In a recent ruling, the Delhi CESTAT held that Small Scale Industry (SSI) exemption is not available to an assessee even when assessee was using third party brand name to manufacture own goods.
The assessee-Units were engaged in the manufacture of various household products under the brand names of Maharaja and Maharaja Whiteline. All these units were availing the benefit of SSI exemption Notification No.175/86-CE.The assessing Officer denied the said benefit to the assessees in respect of the excisable goods manufactured by them for the period upto 31.03.90 as also on the charges of clandestine removal of the goods by the said manufacturing units on ground that all the units were created by Shri Harish Kumar under the brand name of Maharaja with a view to illegally avail the SSI exemption and to evade duty of tax.
The bench noted that all the units being registered separately, manufacturing different goods though identical and located at different places, having complete machinery to manufacture goods cannot be held to be related parties, merely because the Directors or partners or proprietors are relative of each other.
It was further noted that as per the Notification No.175/86, the benefit of SSI exemption would not be available to a manufacturer using the brand name of another person only when the brand name owner was not entitled to the benefit of SSI Notification. “If brand name owner was enjoying the benefit of SSI Notification, the same was available to the other manufacturers manufacturing the goods with his brand name.”
“In as much as the brand name owner M/s Hindustan Machines has been held to be entitled to the benefit of Notification, the other units using the said brand name would become entitled to the benefit of SSI exemption Notification as they are not hit by para 7 of the Notification. As such we hold that the conformation of demand against the M/s Hindustan Machines as also other manufacturing units by denying them the benefit of SSI Notification is unsustainable.”
Read the full text of the order below.
