1. The appellants are aggrieved by the order of the Collector of Central Excise, Ahmedabad confirming duty of Rs. 7,83,252.52 p. on Absorbent Cotton Wool I.P. manufactured and cleared by the appellants during the period from 1987-88 to 1990-91 on the ground that they had wrongly availed the benefit of total exemption from duty in terms of Notification No. 185/87-C.E., dated 17-7-1987 which provides for exemption inter alia to absorbent Cotton Wool falling under GET sub-heading 30.04 subject to the condition that such goods are manufactured by a manufacturer by whom or on whose behalf, no such goods are sold under a brand name - the case of the department is that the appellants sold the product in dispute under the brand name "BRISK", and imposing a penalty of Rs. 1,50,0007-.
2. The brief facts of the case are that on 11-1-1990, the Central Excise officers visited the factory premises of the appellants herein who are engaged in the manufacture of absorbent Cotton Wool I.P.falling under Chapter 30 of the Schedule to the CETA, 1985. The scrutiny of the packages, labels, delivery challans, invoices etc., revealed that the appellants were using the brand name 'Brisk'.
Enquiries also revealed that the factory had started manufacture of "Zig Zag" Absorbent Cotton Wool I.P. with effect from 1-4-1990 and the said brand name was also being used on the packing material and in the order forms placed by the customers.
3. The statement of Shri Natwarlal Mangal Dass Fatal, Partner of the appellants was recorded on 11-1-1990 wherein he deposed that they were packing the cotton manufactured by them in different packings and affixing the labels of their company thereon. He produced two labels along with delivery challans and invoices and stated that they were selling their product in the name of 'Brisk' surgical cotton. His further statement was recorded on 4-5-1990 wherein he stated that from 1984 till February 1986, the appellants were selling the surgical cotton under the brand name 'Brisk' which was put on the labels of the goods as well as upon the stationery. They discontinued the base of brand name on labels from 1-3-1986; however, they continued to use the old stationery such as delivery challans, order forms, stamp receipts and invoices.
4. On the basis of the above investigation and information, the department issued show cause notice on 11-3-1992 proposing classification of the Absorbent Cotton Wool I.P. under GET sub-heading 30.04 and denying the benefit of exemption under Notification No.185/87 and proposing recovery of duty (as confirmed) and imposition of penalty. The extended period of limitation was invoked for alleged suppression of use of brand name, with intent to evade payment of duty.
The adjudicating authority upheld the charges in the show cause notice and confirmed the duty demand and imposed penalty. Hence this appeal.
5. We have heard Shri K.K. Anand, learned Counsel who contends that during the period of demand, goods do not bear any brand name i.e. the labels affixed on the goods did not bear any brand name but only bore the name of the manufacturer while the brand name appeared only on the documents such as invoices, delivery challans etc. and the use of the brand name on the documents does not amount to sale of goods under a brand name. He also contends that the demand is barred by limitation since the appellants had filed copies of the labels of the product along with the classification list filed in 1987, as confirmed by the Superintendent of Central Excise during his cross examination on 11-11-1992, and the classification list was approved only after authorities had satisfied themselves that labels did not bear any brand name or logo.
6. The learned SDR Shri H.K. Jain draws our attention to the statement dated 11-1-1990 of the appellants' partner in which he has stated that they were selling the product in the name of 'Brisk' Surgical cotton and to the finding of the Adjudicating authority that trade mark 'Brisk' was mentioned on the labels of the product. This being so, he contends that it is not open to the appellants to argue that the product in dispute did not bear any brand name so as to be entitled to the benefit of Notification 185/87. Regarding the applicability of the extended period of limitation, he reiterates the findings contained in the impugned order that the appellants had concealed the fact that they were manufacturing goods bearing their brand name and that they had mentioned in the classification list filed in 1987 that they were manufacturing non-branded goods.
7. We have carefully considered the submissions of both the sides. For proper appreciation of the controversy, we reproduce below Notification No. 185/87: Exemption to absorbent/non-absorbent cotton Wool and Gauze. - In exercise of the powers conferred by Sub-rule (1) of Rule 8 of the Central Excise Rules, 1944, the Central Government hereby exempts absorbent cotton wool, non-absorbent cotton wool, and gauze cloth and gauze cloth bandages (hereinafter referred to as such goods), falling under Heading 30.04 of the Schedule to the Central Excise Tariff Act, 1985 (5 of 1986) from the whole of duty of excise leviable thereon which is specified in the said Schedule: Provided that such goods are manufactured by a manufacturer by whom or on whose behalf no such goods are sold under a brand name.
