Jyoti Balasundaram
The common issue in all the three appeals covering different periods is the eligibility of the assessees to the benefit of SSI exemption in terms of Notification No. 1/93-CE dated. 28.2.93 and Notification No. 8/98-CE dated. 2.6.98. The goods in question are fire works; the period of dispute in Appeal No. E/468/01 is 1.4.98 to 8.9.98 and the duty demand raised in the notice and confirmed by the adjudicating authority is Rs.9,35,938/- and penalty imposed is Rs.10,000/-; the period in dispute in Appeal No. E/274/02 is 1.4.99 to 31.8.99, duty demand is Rs.6,78,100/- and penalty is Rs.7000/-. Period in dispute in the third Appeal E/275/02 is 1.10.99 to 20.10.99, the duty demand is Rs.6,71,799/- and penalty is Rs.7000/-.
2). The notices issued to the respondents proposed denial of the benefit on the ground that the brand name Spear with symbol and numeral 27 and Torch belonged to Sundaravel Fire Works Pvt. Ltd. (hereinafter referred to as SFPL) and therefore, the respondents M/s.Sundaravel Fireworks Industries (hereinafter referred to as SFI), a partnership firm are not eligible to the benefit of SSI exemption. The demands were confirmed rejecting the contention of the partnership firm that since SFPL, the company which owned the brand name, was itself a partner in SFI, the SFI was a co-owner or joint owner of the brand name. The Commissioner (Appeals) however, in the impugned order, has held as under :-
I have given my careful considerations to the facts and circumstances of the case and the submissions made during the course of personal hearing. The partnership firm SFI has been got registered as a small scale industries unit. The company SFPL, being the major partner having effective control over the partnership firm SFI, there cannot be any objection to the use of the brand name of its own products, since it is not the brand name of another person but only that of one of the partners of SFI. After the assignment of the brand name to SFI, the SFPL has stopped its manufacturing activity using its brand name since 1.4.98. The said brand name is also not being used by another manufacturer or by another registered or unregistered company. Therefore, the denial of SSI exemption to the SFI, an SSI unit on the pretext that SFI is using another users brand name is illegal. As long as SFPL is a valid partner of SFI, denial of SSI exemption on the basis of brand name concept is not sustainable. There is only reconstitution of the firm wherein SPL is a major and main partner and hence there was no necessity to obtain fresh registration certificate. Hence the original RC was suitably got amended by an endorsement by the competent authority. The SFI unit cleared fire works at confessional rate in terms of exemption notification as per the approved declaration U/R 173B. The partnership was not disputed while approving the amended RC by the department. The declaration U/R 173 B (Classification list) filed by SFI on 3.4.98, 2.6.98 and 19.7.98 recording the use of brand name has been admitted by the department. Hence the demand of duty is not sustainable. There was no allegation of suppression of facts or willful contravention, whatsoever. There was no seizure of goods at the time of visit of the intelligence wing on 8.9.98. The penal proceedings U/R 9(2), and 173Q are without basis and the classification matter relating to rate of duty is purely an interpretation of law and hence the imposition of penalty is unjust and illegal. In the above circumstances, the impugned order demanding the differential duty and penalty are not correct. Hence I hold that the appellant firm SFI is eligible and entitled to SSI exemption.
2). We have heard both sides. The fact that there cannot be any objection to the use of the brand name of SFPL by SFI since SFPL was the major partner in SFI, does not in any way detract from the ownership of the brand name by SFPL who is an independent legal entity, namely, a limited company. The further fact that the SFPL had stopped manufacturing activities using the brand name also does not make the brand name one of SFI or belonging to SFI. Reference by the Commissioner (Appeals) to an assignment of the brand name is not borne out on record. The assessees have never raised the plea that the brand name was assigned by SFPL to SFI. Therefore, it is crystal clear that brand name in question belonged to SFPL which is a separate legal entity from SFI. Since SFI has used the brand name of another person viz. SFPL on its goods, it is not entitled to the benefit of the exemption in terms of the notifications in question (SSI exemption notifications). We, therefore, set aside the impugned orders by which the benefit of SSI exemption has been extended to the assessees, and allow the appeals of the Revenue. The cross objection which is in the nature of reply to the Revenues appeals is dismissed.