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Santel Communications Pvt. Ltd., A. Nagarajan, S. Muralidharan, S. Ganesan, Star Tech Telecom Pvt. Ltd. And Commissioner of Central Excise, Chennai-IV Versus Commissioner of Central Excise Chennai-IV And Santel Communications Pvt. Ltd.

2016 (4) TMI 603 - CESTAT CHENNAI

Manufacture - assembling of imported and indigenous telephone parts - SSI exemption - adjudicating authority demanded excise duty and allowed SSI exemption benefit cum duty benefit and the cenvat credit on the inputs - Held that:- It is seen that the assessee supplied the Basic wired telephones to the “TATA INDICOM” who isonly a Telecom service provider and not engaged in manufacture of any excisable goods with Brand name and not registered under Central Excise. The telephone sets supplied by th .....

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f the Telephone Service Provider and does not relate to any excisable goods sold by the service provider in the ordinary course of trade. Therefore, the Apex Court's decision is distinguishable and does not relate to the present case. - Whereas we find that, the Boards Circulars dated 27.10.1994, 1.9.1994, 18.1.2000 are validly existing during the disputed period and the adjudicating authority rightly relied on the Circular dated 27.10.2014 wherein it is clarified that so long as the goods a .....

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otification 47/2008 dt.1.9.2008 allowing SSI benefit to specified goods bearing the brand name of others. In effect, the Board's circular has been brought in the statue itself. Therefore, there is no merit in the impugned order in allowing SSI exemption benefit on the goods bearing the name of TATA INDICOM. - Further the appellants imported all the parts of telephone set including the outer cover, packing materials and the said parts already bearing the name of “TATA INDICOM”. This confirms .....

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In view of the above facts, we hold that the Telephones cleared by the appellants bearing the name of “TATA INDICOM” to the telephone service provider does not amount to usage of other's Brand to attract para-4 of SSI notification and we do not find any infirmity in the impugned order to the extent of allowing SSI exemption benefit to the goods cleared bearing the name of “TATA INDICOM”. The revenue appeal is liable to be rejected. - Denial of SSI exemption on the goods bearing the name o .....

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ngly the impugned order is liable to be set aside. - Appeal Nos. E/MISC/40264/2015 & E/700/2007, E/MISC/40265/2015 & E/701/2007, E/MISC/40266/2015 & E/702/2007 And E/624/2009, E/625/2009&E/626/2009, E/627/2009&E/628/2009 & E/736/2007 - Final Order No.40399-40407/2016 - Dated:- 4-3-2016 - SHRI R. PERIASAMI, TECHNICAL MEMBER AND SHRI P.K. CHOUDHARY, JUDICIAL MEMBER For the Petitioner : Shri N.Viswanathan, Advocate For the Respondent : Shri K.P.Muralidharan, AC (AR) ORDER PER R. PERIASAMI As we are .....

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e remaining appeals of assessees are filed against Commissioner of Central Excise (Appeals) order. I) Appeal E/700/2007, E/701/2007 & E/702/2007- Santel Communications Pvt. Ltd. 3. The brief facts of the case are that appellants M/s.Santel Communications Pvt. Ltd. are manufacturing excisable goods. Appellant was issued with SCN dt.4.10.2006 on the ground that appellants have not registered with Central Excise department and not paid appropriate central excise duty on the excisable goods manu .....

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d cleared the same to M/s.Tata Teleservices Ltd. after affixing with brand name "TATA INDICOM" which is not the brand name of M/s.Santel Communications Ltd. Accordingly, SCN demanded Central Excise duty of ₹ 60,13,236/- after allowing SSI benefit as detailed in Annexure C under proviso to sub-section (1) of Section 11A and also proposed penalty under proviso to Section 11AC of Central Excise Act along with interest and also proposing appropriation of amount of ₹ 2 lakhs alr .....

