TMI Blog1994 (5) TMI 81X X X X Extracts X X X X X X X X Extracts X X X X ..... ,780.00 and 19 plates bearing brand name of B.M. valued at Rs. 1,14,800.00, seized on 6-3-1990 by Central Excise Officers and held the assessee liable to pay Rs. 80,000/- as fine and the same was appropriated from bond B-11. (iv) Demanded and confirmed a excise duty amount of Rs. 11,42,843.12 Basic and Rs. 44,953.20 (special) evaded/short paid by the party on the branded tractor parts of such tractor engine capacity of which exceeded 1800 cc cleared by them to M/s. Escorts Ltd., Faridabad during Oct. 1987 to Feb. 1990 under Rule 9(2) read with Section 11A of Central Excises Salt Act, 1944. (v) Demanded and confirmed excise duty amount of Rs. 3,02,232.10 basic and Rs. 11,861.65 (special) evaded/short paid by the party on the parts of paper printing machine bearing brand name of B.M. manufactured and cleared by the party to M/s. Bandhu Machinery (P) Ltd., Gurgaon during Oct. 1987 to Feb. 1990 under Rule 9(2) read with the provision of Section 11A of Central Excises Salt Act, 1944. (vi) Imposed penalty of Rs. 5 lakhs on the party under Rule 9(2) and Rule 173Q of Central Excise Rules, 1944. 3. The facts of the case are that the officers of the Preventive Officers Centra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ement of Shri K.L. Sachdeva was recorded by the officers. 6. The classification list was examined and it was found that the party had not declared on their classification list that they were manufacturing and clearing Tractor Parts under the brand name of `ESCORT and parts of paper printing machines under the brand/Trade name of `B.M . The scrutiny of gate pass in form G.P. 1 and R.T. 12s also appeared to show that they had not declared or mention about the use of brand name `ESCORT and `B.M. either on G.P. 1 or on R.T. 12. It is alleged in the show-cause notice that It is evident from G.P. 1 No. 102 dt. 5-3-1990, issued by the party that the party had the practice of mentioning AEW under the column Marks Identification in Central Excise Gate passes, while this abbreviation was not so distinctly and noticeably engraved on Hydraulic Power Lift Body as well as engraved the brand name of ESCORT which was prima facie noticeable. But the party appears to have taken care to bring the brand name of ESCORTS on their G.P. 1 under the column Marks Identification so that it can carry on the practice of clearing branded goods at concessional rate of duty . The officers ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of their unit. 6.(ii) It is further pleaded by them that Notification No. 175/86 also stipulates that nothing contained in this paragraph shall be applicable to the specified goods which are component parts of any machinery or equipments or appliances and cleared from a factory for use as original equipment parts in the manufacture of such machinery or equipment or appliances, and the procedure set out in Chapter X of the said rule had been followed. Therefore, they state that the concession granted to components parts of any machinery or equipment or appliances cleared from the factory for use as OEP though bearing a trade mark or brand name is still available to them under the said notification. They state that the parts were supplied as OEP and all procedure of L-6 Licence had been followed by M/s. Escorts Ltd. under Chapter X also. They were only manufacturing OEP of Escorts Ltd. and those of M/s. Bandhu Machinery P. Ltd. who in turn were using these parts as OEP in the assembling of Hydraulic Lifts to be fixed on the Tractors and in the assembly of Paper Printing Machines and hence the benefit of the SSI exemption under Notification 175/86-C.E. cannot be denied to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gument of the party would have sustained provided there had been no direct connection between the party and M/s. Escorts Ltd. or M/s. Bandhu Machinery (P) Ltd. Since the party is supplying its products only to these parties and non else, it cannot be said that there is no connection between the two especially when the words ESCORTS" or B.M. are embossed in the same factory premises were tractor parts and paper printing machinery parts are made. The plea that the castings enjoy the benefit of exemption under Notification No. 217/86-C.E., dt. 2-4-1986 would not hold good in view of the fact that the brand names embossed on the castings are much more prominent and distinct than the so called brand name AEW embossing of which is quite indistinctly made on one side of the tractor parts or the Paper Printing Machinery Parts. M/s. Escorts Ltd. and M/s. Bandhu Machinery (P) Ltd. are DGTD units. By prominently showing their brand name on the front side of the parts made for these two DGTD units, they make the indentity of their brand quite insignificant, so even if the party enjoys the benefit of exemption Notification No. 217/86-C.E., dt. 2-4-1986, as amended, it cannot be said by any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1990 that clearances of such branded tractor parts had earlier too been made under the brand name of ESCORT by M/s. Agrico Engineering Works to M/s. Escorts Ltd., Faridabad. I, therefore, held that M/s. Agrico Engineering Works are using the brand name of M/s. Escorts in the tractor parts meant for M/s. Escorts Ltd. and using the brand name of B.M. for paper printing machinery parts meant for M/s. Bandhu Machinery (P) Ltd." 7.