TMI Blog2013 (12) TMI 1342X X X X Extracts X X X X X X X X Extracts X X X X ..... 11AC of the central excise act 1944 – Held that:- Assessee continued to use of logo of SEL up to Mar, 99 - statement given under section 14 of the Act by the partner of the respondents was not true and he suppressed the facts - The Original Authority has rightly invoked extended period and imposed the penalty under section 11AC of the Central Excise Act – R-Core Transformers manufactured by the Respondent and which were being cleared by them by affixing the brand name and logo of their collaborator "SEL, Baroda" were not eligible for SSI exemption and extended limitation period under proviso to Section 11A(1) is applicable to the facts of this case - Decided in favour of Revenue. - E/2136/2005-EX(DB) - Final Order No. A/58312/2013-EX(DB), - Dated:- 4-12-2013 - Archana Wadhwa And Sahab Singh, JJ. For the Appellant : Shri Z-U-Alvi, Adv. For the Respondent : Shri S Jain, DR. PER : Sahab Singh This is in appeal filed by Revenue against the Order-in-Appeal No.768-CE/BPL/2004 dated 04.11.04 passed by the Commissioner Central Excise, Bhopal. 2. Brief facts of the case are that M/s. Quantum Instruments Electronics Bhopal (here in after referred to as Respondent) we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nts submitts that as per the technical collaboration agreement with the M/s. SEL the respondents are eligible to use the logo of the M/s. SEL whose name was specifically mentioned in the stickers pasted on the Transformers. As per collaboration agreement they have a right to use the logo of the technical collaborator. The Commissioner (Appeal) has therefore rightly allowed their appeal relying upon the decision of HOD Laboratories (Supra) which is squarely applicable to the case. He submits that the reliance of the Revenue on Chopra Alliances case is not proper as this case was distinguished and considered by the Tribunal in the HOD case. 5. After hearing both the sides we find that issue involved in the present appeal is whether the respondents are eligible for exemption under Notification No.1/93-CE as they are mentioning the Logo of M/s. Silchar Electronics Ltd. on the goods. The other issue is whether the extended period can be invoked and interest and penalty is impossible on the respondents. This is fact that the goods R-Core Transformers manufactured by respondents are having a sticker with description "manufactured by Instruments Electronics, Bhopal in Technical Collabo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... party during the period Aug, 98 to Mar, 99 and those goods were also having the sticker affixed on the Transformers showing the logo of SEL along with description "manufactured by Quantum Instruments Electronics, Bhopal in Technical Collaboration with SEL". Therefore statement given under section 14 of the Act by the partner of the respondents was not true and he suppressed the facts. The Original Authority has rightly invoked extended period and imposed the penalty under section 11AC of the Central Excise Act. 7. In view of the above we set aside the impugned order in appeal and restore the order in original passed by the original authority Revenue Appeal is allowed. Cross objections are also disposed of. (Order pronounced in the Court on.....................) Archana Wadhwa, J. Sahab Singh, J. PER : Archana Wadhwa 8. Having gone through the order passed by my learned brother, I intend to take a different view on the point of limitation, though I agree with the learned brother on the legal issue. 9. After carefully going through the impugned orders, I find that Commissioner (Appeals) has extended the benefit to the respondents by observing as under:- "5 (i) A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erred to a statement of partner recorded on 27.7.99 indicating that they were using the logo of SEL only till May, 1997 whereas the evidence has revealed that the same was being used right up to March, 1999. Even if the said statement regarding affixation of SEL is found to be incorrect in terms of period for which such SEL brand was affixed, the issue required to be addressed is as to whether the said statement, in any manner, would reflect upon the assessee's understanding of all the previous related declaration of law. i.e. as to whether such use would amount to use of brand name of another person thus making them disentitled to benefit of small scale exemption notification. The justification for invocation of longer period of limitation would depend upon the fact of suppression, misstatement etc. with an intent to evade payment of duty. The above statement made by the partner relates to some factual discrepancies and in no way reflects that they were aware of the fact of non-availability of SSI exemption notification on account of use of somebody elses brand name and still continued to clear the goods with a guilty mind to evade duty. If we go through the provisions of Sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was further observed that complexity of the notification which has already resulted in passing of favourable order by Commissioner (Appeals), cannot be understood by a common person, who is not very well conversant with the legal interpretation. Where an expert officer has himself interpreted the notification in such a manner so as to extend the benefit to the assessee, no fault can be attributed