By TIOL News Service

MUMBAI, NOV 15, 2018: APPELLANTS are manufacturers of table diaries and other printed materials.

On the basis of the documents recovered during the search conducted on 17.07.2007, it was observed that the appellants are manufacturing goods falling under Chapter Heading 48 & 49 of the CETA, 1985 and claiming the benefit of SSI exemption under notification No 8/2003-CE.

It was also noticed that the appellants had cleared "branded" diaries of Life Insurance Corporation without payment of duty. Investigations revealed that the raw material for printed diary was supplied by M/s LIC and appellants had collected labour charges of Rs.6.25 per diary and VAT @ 4%.

Since these diaries have logo of LIC printed on them, the Department viewed that exemption under notification No 8/2003-CE was not available in respect of these products.

On the basis of further investigations carried at the appellant's end and at the end of Life Insurance Corporation, CE duty due on diaries supplied to LIC, was determined as Rs.13,85,522/- and which the appellant paid during the course of investigation.

SCN came to be issued on 31.03.2008.

The demand was confirmed/appropriated along with imposition of equivalent penalty, interest etc.

Appeal before the Commissioner(A) went in vain.

The assessee is before the CESTAT and submits since LIC is neither a manufacturer nor a trader of diaries, the logo of LIC printed on diary cannot be termed as brand name, but is only a house mark of LIC; that LIC is also not in the trade of selling the diaries but is an organization engaged in the business of insuring the life of people. Moreover, since there is no suppression of facts, the larger period of limitation is not applicable, the appellant contended.

The Tribunal extracted paragraph 4 of Notification No 8/2003-CE and the Board Circular No 71/71/94-CX dated 27.10.1994 and observed –

"5.2 From plain reading of the said Notification and Circular referred above it is evident that the use of brand name should be in the course of trade in the goods under consideration. If the same is not in the course of trade then benefit of the exemption contained in this notification cannot be denied. In the present case LIC Logo printed on diaries do not establish any connection between the goods and the logo, hence the same cannot be said to be in the course of trade. Further it cannot be said that LIC is in trade of selling the LIC diaries. Thus without establishing such connection between the goods and logo printed on the diaries benefit of exemption under Notification No 8/2003-CE cannot be denied."

The Bench also noted that the issue is also squarely covered by the decision in - 2018-TIOL-563-CESTAT-MUM, wherein after analyzing the text of the notification No 8/2003-CE and Circular No 71/71/94-CX, the bench concluded "6. ...,we find that it is admitted fact that the diaries manufactured by the appellant for LIC have not been traded by LIC. Accordingly, we hold that the appellant is entitled to exemption under Notification No. 8/2003-CE read with Circular No. 71/71/94-CX dated 27/10/1994..."

The impugned order was set aside and the appeal was allowed.

(See 2018-TIOL-3435-CESTAT-MUM)