By TIOL News Service

NEW DELHI, MAR 03, 2017: AFTER a visit to the appellant's factory on 10.08.2007, the lower authorities opined that fabrication of steel frames and fitting of plastic container in the same amounted to manufacture of goods falling under Heading No. 7309 of CETA. And since the appellant was using the plastic container with the brand name 'SHEETAL' which belongs to M/s Aquaplast Industries Pvt. Ltd . on Dustbins, the same amounts to using the brand name of another person and hence, the assessee-Appellants are not entitled for SSI benefit.

The demand was confirmed by the original authority along with imposition of penalties on assessee as well as individuals. The Commissioner(A) reduced the duty demand as well as penalty to Rs.30,87,296/-. Penalties on individuals was also reduced to Rs.1,50,000/- u/r 26 of the CER, 2002.

Aggrieved, the assessee-Appellants have filed appeals before the CESTAT.

The President, writing for the Bench, observed -

++ The assessee-Appellant are engaged in the fabrication of steel frames and fitting of plastic container in the same. The containers were purchased from another group company, namely, M/s Aquaplast Industries Pvt. Ltd., who has the trademark of 'SHEETAL'. The assessee-Appellants are putting the said plastic Dustbin as it is, into the iron frame by fixing handles, lid, wheel, frame etc. The assessee-Appellants were merely fabricating the frames for fixing the Dustbin which was always procured by them from outside. For manufacturing the frame, the turnover always remained below the exempted limit.

++ Entire supply of the goods by the assessee-Appellants is to various civic authorities like NDMC, Municipal Corporation, Municipal Boards of various cities including Bombay, Delhi for handling the municipal waste. So, the assessee-Appellants were under the bonafide belief that the same were exempted from the excise duty, so no registration was taken; but later, registration was also obtained. It is alleged that 100% supply of the goods was for the Government Agencies i.e. civic bodies. No clandestine activity/sale was undertaken as the entire sale of the goods was for managing municipal waste and the goods were supplied for non-commercial purpose.

++ We are of the view that when the brand 'SHEETAL' was owned by M/s Aquaplast Industries Pvt. Ltd. and its products along with the embossed/label of 'SHEETAL' were put in the frame manufactured by the assessee-Appellants, then the cost of the borrowed item cannot be included. In the instant case, 100% supply of the goods of the assessee-Appellants is for the civic agencies of the State Governments which are making valuable contribution towards the 'Clean India' campaign.

++ Following the ratio laid down in the case of Trimurty Weldmesh P. Ltd., upheld by the Supreme Court, we are of the view that the brand name 'SHEETAL' was already there on the plastic container purchased from M/s Aquaplast Industries Pvt. Ltd. Hence, the assessee-Appellants cannot be considered as using the brand name of another person. M/s Aquaplast Industries Pvt. Ltd. has also given the 'No Objection Certificate' to use the containers in the original form with the label.

Holding that there is no merit in the order impugned, the same was set aside and the appeals were allowed with consequential relief.

(See 2017-TIOL-675-CESTAT-DEL)