(ii) The ld. Collector also rejected the plea of time bar and thus confirmed the demands raised in the show cause notice. 8. We have heard Shri G.L. Rawal, ld. Advocate for the appellant and Shri S.K. Sharma, ld. JDR for the Revenue. 8.(i) While reiterating the pleas made by the assessee before the Collector, Shri Rawal ld. Advocate submitted that the fixing of the name had been done at the time of casting and the goods were not the final products of the assessee and they were neither traded. The party had received the goods from Escorts and BM under Chapter X procedure and hence the explanation VIII of Notification No. 175/86-C.E. is clearly in favour of the assessee. The ld. Collector had failed to examine this point in his findings. The goods we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) (iii) Casting Combines v. Collector of Customs Central Excise - 1989 (42) E.L.T. 501. (iv) Kiran Spinning Mills v. Collector of Central Excise - 1989 (40) E.L.T. 385. (v) Collector of Central Excise v. Indian Explosives Ltd. - 1988 (36) E.L.T. 124 (vi) Chemicals Fibres of India Ltd., Bombay v. Collector of Central Excise, Bombay - 1988 (33) E.L.T. 551 On the plea that the duty calculation has to be done only after removal, the ld. Counsel relied on the ruling rendered in the case of British India Corporation Ltd., Dhariwal v. Collector of Central Excise, Chandigarh as reported in 1986 (25) E.L.T. 727 at p. 733, 734. 8.(ii) Countering the arguments of ld. Advocate, Shri S.K. Sharma, ld. JDR submitted that the goods cleared from the factory were M.V. Parts and at the time of removal these finished parts were having trade/brand name. He submitted that the party had not placed their terms of contract to see whether the names had been affixed at the stage of goods or at the specified goods stage. Relying on the ruling of the Hon ble Supreme Court rendered in the case of Bhor India Ltd. v. Collector of Central Excise - 1989 (40) E.L.T. 280, he pleaded that the goods wer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tractor or Parts of Paper Printing machine. They say that if they had removed the castings with or without brand/trade name, then the goods would have been exempted under Notification Nos. 208/83, 90/88 and 202/88. Instead the same had been used again as input for manufacture of M.V. parts. Therefore, it is their case that already exempted goods affixed with brand/trade name are different from the goods specified for the purpose of Notification No. 175/86-C.E., and that they had not affixed on the specified goods i.e. M.V. parts with brand name or trade name as the castings had already been affixed with the brand/trade name. The second plea is that the goods had been received under Chapter X and the same were not traded and sold in market directly but used as OEP and hence question of bringing within the mischief of Clause 7 of the Notification No. 175/86-C.E. does not arise. On a careful examination of this plea, there is force in the arguments of the appellants. The Revenue has not disputed the emergence of casting and casting products and its exemption under the Notification No. 217/86-C.E., dt. 2-4-1986. The ld. Collector held that this argument of the party would have sust ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Notification No. 47/88-C.E., dt.1-3-1988 refers to all other goods specified in the said Schedule, other than the following namely . In S. No. (iv) cast articles of iron steel not specifically described in Chapter 72 or 73" is mentioned. These goods are specifically described in Chapter 73.25 of the Central Excise Tariff as cast articles of iron steel . Hence they are excluded from S. No. 4 as they fall within the meaning of cast articles of iron steel". In amending Notification No. 231/88, dt. 7-7-1988 S. No. (i) of the S. No. 4 of notification, includes all goods falling under Chapter 73. Thus for the entire period casting products were not covered under Notification 175/86 as specified goods. It follows that the castings products are not already exempted and hence they are not included in Annexure of this notification and that they are not specified goods. Hence the affixing of the Brand name/Trade name at the stage of casting are not within the purview of Notification 175/86-C.E., dt. 1-3-1986. Therefore, the Clause 7 and Explanation VIII refers to specified goods. Here specified goods are MV Parts. Admittedly, no trade mark or trade brand name is affixed on the spe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s