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g" amounts to "manufacture" and classifiable under Chapter Heading 8517 of the Central Excise Act and also held that activity of labelling, relabelling and affixing/altering of RSP/MRP stickers amounts to "manufacture" on or after 1.3.2003. He confirmed the revised demand of ₹ 20,56,807/- as per Annexure-A after allowing SSI benefit for the period 2001-05 and also appropriated an amount of ₹ 2 lakhs already paid by them. He allowed adjustment of cenvat credit .....

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out of imported parts like Top Plastic, bottom plastic, PCB, Line cord from Hong Kong and the appellants were not registered with Central Excise Department and not discharged Central Excise duty and manufactured and cleared telephone instruments bearing others brand name of SANTEL and TATA INDICOM. Appellants imported telephone instruments from Hong Kong bearing the brand names of "GE""AT&T" and "SFX 111 fax machines" bearing the brand name of "SANYO" .....

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07 confirmed the demand of ₹ 27,41,325/- and denied SSI benefit on the goods bearing others brand name of "TATA INDICOM" and "SANTEL" and appropriated ₹ 2 lakhs already paid and imposed equivalent penalty under Section 11AC of ₹ 27,02,772/- under Section 11AC and imposed penalty of ₹ 5 lakhs on Shri S. Ganesan, Director of the company and of ₹ 2,50,000/- on Shri S.Muralidharan, Financial Advisor. He dropped proceedings against Smt.Prema Jalpesan .....

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the telephone instruments bearing the brand name of "TATA INDICOM". SCN dt. 18.10.2006 was issued demanding duty of ₹ 14,20,258/- under proviso to sub-section (1) of Section 11A and also proposing equivalent penalty under Section 11AC and for appropriating an amount of ₹ 2 lakhs already paid. The adjudicating authority confirmed the demand and appropriated amount of ₹ 2.0 Lakhs and also imposed personal penalty of ₹ 1 lakh on Shri S. Ganesan. On appeal, Commissi .....

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ard both sides on 13.7.2015, 21.7.2015, 4.8.2015 & 10.8.2015. Shri N. Viswanathan, Ld. Advocate for the appellant-assessee submitted a written synopsis in respect of all the three appellant-assessee appeals and also for the Revenue's appeal and reiterated the submissions dt.13.7.2015 and 21.7.2015. He briefly explained the activity of manufacture of assembling of telephones and submits that initially they imported fully assembled telephones and marketed thereafter and started importing t .....

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after allowing SSI benefit. He drew our attention to para-9 of SCN where the SSI exemption was allowed and referred to para-7 of OIO. He submits that at the time of importing the parts in CKD condition they were already bearing the names of "SANTEL". They have only affixed the MRP sticker bearing "imported and marketed by appellant SANTEL Communications (P) Ltd., before selling the said goods through their dealers. He submits that Note 6 of Section XVI of Chapter 84 is not applica .....

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ELT 485 (T) (iii) CCE Chandigarh Vs Bhalla Enterprises-2004 (173) ELT 225 (SC) (iv) Commissioner Vs Mahaan Dairies -2004 (166) ELT 23 (SC) (v) Commissioner Vs Rukmani Pakkwell Traders-2004 (165) ELT 481 (SC) (vi) Indian Xerographic System Ltd. Vs CC Bombay-1995 (80) ELT 337 (T) (vii) CC Vs Hindustan Motors Ltd.-2003 (156) ELT 55 (Tri.-Del.) 8. On limitation, he submits that the demand is hit by limitation as they have submitted all the facts before the Commissioner. They have maintained all the .....

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ng Board Vs CCE Madras-1994 (74) ELT 9 (SC) (3) Cosmic Dye Chemical Vs CCE Bombay-1995 (75) ELT 721 (SC) (4) Sober Plastics Pvt. Ltd. Vs CCE Jaipur-2002 (139) ELT 562 (Tri.-Del.) (5) CCE Vs Chemphar Drugs & Liniments-1989 (40) ELT 276 (SC) 9. On Revenue's appeal , Ld. Advocate reiterated the findings of the adjudicating authority. He submits that the adjudicating authority correctly allowed the SSI benefit as the brand name "TATA INDICOM" is not the brand name identified with a .....

