2001 (3) TMI 158 - AT - Central Excise

Summary

Issues:
1. Duty demand on textile machinery parts
2. Brand name "Shah Trumpelt" affiliation
3. Relationship between appellants and M/s. L.M.S. Marketing Pvt. Ltd.
4. Requantification of duty demand
5. Confiscation of CAM Dobby Heads
6. Penalty imposition and reduction

Analysis:

1. Duty Demand on Textile Machinery Parts:
The appeal concerns a duty demand of Rs. 18,30,840 on textile machinery parts, specifically "Dobby Heads," manufactured and cleared by the appellants between 1-4-1989 to 30-9-1992. The demand was confirmed by the Commissioner of Central Excise, who also imposed a penalty and confiscated five pieces of CAM Dobby Heads. The demand was based on the brand name "Shah Trumpelt" affixed on the goods, which was associated with a partnership firm engaged in trading activities, not a registered SSI unit involved in manufacturing.

2. Brand Name "Shah Trumpelt" Affiliation:
In a related case, the Tribunal held that the exemption under Notification 175/86 would not apply if a manufacturer affixes goods with a brand name of another ineligible person. However, the burden of proof lies on the Department to establish this. The appellants claimed joint ownership of the brand name and provided certificates to support their manufacturing status. The Tribunal ruled that the Department failed to prove the brand name affiliation, thus exempting the appellants from para 7 of the Notification.

3. Relationship with M/s. L.M.S. Marketing Pvt. Ltd.:
The Tribunal found similarities between the present case and a previous ruling involving mutual interests, common directors, and financial transactions between manufacturing and marketing companies. As such, the appellants and M/s. L.M.S. Marketing Pvt. Ltd. were deemed related persons, and the assessable value of goods sold by the marketing company was upheld.

4. Requantification of Duty Demand:
Considering the above findings, the duty demand needed to be requantified, and the case was remanded to the Commissioner for this purpose. The confiscation of CAM Dobby Heads was set aside, and the penalty, though sustained due to the related person status, was reduced to Rs. 20,000.

5. Confiscation of CAM Dobby Heads and 6. Penalty Imposition and Reduction:
The confiscation of CAM Dobby Heads was overturned based on the brand name affiliation ruling. While the penalty was upheld due to the related person status, it was reduced in light of the accepted SSI benefit claim. The appeal was partially allowed, providing relief to the appellants on various grounds.