By TIOL News Service

NEW DELHI , JUNE 09, 2017: THIS is a Revenue appeal.

The respondent is engaged in the manufacture of various engineering equipment such as fire resistant floppy storage cabinets and various spares and components of earth moving equipment for the principal manufacturer viz. M/s. L&T Case Equipments Pvt. Ltd. The goods manufactured by the respondent for L&T were cleared on payment of full duty @16% advalorem by treating such goods as branded goods as they were embossing the goods with "ME-2 L&T".

The respondent is also availing the benefit of SSI exemption notification 8/2003-CE in relation to the goods manufactured and cleared for home consumption under its own brand name to various customers. Therefore, they have deducted the value of clearances made to L&T while computing the aggregate value of clearances of all excisable goods for home consumption. This was done in terms of the para 2(vii) of the said SSI notification.

It is the case of the Revenue that the goods manufactured for L&T were ‘not branded' goods and the respondent had intentionally paid duty on these goods only for availing the benefit of value-based exemption on their other clearances. Inasmuch as Revenue took the view that what has been embossed is not a brand name belonging to someone else, and accordingly sought to include the value of such clearances in the aggregate value of clearances by the respondent leading to the demand of differential duty.

Consequently, a demand of Rs.48,00,000/- was confirmed by the original authority.

However,the Commissioner (Appeals)set aside the demand and allowed the appeal of the respondent.

Aggrieved, Revenue is before the CESTAT.

The Bench observed -

++ The fact of the matter is that the respondent is clearing the goods to the customer L&T after embossing them with the mark, "ME-2 L&T". The adjudicating authority has taken the view that the goods have been marked as above only for identification of the goods as manufactured for L&T. However, the fact that the goods have been cleared bearing such mark without availing the concession indicates that both the parties in question have regarded such goods as cleared with the brand name of L&T who are not eligible for the SSI benefit.

++ When we look at the investigation conducted by the Department we note that neither the respondent nor M/s L&T in the statements given by their representatives have categorically confirmed whether it is a brand name are not. Hence we have to conclude that revenue has not adduced any evidence which shows that the goods are not branded. Consequently, we have to go by the understanding between the buyer and seller/manufacturer of the goods in this case. It is evident that the goods are to be embossed with "L&T" which has been considered as the brand name of the buyer. The intention is manifest from the fact that the goods stand cleared by the respondent on payment of full duty without the concession. It is therefore axiomatic that such clearances need to be excluded while computing the aggregate value of clearances in a financial year in terms of para 2(vii)…

Concluding that the impugned order cannot be faulted, the same was upheld and the Revenue appeal was rejected.

(See 2017-TIOL-1943-CESTAT-DEL)