Explanation. - For the. purpose of this notification, 'brand name' shall mean a brand name whether registered or not, that is to say, a name or a mark such as a symbol, monogram, label, signature or invented word or writing, which is used in relation to such goods for the purposes of indicating or so as to indicate a connection in the course of trade between such goods and some person using such name or mark with or without any indication of the identity of that person." 8. From the above, it is clear that what is to be seen for the purpose of deciding whether the notification is applicable in the present case is whether Absorbent Cotton Wool I.P. on which the duty has been confirmed was sold under a brand name. The panchnama shows that the labels on the goods contained the name, address of the manufacturer i.e. 'Brisk' Surgical Cotton, Factory Plot No. 62, GIDC Kalol (North Gujarat). The Superintendent of Central Excise Shri R.C. Parekh has confirmed that the appellants had filed the label of the product along with the classification list and that no logo or brand name was figuring on the labels and only name of the manufacturer appeared thereon. This factual position is further borne out by the detailed statement dated 4-5-1990 of the partner of the appellants wherein he has explained that from 1-9-1984 till February 1986, they were putting the name 'Brisk' and the monogram on their labels and from 1-3-1986, they had dis-continued the practice of putting the brand name on the labels.
9. The partner has clarified that the brand name of the product was shown only in the documents such as delivery challans, invoices, etc.
and that even after the appellants had stopped using the brand name on the labels of the goods, they had continued to use the old stationery.
The partner also produced the copy of the label of the disputed product and affixed on the goods during the relevant period, as an enclosure to the reply dated 25-11-1992 to the show cause notice. We have seen this label at page 98 of the paper book and find that it contains only the name of the manufacturer and not any brand name. The department has not rebutted the contention of the appellants that the label above mentioned was not the label produced along with the reply or that such label was different in any way from the labels perused by the adjudicating authority in spite of the appellants raising this ground once again in the appeal memorandum before the Tribunal. From the above, the appellants contention that the labels of the goods did not contain any brand name is required to be accepted. Use of brand name on documents such as delivery challans invoices etc., does not amount to sale of goods under a brand name within the meaning of the proviso to Notification 185/87., following the ratio of the Tribunal's order in the case of Forest Industries Put. Ltd. v. Collector of Central Excise reported in 1996 (83) E.L.T. 570 wherein the Tribunal has held that when goods are merely invoiced under brand name of others and brand name is not affixed on goods, the goods are eligible for SSI exemption under Notification No. 175/86, in paragraph 7 of which affixing of others' brand name on the goods will operate as a bar to the availment of the benefit under that notification.
10. Indication of the manufacturer's name on the labels of the goods has been held to be not a ground for denial of the benefit of Notification, in the case of Star Processors Ltd. v. Collector of Central Excise, Calcutta reported in 1998 (24) RLT 626 relying upon a Trade Notice issued by several Commissionerates stating that merely because the name of the manufacturer and Drug Licence No. are given on the label, the benefit of Notification 185/87 should not be denied.
11. In the present appeal also, the appellants relied upon Circular No.4/88, dated 25-3-1988 issued by the C.B.E.C. clarifying that exemption under Notification 185/87 may not be denied to Absorbent Cotton Wool I.P., gauze bandages etc. merely because the name of the manufacturer or his Drug Licence No. is written on the label since the indication of the manufacturer's name and Drug Licence No. These are statutory requirements for all drugs including the aforesaid products.
12. In the light of the above, we hold that the appellants are entitled to the benefit of exemption in terms of Notification No. 185/87.
13. We also hold that demand is barred by limitation - the Superintendent of Central Excise Shri R.C. Parekh has confirmed in cross examination that the labels of the products were being filed along with the classification list in 1987, that the labels did not contain any brand name or logo and therefore, the classification list was approved extending the benefit of Notification 1985/87 (sic). In these circumstances, the appellants cannot be held guilty of any suppression of facts with intent to evade payment of duty since the classification lists were approved only after perusing the samples of the labels of the disputed products. In the result, the impugned order is set aside and the appeal is allowed.