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2016 (8) TMI 239 - CESTAT CHANDIGARH

2016 (8) TMI 239 - CESTAT CHANDIGARH - TMI - SSI Exemption - Availing of exemption under notification no.8/2003 when appellant using brand name of others prior to its registration Held that: brand name is a common brand and appellant used it prior to the other person registration impugned order deserves no merit - appeal allowed. - Demand of duty from the firm dissolved on the death of the partner Held that: demand of duty not sustainable. - Both issues decided in favor of appel .....

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appellant is using the brand name of others (third party), therefore is not entitled for the benefit of exemption of exemption Notification No.8/2003-CE ibid consequently the demand of duty has been confirmed alongwith interest and equivalent penalty was also imposed. 2. In the impugned order, it is alleged that against the appellant that they are using brand name "SAGAR" which is owned by M/s. Sagar Machine Tools Pvt. Ltd., 418, Industrial Area-A, Ludhiana (SMT). Therefore, the appel .....

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i.e. Late Shri Atma Singh on 18.4.1958 and the said brand name is owned by several other persons. In that view, it cannot be said that the brand name is owned by M/s. SMT only. In fact, M/s. SMT has applied for registration on 5.2.1996 the date when M/s SMT started using the said brand name, therefore, the benefit of exemption cannot be denied to the appellant. He further submitted that the appellant is a partnership firm consisting of Shri Satpal Singh and Shri Kripal Singh has partners. He fur .....

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ounsel on facts of the case: (a) In case the appellant is using the brand name prior to its registration in the name of SMT, whether the appellant is entitled for availing the benefit of exemption under Notification No. 8/2003-CE (SSI exemption) or not? and (b) In case the partner of the firm dies whether the proceedings against the appellant firm are sustainable or not. 7. The issue No. 1 has been dealt by this Tribunal in the case of M/s. Sagar Machine Tools Pvt. Ltd., the unit No.2 vide Final .....

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s also fact on the record that the said brand name i.e. 'SAGAR' was registered in the name of M/s Sagar Machine Tools Pvt. Ltd. w.e.f 05.02.1996. This fact has not been denied by Sh. Amarjit Singh Director of the M/s SMT. As per the invoice shown by the appellant; they were using this brand name prior to 05.02.1996. We also take note of the fact that initially the brand in question was registered in the name of the father of the appellant and is registered in the name of other independen .....

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lso came up before this Tribunal in the case Novel Tronics Corporation (Supra) wherein the issue of denial of exemption under Notification before this Tribunal on the ground that the assessee was using brand name from 1993 where is the registered owner of said brand name which came into existence only in 1995. In these facts, this tribunal has observed as under: 2. After examining the records and hearing the learned JDR, we note that the appellate Commissioner's finding that the brand names .....

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s prior to 1995 cannot be held to have belonged to the buyer-company which came into existence only in 1995. The buyer Company did not apply for registration of the brand name in their favour, either. In the circumstances, the finding of the lower appellate authority has only to be sustained. Accordingly, it is held that the goods in question were cleared by the respondents under their own brand name and they were eligible for SSI benefit. 9. In the facts of the case, the decision of this Tribun .....

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name and the brand name is a common brand. Accordingly, impugned order deserves no merits, the same is set aside. In result, the appeal is allowed with consequential relief (if any). 8. In view of above, we hold that the appellant is entitled for the benefit of exemption under Notification No. 8/2003-CE (SSI exemption) being user of the said brand name prior to the brand name registered in the name of SMT and the fact of usage has not been disputed by the Revenue. 9. With regard to the issue No. .....

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turnover. The majority judgment referred to the definition of dealer in the Bombay Act of 1953 and referred to this Court s judgment in State of Punjab v. M/s. Jullunder Vegetables Syndicate (supra). We find that the majority judgment of this Court relied heavily on the fact that dishonest persons may dissolve a firm in order to escape liability to assessment of taxes legitimately due from them but which have escaped assessment. In paragraph 19, the majority held : It is plausible that a distin .....

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nuity, evade its liability by the voluntary act of dissolution. The dissolution of a firm could therefore, be viewed differently from the death of an individual and the partners could be denied the advantage of their own wrong. But we do not want to strike this new path because the Jullundur case (supra) and the two cases which follow it have likened the dissolution of a firm to the death of an individual. Let us therefore, proceed to examine the other provisions of the 1953 Act. It then went on .....

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were a notice served under Section 14(3). Section 14(3) speaks of the power of the Collector to assess the amount of tax due from the dealer after giving notice to him, if the Collector is not satisfied that the returns furnished are correct and complete. The jurisdiction to assess or reassess which is conferred by section 15(1) is thus equated with the original jurisdiction to assess the dealer under section 14. By this method, the continuity of the legal personality of the assessee is maintai .....

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he turnover, evade the sales-tax, dissolve the firm and earn your freedom from taxation. The Court then went on to add : 24. Section 15A confers on the Collector analogous powers to asses or re-assess a dealer for taxes due prior to November 21, 1956 when the States were reorganised, if either no assessment was made for the prior period or if any turnover had escaped assessment. This provision, like the one contained in Section 15, is of general application and makes no exception in favour .....