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cating authority and the Commissioner (Appeals) both denied SSI exemption on the goods cleared with Santel Brand and also denied SSI benefit on telephones cleared under TATA INDICOM . He submits that SANTEL is not a registered brand name of any person and also submits that adjudicating authority has not followed Commissioner s order who already allowed benefit on goods bearing brand name "TATA INDICOM" and "SANTEL" for the same period. He further drew our attention to relevan .....

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ation with brand name of anybody. Trade Mark authority has already rejected the application of Santel Industries. He relied on the following case laws :- (1) Garnier Solutions Vs CCE Bangalore-2008 (232) ELT 311 (Tri.-Bang.) (2) CCE Chandigarh Vs Bhalla Enterprises-2004 (173) ELT225 (SC) (3) CCE Kolkata Vs Nitin Electronics Corpn.-2003 (160) ELT 605 (Tri.-Kolkata) (4) Leo Rubbers Vs CCE Hyderaba-2006 (203) ELT 49 (Tri.-Bang.) 11. On penalty, he submitted that Director of the company and other co .....

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the Revenue appeal. On limitation, he submits that appellants are not registered with Central Excise. He drew our attention to para-4 of SCN and submits that department issued several letters and appellants furnished purchase invoices, sales invoice bank statements etc. vide their letters dt. 1.2.2006, 13.2.2006 and 14.2.2006 and only on the receipt of the reply, the department came to know the activities of the appellant. Therefore, extended period has been rightly invoked. He referred to para .....

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e of others. He reiterated para-4, para-6 of the grounds of appeal. He submits that Hon ble Supreme Court in the case of Kohinoor Elastics Pvt. Ltd. (supra) is binding on the Commissioner and the adjudicating authority once the goods are marked as labelled as TATA INDICOM belong to brand name of others. He also submits that Board s circular dt. 27.10.2014 is not applicable. He relied on Board s circular dt. 1.9.2008. He relied on following decisions :- (1) Ratna Industries Vs CESTAT Chennai- 201 .....

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(SC) (2) Nitin Patki Vs CCE Thane-II- 2011 (273) ELT 104 (Tri.-Mumbai) (3) Kadex Stear (P) Ltd. - 1999 (114) ELT 212 (Tribunal) (4) CCE Calcutta Vs Emkay Investments (P) Ltd.- 2004 (174)ELT 298 (SC) (5) B.P.L. India Ltd. Vs CCE Cochin- 2002 (143) ELT 3 (SC) (6) Eagle Flask Industries Ltd. Vs CCE Pune- 2004 (171) ELT 296 (SC) In respect of other appeals, SSI benefit has been rightly denied by the adjudicating authority and the Commissioner (Appeals) has rightly upheld OIO. 13. In rejoinder, lear .....

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in the case of CCE Vs. Mehta & Co. (supra) is not applicable and there is no intention to evade duty. He relied on the SCN which proposed only for demand after allowing SSI exemption. He submits that M/s.TATA INDICOM is not manufacturer of excisable goods or they have any branded goods. They are only service provider and not manufacture of any branded goods i.e. telephone and have not sold any branded goods to anybody where telephone instruments are used for others. Therefore, the Commission .....

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the individuals whereas this rule can be only invoked where act of contravention in connection with excisable goods rendered the goods liable for confiscation. Since, in the present case, there is no goods available for confiscation and there is no such allegation, rule 26 cannot be invoked. 14. We have carefully considered the submissions of both sides and perused the records. 15. The main issue to be decided in the assessee s Appeal Nos. E/700, 701, 702/2007 are : (i) as to whether the assemb .....

