MUMBAI, JAN 24, 2013: THE appellant claimed the benefit of SSI exemption during the period 1.4.1999 to 6.12.2001 in respect of medicaments bearing the brand name of M/s Milichem Laboratories .

The department was of the view that since the goods bore the brand name of another person the appellant is not eligible for the SSI exemption in terms of para 4 of the notification. Accordingly the lower authority confirmed a demand of Rs.45,851/- along with interest and penalty. Since this order was upheld by the Commissioner(A), the appellant is before the CESTAT.

The proprietor of the appellant firm appeared before the Bench and submitted that they had a Deed of Assignment dated 10.08.2000 executed by M/s Milichem Laboratories in their favour where under the brand names have been sold to them for a consideration of Rs.2000/- and, therefore, they are rightly entitled for the SSI exemption in respect of goods cleared with the said brand name. It is further submitted that one more Assignment Deed has been executed by M/s Milichem Laboratories in their favour in May, 2003, once again assigning the brand names in their favour, and which they have registered with the Trade Marks Registry on 20.05.2003. Reliance is also placed on the decision in Zarafshan Chemicals Pvt. Ltd. 2000 (124) ELT 256 for deciding the appeal in their favour.

The Revenue representative submitted that the assignment deeds take effect only from the date when the said trademark gets registered and during the relevant period, the trade marks were not registered and, therefore, the benefit of the Small Scale Exemption notification would not be available.

The Bench observed -

“6. In this case, the demand pertains to the period April, 1999 to December 2001 and the first assignment deed has been executed on 10.08.2000. Therefore, for the period prior to 10.08.2000, there is no assignment of brand name in favour of the appellant and, therefore, the demand of duty is sustainable in law. For the period after 10.08.2000, it is seen from the assignment deed that “In consideration of the sum of Rs.2000/- payment of which is deemed to have been made to and receipt acknowledged by the Assignors on execution of these presents, the Assignor hereby agree to assign the Assignee the said trademarks when get registered.” To a query by the Bench, the appellant state that the trademarks are yet to be registered and the application is still pending. If that be so, at the material time, there is no assignment in favour of the appellant and, therefore, the brand names of the goods under clearance do not belong to the appellant and belong to M/s Milichem Laboratories, the assignor. Therefore, condition 4 of the SSI exemption notification is violated and the appellant is not entitled for the benefit of the said exemption.

7. We have also perused the order of the Tribunal in the case of Zarafshan Chemicals Pvt. Ltd. vs. CCE, Chandigarh 2000 (124) ELT 256. In that case, the appellant therein had a valid assignment deed in his favour at the time of clearance of the goods and as per the assignment deed therein, the right, title and interest together with the goodwill was transferred to the appellant on 3.4.1993 whereas the period of demand ws subsequent to the assignment. In that context, it was held the appellant therein would be eligible for small scale exemption. This is not the case before us. As discussed earlier, in the case before us, there is no assignment deed in favour of the appellant for the period prior to 10.08.2000 and even for the period on or after 10.08.2000, the assignment is not effective since, as per the deed, the assignment takes place when the trade marks are registered. Inasmuch as the trade marks are yet to be registered, the question of the appellant owning the brand name by virtue of the assignment deed does not arise at all….”

Holding that there is no merit in the appeal, the same was dismissed.

(See 2013-TIOL-149-CESTAT-MUM)