to the assessee to understand the law in that particular manner. Said view of the Member (Judicial) was not concurred with Member (Technical) who held that there was suppression on the part of the assessee and the matter has to be decided in reference to the appellant's action and not with reference to the actions of the Commissioner (Appeals). The third Member. Concurred with Member (Judicial) by observing as under: ".......The very fact that on the issue of eligibility for exemption under this notification, the Commissioner of Central Excise (Appeals) has held that the Respondent is located within a academic Institutions and the Tribunal has taken a contrary view on the same issue, shows that on this issue, two views were possible. In this factual background, I am of the view that j ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the Respondent also had non-exclusive rights in the state of Madhya Pradesh for marketing of Transformers manufactured by them by using the technology provided by SEL and they were also to pay royalty to SEL at the rate of 1% of the sales. The Respondent were availing of SSI exemption in respect of goods manufactured by them including R-Core Transformers being manufactured in terms of the licensee manufacturing agreement with SEL, Baroda. Sometime in year 1999, it was found that the R-Core Transformers being manufactured by the Respondent in terms of licensee manufacturing agreement with SEL, Baroda were having a sticker affixed on them which, in addition to the Respondent's own brand name "Quantum", also had the logo of SEL along with the words "manufactured by Quantum Instrument Electronics Limited, in technical collaboration with M/s. Shilchar Electronics Limited, Baroda" printed on them. The Department was of the view that the Respondent were using the brand name and logo of other person and, hence in respect of R-Core Transformers being manufactured by them, they would not be eligible for SSI exemption. On this basis, the Show Cause Notice dt. 21.12.01 was issued to them f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion, dis-agreed on the issue of limitation, observing, that since during the period of dispute, there were conflicting judgments of the Tribunal on this issue, the Respondent cannot be accused of wilful suppression of facts with intent to evade the payment of duty and therefore longer limitation period under proviso to section 11A(1) is not applicable and the duty demand is time barred. Thus while Hon'ble Member (Technical) allowed the Revenue's appeal, Hon'ble Member (Judicial) rejected the Revenue's Appeal. 18. On account of difference between Hon'ble Member (Technical) and Hon'ble Member (Judicial), the matter was placed on before the Hon'ble President who assigned this matter to the undersigned for decision. The points of difference referred for decision by the third member is as under:- (i) "Whether the appeal filed by Revenue is to be allowed as held by Member (Technical);or (ii) The Revenue's appeal is to be rejected on the ground of demand being barred by limitation as held by Member (Judicial)". 19. Today when this matter of difference of opinion was called for hearing, none representing the Respondent appeared. On earlier occasions also this matter had been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rmers being manufactured by them for SSI exemption, as the same were affixed with the logo of another person- SEL, that the Apex Court's judgment in the case of Continental Foundation Joint Venture reported in 2007 (216) ELT-177 (SC) is not applicable to the facts of this case and that in view of the above submissions the order passed by the Hon'ble Member (Judicial) is not correct. 21. I have considered the submissions of the learned DR and have gone through the records in this case. The un-disputed facts are that the Respondent in terms of their agreement with SEL, Baroda manufactured R-Core Transformers by using the technology developed by SEL and also their technical assistance. There is also no dispute that the R-Core Transformers being manufactured by the Respondent have a stickers affixed on then on which in addition to the brand name "Quantum" of the Respondent, the logo of SEL, Baroda is also printed alongwith the words "manufactured by Quantum Instrument Electronics, Baroda in technical collaboration M/s. Shilchar Electronics Limited, Baroda". The Commissioner (Appeals) set aside the Additional Commissioner's Order by relying upon the Tribunal's judgment in case of HO ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s use of the brand name or trade name of M/s. Grasim Industries Limited and accordingly the Apex Court held that the Cement manufactured by Dharani Cement Ltd. would not be eligible for Exemption Notification No. 5/98-CE. According to Hon'ble Member (Technical), this judgment of the Apex Court is also squarely applicable to the facts in this case, as the name "SEL, Baroda" and logo of SEL mentioned on the goods manufactured by the Respondent indicate connection between SEL and the goods manufactured by the Respondent. 