1999 (2) TMI 349 - AT - Central Excise

Summary

Issues Involved:
1. Imposition of penalties on M/s. Janta Rubber Distributors, M/s. Jayco Industries, and M/s. Fairdeal Enterprises.
2. Demand of duty from M/s. Fairdeal Enterprises.
3. Application of extended period of limitation.
4. Bona fide belief regarding affixation of brand names of traders.
5. Justification for penalties on traders.

Issue-wise Detailed Analysis:

1. Imposition of Penalties on M/s. Janta Rubber Distributors, M/s. Jayco Industries, and M/s. Fairdeal Enterprises:
The penalties were imposed due to the affixation of brand names of traders on the goods manufactured by M/s. Fairdeal Enterprises and M/s. Romi Enterprises. The penalties were Rs. 1,000.00 on M/s. Janta Rubber Distributors and Rs. 5,000.00 on M/s. Jayco Industries and M/s. Fairdeal Enterprises. The Tribunal found that there was no justification for these penalties as the appellants had a bona fide belief that the affixation of a trader's brand name did not attract the provisions of para 7 of Notification No. 175/86. Consequently, the penalties were set aside.

2. Demand of Duty from M/s. Fairdeal Enterprises:
A duty of Rs. 37,146.13 was demanded from M/s. Fairdeal Enterprises for the period from 1-10-1987 to 25-10-1990. The Tribunal held that the demand was barred by the limitation of six months since the show cause notice was issued on 14-5-1991, well beyond the permissible period.

3. Application of Extended Period of Limitation:
The Tribunal examined whether the extended period of limitation was applicable. It was found that during the relevant period, there was ambiguity regarding the interpretation of the amending Notification No. 223/87. The Tribunal's decision in the Thio Pharma case clarified the legal position, indicating that the affixation of a trader's brand name would attract the mischief of para 7 of Notification No. 175/86. Given the bona fide belief and the lack of clear legal guidance during the relevant period, the extended period of limitation was deemed inapplicable.

4. Bona Fide Belief Regarding Affixation of Brand Names of Traders:
The appellants contended that they were under a bona fide impression that affixation of a trader's brand name would not attract para 7 of the Notification. This belief was supported by the Tribunal's earlier decisions in Byco International and Jaison Syntex Industries. The Tribunal acknowledged this bona fide belief and held that the longer period could not be invoked against the appellants.

5. Justification for Penalties on Traders:
The Tribunal found no justification for the penalties imposed on the traders. The penalties were based on the assumption that the traders were complicit in the alleged suppression of facts. However, the Tribunal held that the traders were not liable for penalties as there was no evidence of mala fide intent or suppression of material facts. The penalties imposed on M/s. Janta Rubber Distributors and M/s. Jayco Industries were therefore set aside.

Separate Judgments Delivered by Judges:
- Archana Wadhwa, Member (J): Held that the appellants had a good case on limitation and that the penalties were unjustified. All four appeals were allowed with consequential reliefs.
- P.C. Jain, Member (T): Disagreed with the view on limitation, holding that the appeals should be dismissed as there was no bona fide belief based on contemporary materials.
- J.H. Joglekar, Member (T): Agreed with Member (J) that the appeals should be allowed, emphasizing the doctrine of precedence and the absence of mala fide intent.

Final Order:
In view of the majority decision, all the appeals were allowed.