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unts to manufacture under Section 2 (f) (iii) of the Central Excise Act, 1944 and whether duty is demandable on such activity ? (iii) as to whether the act of clearing of assembled Basic Wired Telephone instruments by M/s.Santel Communications Pvt. Ltd. bearing the brand name of "TATA INDICOM" amounts to using other's brand name and whether the mischief of Notifications No.8/2001 dated 01.03.2001 and 8/2003 dated 01.03.2003 as amended is attracted and whether the demand is hit by l .....

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the assessee s appeal (E/700, 701, 702/2007), the appellant contended that, on merits, the process carried out by them would not amount to manufacture as the entire parts and instruments were imported in CKD condition and they have only assembled the parts. It was also contended that they were not required to take any central excise registration as they are well within the SSI limit, that merely affixing of M.R.P sticker is not amounting to manufacture . On the issue whether process carried out .....

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sses carried out by them. We reproduce section 2 (f) (iii) as it stood at the material period as under :- Manufacture includes any process which, in relation to the good specified in the Third Schedule, involves packing or re-packing of such goods in a unit container or labelling or re-labelling of containers including the declaration or alteration of retail sale price on it or adoption of any other treatment on the goods to render the product marketable to the consumer. 18. The above definition .....

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ally for each item and classified under separate headings as under :- "Chapter Heading Nos. 8517.00, 7318.15, 8544.41, 4819.90, 7318.29, 3502.00, 8518.00 and 4901.90." Therefore, it is proved that appellants have not imported the complete Telephone in CKD or SKD condition as contended by them. It is relevant to see Section Note 6 to Section XVI which is reproduced as under :- conversion of an article which is incomplete or unfinished but having the essential character of the complete o .....

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tral Excise Act read with Section Note 6 of Chapter Heading XVI to Central Excise Tariff the process carried out by the appellant assembling various parts to make it complete telephone instrument amounts to manufacture and chargeable to Central Excise duty. Therefore, appellants relying of citations of Indian Xerograpic System Ltd. Vs CC Bombay (supra), CC Vs Hindustan Motors Ltd. (supra), T.S. Cycles of India Vs UOI (supra) and M/s.Walchand Nagar Industries Vs CCE Pune (supra) are not applica .....

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ade payment of duty. We find that the appellants are not registered with Central Excise for manufacture and clearance of excisable goods and not filed any declaration before the department claiming SSI exemption. It is pertinent to see that Notification No.36/2001-CE (NT) dt. 26.6.2001 exempts from Rule 9 of CER under certain conditions. Para 1 (i) (a) of the said notification stipulates that every manufacturer makes a declaration claiming the exemption from registration before the authorities. .....

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preme Court in the case of Eagle Flask Industries Ltd. Vs CCE Pune (supra) held that filing of declaration and giving undertaking as specified in the form annexed with notification is not merely procedural. The Hon'ble Supreme Court in the case of BPL India Ltd. Vs CCE Cochin (supra) upheld the Tribunal order and held that intention to evade duty is proved as the appellant in the above case manufactured the goods and removed the same without any intimation to the department. 22. The ratio of .....

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ontention on limitation. The invocation of extended period under proviso to Section 11A by the adjudicating authority is fully justified and well within the law. Accordingly, we hold that the demand confirmed by the adjudicating authority after allowing SSI benefit is liable to be upheld both on merit as well as on limitation. Consequently, the equivalent penalty imposed on the appellant is also liable to be upheld. 23. On the personal penalty of ₹ 1.0 lakh imposed on the co-noticee Shri N .....

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hri S.Muralidharan under Rule 26 of CER is upheld. 24. We now proceed to discuss the revenue appeal (E/736/2007)filed against that portion of impugned order dt. 24.7.2007 where the adjudicating authority extended the benefit of ₹ 1.0 crore exemption limit to the goods telephones bearing the brand name of TATA INDICOM pertaining to the period 2002-03 to 2004-05. The revenue s main ground is that the impugned goods were cleared under the brand name of other person as per para (4) of the noti .....