are separate tradeable commodity. Para 7 of Notification No. 175/86 excludes the benefit of notification to specified goods embossed with a trade name of a person who is not entitled to the benefit of the said notification. The specified goods in the present case, submits the learned counsel, are motor vehicle parts or printing machinery parts. Affixation of brand name has, not, therefore, been done according to him on the specified goods and therefore, he submits that provisions of para 7 of the notification do not come in his way. 15. I have given utmost consideration to the aforesaid plea but I do not agree with the same. Castings in the present case are produced by the appellant in the course of manufacture of the specified goods, namely, motor vehicle parts and printing machinery parts. Castings are not traded by the appellant. They are captively used by him in the course of manufacture of motor vehicle parts and printing machinery parts. Brand name or trade name has been defined in Explanation VII to the said notification as meaning a name or a mark, such as symbol, monogram, label, signature or invented word or writing which is used in relation to such specified goods f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he case, benefit of Notification 175/86 would not be available to the appellant in view of the provisions of Para 7 of the said notification. Dated : 25-8-1993 Sd/- (P.C. Jain) Member (T) Sd/- (S.L. Peeran) Member (J) 17. [Order per : S.K. Bhatnagar, Vice President]. - This matter has been referred to me by the Hon ble President on account of difference of opinion between two Ld. Members on the following point : Whether in the facts and circumstances of the case, benefit of Notification 175/86 would not be available to the appellant in view of the provisions of para 7 of the said notification . 18. I have accordingly heard both the sides. 19. During the hearing both the sides reiterated their respective points of view including the case law and my attention was drawn in particular to the judgment and orders reported in AIR 1976 SC 1503, AIR 1953 SC 148, AIR 1960 JK 6, 1992 (60) E.L.T. 160 and 1993 (63) E.L.T. 326 by the Ld. Counsel and 1985 (21) E.L.T. 231 by the ld. DR. 20. I have considered the above submissions carefully. I observe that Ld. DR s arguments have strong force. Admittedly, the brand names have been affixed on castings used in the manufa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... they were not embossing the brand name on the specified goods. There was no intention to defraud the exchequer. The departmental officials had been visiting to factory for physical verification of the goods. The full description in the classification list was not given to show the word Escort and it did not mean that the appellants were suppressing the required information, as was required, to be given to the department. He argued that the department has not shown any positive evidence from which it would be inferred that the appellants had no intention to defraud the Revenue. He, further, submitted that the appellants were not to pay the duty in any event, as the duty was required to be paid by M/s. Escorts and as such appellants were not to gain anything by not disclosing the details of embossing the brand name on the said parts. He submitted that the registers have been signed after the inspection of goods. The mark Escort is so prominent and big that it is impossible to have loss sight off within the course of inspection. He submitted that there has been no findings on the plea raised by them in their reply on the visit of the officials and regular inspection of the goods. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has observed that there might have been inquiry made by the proper officer at the time of approving of the classification list, however, he has not accepted the plea of the appellants that there has been no misdeclaration or suppression in the matter. As stated by us that this aspect of the matter requires further verification and inquiry and in view of the absence of any clear finding in the light of documents relied by the appellants, it is but proper that the matter pertaining to extension of larger period is remanded to the original authorities for de novo adjudication. Ordered accordingly. Dated : 13-5-1994 Sd/- (P.C. Jain) Member (T) Sd/- (S.L. Peeran) Member (J) FINAL ORDER In view of the majority order on the applicability of the exemption Notification No. 175/86-C.E., dt. 1-3-1986, the appeal is disposed of in the following terms : (1) The benefit of Notification No. 175/86-C.E., dt. 1-3-1986 is not available to the appellant in view of the provisions of Para 7 of the said Notification. (ii) On the extension of larger period the matter is remanded to the lower authorities for de novo adjudication in the light of findings given in the order. In ..... X X X X Extracts X X X X X X X X Extracts X X X X
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