In a recent case, the Chennai bench of the Customs, Excise And Service Tax Appellate Tribunal (CESTAT) allowed the SSI exemption to Sabari Kitchen Service as per CBEC Circular. The bench found that the Appellant using the brand name of others did not own that particular brand name during investigation which according to the Revenue itself was the brand name registered for other different products.
M/s. Sabari Kitchen Services (P) Ltd. ,the Appellant-A1 and Mr. M. Thangavelu, Managing Director the Appellant-A2 filed the appeal as aggrieved by the impugned Order-in Original No. 3/2016 dated 23.02.2016 passed by Commissioner of Central Excise, Coimbatore confirming demand of Rs.99,42,427/- under Section 11A(10) of the Central Excise Act, 1944 (Act) appropriating Rs.4,48,558/- paid towards the said demand, and imposing equal penalty on Appellant-A1 under Section 11 AC of the ACT and Rs.5,00,000/- on Appellant-A2 under Rule 26 of Central Excise Rules, 2002 (Rules).
The Appellant-A1 was engaged in the manufacture and clearance of various kitchen equipments under their brand name “SaBari” which was used on all their manufactured products since 01.01.2004. They have also mentioned the brand name in their invoices, products and brochures. The Appellant-A1 was availing the benefit of SSI Notification No. 8/2003-CE dated 01.03.2003. DGCEI conducted an investigation during January 2014, and it was alleged that appellant was using the brand name “SaBari”, which belonged to others and hence not eligible for SSI exemption and therefore liable to pay duty during the period from March 2010 to December 2014.
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A Show Cause Notice was issued to Appellant A1, seeking to deny the SSI exemption and demand duty of Rs.99,42,427/- under Section 11A(1)/11A(4) of the Act along with applicable interest and to impose penalty under Section 11 AC of the Act read with Rule 25 of the Rules and to impose penalty on Appellant A2 under Rules 26 of the Rules. The Adjudicating Authority vide the impugned order confirmed the demands as proposed and imposed penalties on A1 and A2 and also appropriated an amount of Rs.4,48,558/- paid by the Appellant-A1 towards duty demand.
It was pointed out that the impugned order had mentioned that the brand name was registered for different class of goods other than the Appellants goods and under the circumstances, SSI exemption could not be denied as per the ratio of the decisions rendered in CCE Vs. Bhalla Enterprises , 2004 and as per CBEC Circular No.
213/41/88-CX 6 dated 30.12.1988.
The Counsel Shri S. Durairaj representing the Appellants reiterated the averments in the Grounds of Appeal and further submitted that usage of brand name should indicate a connection during the trade to fall under the definition of brand name as defined in Explanation A of Notification No. 8/2003-CE dated 01.03.2003 and that the impugned order failed to adduce any evidence to establish the connection with another person in whose name, this brand name was registered.
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The Authorised Representative Smt. O.M. Reena, representing the Department affirmed the findings in the impugned order and submitted that the Appellants were using the brand name of others and hence not eligible to avail the SSI exemption of Rs. 1.5 Crores.
A two memebr bench of Vasa Seshagiri Rao, Member (Technical) and Ajayan T.V., Member (Judicial) observed that the Appellant using the brand name of others did not own that particular brand name during investigation which according to the Revenue itself was the brand name registered for other different products. Evidently, these products had no business connection whatsoever with the Appellant herein.
Further, the Department had not conclusively proved that the brand name for kitchen items has been used by the Appellant with the intention to establish a connection, or to indicate a connection, with others who are into business of dealing in other items other than kitchen articles.
The use of brand name “SaBARI” in the instant case can be termed as fortuitous, there being no intention on the part of the appellant to use the said brand name to show a connection with the Assessee’s goods and such other person. Moreover, it was submitted that the Appellants are the owners of the brand name as their brand is reflected in all their invoices and products since 2004 as the unique red flame differentiated their brand name from others and moreover there were no objections to the usage of this brand name. Others who have registered the brand name for different products cannot entertain any objection, if the same is used for different products.
The Tribunal held that the Appellant is entitled to SSI exemption under Notification No. 08/2003 as amended. The issue of eligibility for SSI exemption benefit and also Limitation have thus been decided in favour of the Appellant. As such, imposition of penalties on the Appellant A1 and Mr. Thangevelu, the Managing Director (A2) is not legal and so ordered to be set aside.
The Appellants are expected to cooperate with the Department by making available all the documents in order to arrive at the taxable turnover after giving the benefit of SSI exemption.
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