities.

The Bench adverted to the apex court decision in Bhalla Enterprises - 2004-TIOL-90-SC-CX wherein it is held that if a brand name of another person has been used, benefit of SSI exemption is not available as objective of the Notification is to give benefit to those industries, which otherwise do not have advantage of brand name.

Noting that the lower authorities had held that it is a fact that the established brand name "Autopal" is registered in the name of M/s Autolite India Ltd., and it has been used by the appellant only to avail the advantage of an established brand name in connection with sale of the goods manufactured by the appellant, the CESTAT held that the appellant is not entitled to the benefit of exemption provided under notification No. 8/2003-CE dated 1.3.03 in terms of para 4 thereof.

In the matter of the plea of bonafide belief made by the appellant, the Bench observed that the same does not have any force as -

"…When the appellant has not informed the department/revenue that they were using the brand name of other group company, this is clearly a suppression of the fact. The Revenue does not have automatic knowledge of the fact that the brand "Autopal? does not belong to the appellant but belongs to another company. It makes no difference that M/s Autolite India Ltd. is a group company. In law it is different entity. Further, even after coming to know that the law does not permit them to take benefit of Notification No. 08/2003 (supra), the appellant has not paid the duty of Central Excise confirmed against them. Therefore, their bonafides cannot be pronounced as beyond doubt. Consequently, it cannot be concluded that the appellant had bonafide belief that they can freely use the brand name of another group company and can still take the benefit of SSI exemption notification No. 8/03-CE (supra). Further the ignorance of law cannot be an excuse as per ratio laid down in the case of CESC Ltd Vs. Dy.CIT, 270 ITR 383 Cal."

The impugned order was sustained and the appeal was rejected as being without merits.

(See 2017-TIOL-509-CESTAT-DEL)