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9;s decision in the case of Collector Vs Vimal Printery [Civil Appeal No.D.No.8814/99] reported in 1999 (115) ELT A 222 (SC). It is seen that the assessee supplied the Basic wired telephones to the TATA INDICOM who isonly a Telecom service provider and not engaged in manufacture of any excisable goods with Brand name and not registered under Central Excise. The telephone sets supplied by the appellant are not traded or sold to customers but are only rented to the customers while giving telephone .....

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fore, the Apex Court's decision is distinguishable and does not relate to the present case. 25. Whereas we find that, the Boards Circulars dated 27.10.1994, 1.9.1994, 18.1.2000 are validly existing during the disputed period and the adjudicating authority rightly relied on the Circular dated 27.10.2014 wherein it is clarified that so long as the goods are supplied to the customer for further manufacture are not traded , the benefit of SSI exemption should not be denied, merely on the ground, .....

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lar has been brought in the statue itself. Therefore, there is no merit in the impugned order in allowing SSI exemption benefit on the goods bearing the name of TATA INDICOM. 26. Further we find that the appellants imported all the parts of telephone set including the outer cover, packing materials and the said parts already bearing the name of TATA INDICOM . This confirms that the appellant, have not affixed the brand name TATA INDICOM while clearing the said goods and the revenue's plea th .....

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lephone service provider does not amount to usage of other's Brand to attract para-4 of SSI notification and we do not find any infirmity in the impugned order to the extent of allowing SSI exemption benefit to the goods cleared bearing the name of TATA INDICOM . The revenue appeal is liable to be rejected. Appeal Nos.E/624, 625, 626/ 2009: 28. The appellant M/s.Santel Industries filed the appeals against Commissioner (Appeals) order and the facts are identical to the appeal of Santel Commun .....

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od in these appeals. 29. As regards the denial of SSI exemption benefit on goods bearing TATA INDICOM as we have upheld the Commissioners order and rejected the revenue's appeal on this issue, the same applies to the present appeal. 30. Therefore, the only issue to be decided in these appeals is on the denial of SSI exemption on the goods bearing the name of SANTEL is a brand name of other manufacturers or not. The adjudicating authority held that SANTEL is a brand name of M/s.Santel Communi .....

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e mark authority had rejected the claim of M/s.Santel Communications and raised objections that the mark is a part of trading style and not distinctive. This confirms that the name SANTEL is not a registered Brand name of M/s.Santel Communications or any other person. Therefore the appellants using the name SANTEL is not a brand name of other person within the meaning of SSI Notification as the said name is not used in relation to specified goods to indicate connection between goods and some per .....

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te area of the country had used the trade mark earlier is unfounded. The notification clearly indicates that the assessee will be debarred only if it uses on the goods in respect of which exemption is sought, the same/similar brand name with the intention of indicating a connection with the assessees goods and such other person or uses the name in such a manner that it would indicate such connection. Therefore, if the assessee is able to satisfy the assessing authorities that there was no such .....

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to the contrary in the matter of Fine Industries reported in 2002 (146) E.L.T. 53. In the appeals which are being disposed of by us the decision in Fine Industries has been followed by the Tribunal and relief has been granted to the assessee s concerned without going into any other question. The learned Counsel for the different assessees have pointed out to us that in many of the appeals which are being disposed of today, there were other issues raised by them relating to limitation and ownersh .....

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e ratio of Apex Court decision is squarely applicable to the present case as it is evident that the name Santel is not a registered brand name of M/s.Santel Communications or of any other persons. Accordingly, we hold that the appellants are entitled to SSI exemption benefit on the goods cleared with brand name of "SANTEL". Having held that the appellants are eligible for SSI exemption for the goods bearing SANTEL and TATA INDICOM , we find that the value of clearance for the years 200 .....

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