21.2 While Hon'ble Member (Judicial) does not dis-agree with the above findings of the Hon'ble Member (Technical), she is of the view that during period of dispute, the law on the point of dispute in this case was not clear and hence extended limitation period under Proviso to section 11A(1) would not be applicable. In this regard she has referred to the judgment of the Tribunal in case of HOD Laboratories (Supra)and also Apex Court's judgment in case of CCE Vs. Vikshara Trading and Investment Pvt. Ltd. reported in 2004 (156) ELT-41 and also the judgment of Hon'ble Karnataka High Court in case of Commissioner Vs. Mammo Products reported in 2009 (235) ELT-A-147. 21 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd name "Quantum" also affixed the logo of MEL, Baroda along with the words "manufactured by Quantum Instruments Electronics Ltd., in technical collaboration with M/s. Shilchar Electronics Ltd., Baroda". 21.7 From the above discussion of various judgments referred to para 9 of the order of Hon'ble Member (Judicial), it will be seen that on the issue involved in this case whether SSI exemption would be applicable to the Respondent when the Respondent, in addition to their own brand name, also used the logo of the other person (SEL) on the goods, there is only one judgment of the Tribunal, which is in case of Chopra Appliances(Supra)and that judgment is against the Respondent. Thus it cannot be said that on the issue involved in this case there were conflicting judgments. 22. In terms of proviso to Section 11A(1) of the Central Excise Act, 1944, longer limitation period of five years from the relevant date is applicable for recovery of duty not levied or paid or short levied or short paid or erroneously refunded in cases when such non levy/non payment or short levy/short payment or erroneous refund has occurred due to fraud, collusion or any wilful mis-statement or suppression ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sformers affixed with the logo of M/s SEL, Baroda, even if the words "manufactured by M/s. Quantum Instruments Electronics Ltd. in technical Collaboration with M/s. Shilchar Electronics Ltd., Baroda" are ignored. The question arises as to whether in the circumstances of the case, the extended period cannot be invoked or not. In this regard, the factual position is that:- (a) availability of SSI exemption in respect of the goods manufactured by a manufacturer depends upon whether or not the goods are affixed with brand name or trade name, whether registered or not of another person and, therefore, when a manufacturer manufacturing the goods on which he affixes the brand name or logo of another person and in respect of such goods, he avails SSI exemption, in the ER-1 Return filed by him or by direct communication, he is expected to disclose to the Jurisdictional Central Excise Authorities the use of brand name/logo of another person on the goods, as this is a most important information input for the Assessing Officers who are required to scrutinize the Returns filed by him; and (b) in this case, the fact of use of logo of "SEL, Baroda" on the R-Core Transformers manufactu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dmini Products v. Collector of Central Excise reported in 1989 (43) E.L.T. 195; and Formica India Division v. Collector of Central Excise reported in 1995 (77) E.L.T. 511. 23. We do not find merit in the above contentions. In this matter, we are concerned with the application of the above judgments to the facts of this case. The words "wilfulness" and "intent" in Section 11A are expressions of mental state at the time of manufacture and clearance of the goods. The situs of the levy of central excise is on manufacture. Pricing and value of clearances are matters specially within the knowledge of the assessee. As stated above, the assessee herein was in the business of manufacture of chewing tobacco and its preparations for last couple of years. In the course of business, the assessee had dealt with similarly situated traders. It was fully aware that those traders who produced similar compounds had their units licensed or registered and yet the assessee herein did not take steps to get the above two units, in which the impugned compound (kimam) was manufactured, registered or licensed. As stated above, it has been buying a similar kimam from various traders. These circumstances ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or of some statutory provision being ambiguous creating scope for doubt; (b) Conflicting judgment's of Tribunal or High Courts or different Circulars of the Board operating at different points of time creating scope for doubt for Assessee; etc. Applying the ratio of the above judgment of the Apex Court to the facts of the present case, since in this case the Respondent were availing of SSI exemption and for assessment of duty payable by a unit availing of SSI exemption, the fact as to whether or not the unit is using the brand name/logo of another person is a necessary input for the Assessing Officer to determine as to whether the duty self assessed, as reported in the ER-1 Returns, is correct or not and since in this case the Respondent, while using the logo of SEL, Baroda, had not informed the Department in this regard and since the language of SSI exemption on the point of use of another person's brand name/logo is absolutely clear and unambiguous and on the issue involved in this case, there were no conflicting judgments or circulars, the Respondent omission to inform the Department about use of logo of M/s. SEL, Baroda on the R-Core transformers being manufactured by t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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