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an assessed firm, though on conditions specified in the section. The section contains a compelling implication that evident errors can be corrected no matter whether the firm is in existence or is dissolved. Dissolution is not a panacea for liability to pay sales-tax. It also added in paragraph 32 : It is indisputable that the first appellant firm was liable to be charged to sales tax on its business turnover. The charging provisions are contained in Chapter III of the Act of 1953 and Chapter I .....

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ness and ingenuity which go into well-timed dissolution of firms ought not to be allowed to be used as convenient instruments of tax evasion. As observed by Lord Dunedin in Whitney v. Commissioners of Inland Revenue : A statute is designed to be workable, and the interpretation thereof by a Court should be to secure that object, unless crucial omission of clear direction makes that end unattainable. Far from there being any crucial omission or a clear direction in the present case which would ma .....

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dies and a firm that is dissolved as a device to evade tax. The Court laid great stress on the provision contained in Section 15(1) of the said Act by which the jurisdiction to assess or reassess under Section 15(1) is equated with the original jurisdiction to assess the dealer under Section 14. By this method, the Court found the continuity of the legal personality of the assessee is maintained in order to enable the assessment of turnover which has escaped assessment. The crucial difference, .....

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he necessary machinery provisions to assess dissolved firms in respect of escaped turnover pre-dissolution. Hence, this Court added : 35. It is relevant, though we did not refer to this aspect while dealing with the provisions of the 1953 Act, that section 19(3) of the 1959 Act contains a clear indication that the legislature intended that a dissolved firm could be assessed under the 1953 Act also. Section 19(3) speaks of the liability of partners for the tax due from a dissolved firm and p .....

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d for a charge of sales-tax, it could not have intended to render that charge ineffective by permitting the partners to dissolve the firm, an easy enough thing to do. Nothing, in fact, would be easier to evade a tax liability than to declare that the firm, admittedly liable to pay tax, has been dissolved. Section 19(3) of the 1959 Act not only makes clear what was necessarily implied in the 1953 Act, but it throws additional light on the true construction of the earlier law. But we thought it ad .....

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for saying that it serves to throw some light on the Act of 1953, in case the argument is that the Act of 1953 is ambiguous. 36. Section 19(3) being quite clear and explicit, it is unnecessary to dwell on the other provisions of the Act of 1959 in order to show that a dissolved firm can be assessed under it. We may only point out that the Act of 1959 contains provisions similar to those in Sections 15, 15A and 35 of the Act of 1953 on which we have dwelt at some length. Those provisions ca .....

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proprietor has died through natural causes and it is nobody s case that he has maneuvered his own death in order to evade excise duty. Interestingly, in the written submissions filed by revenue, revenue has argued as follows :- It is pertinent to mention that in the present case, Shri George Varghese (predecessor in interest of the appellants herein) was doing business in the name of manufacturing unit namely M/s. Kerala Tyre & Rubber Company and after the death of Shri George Varghese, his .....

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not possible. Before leaving the judgment in Murarilal s case (supra), we wish to add that so far as partnership firms are concerned, the Income Tax Act contains a specific provision in Section 189(1) which introduces a fiction qua dissolved firms. It states that where a firm is dissolved, the Assessing Officer shall make an assessment of the total income of the firm as if no such dissolution had taken place and all the provisions of the Income Tax Act would apply to assessment of such dissolve .....

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28. Learned counsel for the revenue also relied upon the definition of a person under the General Clauses Act, 1897. Section 3(42) of the said Act defines person as under :- (42)  Person shall include any company or association or body of individuals whether incorporated or not. It will be noticed that this definition does not take us any further as it does not include legal representatives of persons who are since deceased. Equally, Section 6 of the Central Excises Act, which prescrib .....

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5 at pages 140, 141 para 18 : (1966) Suppl. SCR 419 at 429 A-B, C.A. Abraham v. The Income-Tax Officer, Kottayam & Another, AIR 1961 SC 609 at 612 para 6 : (1961) 2 SCR 765 at page 771, The State of Tamil Nadu v. M.K. Kandaswami & Others, AIR 1975 SC 1871 (para 26) : (1975) 4 SCC 745 (para 26), Commissioner of Sales Tax, Delhi & Others v. Shri Krishna Engineering Co. & Others, (2005) 2 SCC 695, page 702, 703 paras 19 to 23, all enunciate principles dealing with tax evasion in the .....

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Ellis C. Reid s case but has not extracted the real ratio contained therein. It then goes on to say that this is a case of short-levy which has been noticed during the lifetime of the deceased and then goes on to state that equally therefore, legal representatives of a manufacturer who had paid excess duty would not by the self-same reasoning be able to claim such excess amount paid by the deceased. Neither of these reasons are reasons which refer to any provision of law. Apart from this, the Hi .....

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letter of the law he must be taxed, however great the hardship may appear to the judicial mind to be. On the other hand, if the Crown seeking to recover the tax, cannot bring the subject within the letter of the law, the subject is free, however apparently within the spirit of law the case might otherwise appear to be. In other words, if there be admissible in any statute, what is called an equitable, construction, certainly, such a construction is not admissible in a taxing statute where you ca .....

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