By TIOL News Service

NEW DELHI, NOV 04, 2014: THIS is a Revenue appeal against the order passed by the Commissioner (Appeals).

The respondents are manufacturers of Synthetic Rubber Aprons and Cots. The period of dispute is from March, 1989 to August, 1990. The respondent, during this period, were availing of SSI exemption notification no.175/86-CE. The departmental officers visited the factory and found that they are using brand name "Precitex" on their goods which belonged to M/s. Precision Rubber Industries Pvt. Ltd. Bombay (PRIPL)and, therefore,took a view that in terms of clause 7 of the notification, SSI exemption was not available.

In adjudication proceedings, the duty demand of Rs.15.56 Lakhs was confirmed.

The assessee had submitted that PRIPL is also a SSI unit with SSI registration certificate issued by the Directorate of Industries and is, therefore, eligible for SSI exemption under notification no. 175/86-CE and hence, the use by the Respondent of the brand name "Precitex" of PRIPL would not debar them from the benefit of the SSI exemption, but this plea was not accepted on the ground that the total value of the clearances of PRIPL was more than Rs.150 Lakhs.

The Commissioner (A) while allowing the appeal took a view that the impugned goods manufactured by PRIPL, Bombay had been classified under sub-heading no.4009.99 where rate of duty is nil and that since the value of the clearances of these goods would not form part of the aggregate value of the clearances during 1987-88 as well as 1989-90, PRIPL would be eligible for SSI exemption.

Therefore, Revenue is in appeal before CESTAT.

The AR submitted that the Tribunal in respect of the Bangalore Unit of PRIPL had held in March 1998 that the classification of synthetics Aprons and cots has to be made under heading no.84.48; which goods are not subject to Nil rate of duty, and, therefore, SSI exemption is not available as the turnover limit is crossed. It is also submitted that the finding of the Commissioner (Appeals) that the brand name "Precitex" used by the respondent is different, as the same is without circle surrounding the brand name "Precitex", while the brand name "Precitex" owned by PRIPL, Bombay is having a circle in the middle of which the word "Precitex" has been inscribed, and therefore use of the brand name "Precitex" would not debar the Respondent from the benefit of the SSI exemption, is not correct. Reliance is placed on the apex Court decision in CCE, Trichy vs Rukmani Packwell Traders - 2004-TIOL-51-SC-CX .

The respondent defended the order passed by Commissioner (A) in their favour.

The Bench observed -

++ One ground on which the Commissioner (Appeals) has allowed the benefit of exemption is that the brand name "Precitex" being used by the respondent is not inscribed in the circle while the brand name owned by PRIPL, Bombay is inscribed in the circle. We do not agree with the view of the Commissioner (Appeals) as in view of the Apex Court's decision in the case of RukmaniPackwell Traders (supra) , even the use of the brand name by a SSI unit, which is similar to the brand name used by some other person or is a part of the brand name of another person would debar him from the benefit of the SSI exemption.

++ However, during the period of dispute, in a case where a small scale unit used the brand name of another manufacturer, the benefit of SSI exemption could be denied to that unit only if the brand name owner was not eligible for the SSI exemption. In this case, there is no dispute about the fact that the brand name owner - M/s PRIPL, Bombay was registered with the Directorate of Industries as a small scale unit.

++ However, during that period, that unit was not availing SSI exemption for the reason that its product had been classified by the Assistant Commissioner under Heading no.4009.99 where rate of duty is nil and this classification has been affirmed by the Commissioner (Appeals) as well as by this Tribunal as a result of which they were not paying any duty.

++ However, for the purpose of SSI exemption to the respondent, what is material is as to whether during that period, the brand name holder (M/s PRIPL) was eligible for SSI exemption. It is not disputed that if as per the provisions of the SSI exemption, the value of the exempted goods is excluded from the aggregate value of the clearances of PRIPL, during each preceding financial year, the same would be well within the exemption limit.

++ Therefore, it cannot be said that, during the period of dispute, the brand name holder, PRIPL was not eligible for SSI exemption and for this reason it would not be correct to deny the benefit of the SSI exemption to the respondent unit. On this point, therefore, we agree with the findings of the Commissioner (Appeals).

++ Though subsequently, the Tribunal in the year 1998 vide order dated 19.3.98 held that the Synthetic Rubber Aprons and Cots are parts of the textile machinery and would be classifiable under Heading No.84.48, in our view, on the basis of this decision, the classification of the goods, during the period of dispute, cannot be revised and it has to be held that during the period of dispute, PRIPL, Bombay were eligible for SSI exemption and hence, use of their brand name "Precitex" by the respondent unit would not debar them from the benefit of the SSI exemption.

Holding that there is no infirmity in the order of the Commissioner(A), the Revenue appeal was dismissed.

Quick reference - Amending Notification 223/87-CE dated 22/09/1987 -

“7. The exemption contained in this notification shall not apply to the specified goods where a manufacturer affixes the specified goods with a brand name or trade name (registered or not) of another person who is not eligible for the grant of exemption under this notification :

Provided that nothing contained in this paragraph shall be applicable in respect of the specified goods cleared for home consumption before the 1st day of October, 1987.”

(See 2014-TIOL-2175-CESTAT-DEL)