ORDER
V.K. Agrawal, Member (T)
1. The issue involved in these four appeals, filed by M/s. CEASA India Ltd. and their director Shri Sandeep, is whether the excisable goods, manufactured and cleared by them, are bearing the Brand Name of another person.
2. Shri Pravin Sharma, learned Advocate, mentioned that the Appellants manufacture Water Purifying Machine in foreign collaboration with M/s. Comparia Europea Del Aqua S.A. which holds 51% of equity and avail of small scale exemption Notification No. 8/99-C.E., dated 28-2-1999; that the Central Excise duty has been demanded and penalties have been imposed on the ground that they are clearing the impugned goods bearing brand names ‘Aqua Pure’ and ‘Aqua Vita’ which are brand names of M/s. Modi Hoover International Ltd. and their foreign collaborator respectively. The learned Advocate fairly mentioned that the duty of excise is payable by them in respect of goods bearing the brand name “Aqua Pure” belonging to Modi Hoover International Ltd. He, however, submitted that the quantification of duty is only disputed as far as impugned goods bearing the brand name “Aqua Pure” are concerned; that before starting their manufacturing activity in May, 1999, they had imported two consignments of 300 and 1200 Water Purifying Machines under Bill of Entry dated 29-6-1998 and 23-9-1998 along with some spare parts; that thus till April, 1999, all the impugned goods sold by them including goods bearing brand name ‘Aqua Pure’ were imported and not manufactured by them; that the Department has presumed that the Appellants had only imported complete set of components required for assembling of the impugned goods. He submitted that the description in Bill of Entry ‘Water purifier complete’ supports their case; that the impugned goods were imported in ready to use conditions along with spares; that it is clearly a presumption on the part of the Department that the said description refers to complete set of components required for assembly of the impugned goods. Finally he mentioned that the price at which the impugned goods bearing brand name “Aqua Pure” have been sold is to be regarded as cum-duty price in view of the judgment of the Supreme Court in the case of CCE v. Maruti Udyog Ltd., .
3. The learned Advocate submitted that the Brand Name ‘Aqua Vita’ is not owned by their foreign collaborator; that they are the owner of the said brand name and they have applied for its registration in their name; that Shri Sandeep has wrongly deposed in his statement that brand name ‘Aqua Vita’ belongs to their foreign Collaborator and they are paying royalty to the Spanish Company for use of brand name. He mentioned that as per the Joint Venture Agreement, the Appellants are to pay royalty to the Spanish Company on the sales made by them in lieu of technical know how provided by the Spanish Company and not for any brand name used by them; that the brand name used by the Spanish Company is ‘B1OLUX’ and not ‘Aqua Vita’ as stated by Shri Sandeep; that Shri Jose Manuel, Managing Director who represents the Spanish Company, has affirmed in his Affidavit that “Spanish Company do not use brand name ‘Aqua-Vita’ on their product in Spain nor they are the owners of the said brand name. Their brand name is ‘BIOLUX’, which is registered in their name; that Shri Sandeep has also given an Affidavit stating therein that “I did not know the true factual position regarding the brand name ‘Aqua Vita’ at the time and it was only an impression on my part that the said brand name may have been used by the Spanish Company.” Finally the learned Advocate submitted that they have applied for the registration of brand name “Aqaua Vita” in their name on 3-3-1998. He also relied on the decision in the case of CCE, Shillong v. Hindustan Coca Cola Beverages – . Regarding penalties levied on both the Appellants, the learned Advocate submitted that they were under the bona fide belief that they were eligible to the benefit of Notification No. 8/99; that Shri Sandeep looks after only the marketing operation and is not responsible for production and clearance of goods and as such he has no role to play in the clearance of goods and so no penalty is imposable on him under Rule 209A of the Central Excise Rules, 1944.
4. Countering the arguments, Shri O.P. Arora, learned SDR, submitted that two statements dated 30-8-1999 and 1-3-1999 were recorded from Shri San-deep who in his second statement has clearly deposed that “Compania Europea Del Aqua S.A. also have brand name “Aqua-Vita” in respect of Water purifier machine”; that he has also deposed that “CEASA SPAIN have given a letter to use the name “Aqua-Vita” to CEASA India Pvt. Ltd. Copy of the letter will be produced later on.” The learned SDR emphasized the fact that one of the signatory to “Joint Venture Collaboration Agreement” is Shri Sandeep and as such he is in-know of these details. Regarding cum-duty price, the learned SDR relied upon the decision of the Supreme Court in the case of Assistant Collector of Central Excise v. Bata India Ltd., wherein the Supreme Court has held that “if a manufacturer includes in the wholesale price any amount by way of tax, even when no such tax is payable, then he is really including something in the price which is not payable as duty at all…. In such a situation, there cannot be any question of deduction of duty payable on the goods from the wholesale price because as a matter of fact no duty has actually been included in the wholesale price.”
5. We have considered the submissions of both the sides. Regarding brand name “Aqua Vita”, the Revenue is relying solely upon the statement of Shri Sandeep for claiming that the said brand name belongs to their foreign collaborator. On the other hand, the plea of the Appellants is that the foreign collaborator does not own the brand name “Aqua Vita” which has not been used by the Spanish company and they have also furnished two affidavits of Shri Jose manuel, Managing Director and Shri Sandeep Director. The Joint Venture Collaboration Agreement nowhere mentions about the foreign company permitting the Appellants to use brand name “Aqua Vita”. Perusal of the Agreement also reveals that Spanish Company will be entitled to a Royalty on domestic sales and export sales. However, there is no mention that royalty is only for parting with technical know how by the foreign collaborator. It appears that the Revenue has not made any enquiry into the factual aspect as to whether Brand Name “Aqua Vita” belongs to the Spanish Company. The Appellants have also not brought on record any material, say any certificate/Letter from the Competent Authority in Spain to the effect that the brand name “Aqua-Vita” is not registered/owned by the Spanish Company. Accordingly, we remand this matter to the jurisdictional Adjudicating Authority to ascertain the correct factual position as to whether brand name “Aqua Vita” belongs to the foreign collaborator of the Appellants. The Appellants are at liberty to adduce any material/evidence they deem fit in this regard.
6. As admittedly brand name “Aqua Pure” belongs to M/s. Modi Hoover International Ltd., the Appellants are not eligible to avail the benefit of exemption Notification No. 8/99 in respect of Water Purifying Machines bearing the brand name “Aqua Pure”. There is force in the submission of the Learned Advocate that they had imported the impugned goods and sold the same in India before commencing their manufacturing activities. They have brought on record both the Bills of Entry under which the goods were imported. Revenue, except presuming, has no material or evidence to show that what was imported by the Appellants were only components and not water purifying machine. We, therefore, hold that in absence of any proof, regarding manufacture/assembly of impugned goods before May, 1999, the Appellants are not liable to pay any duty of excise. We also agree with the learned advocate that the price at which water purifying machine bearing ‘Aqua Pure’ brand name has been manufactured and sold by the Appellants is to be regarded as cum-duty price and the assessable value has to be determined after deducting the element of excise duty in terms of Section 4(4)(d)(ii) of the Central Excise Act and also in view of the Supreme Court’s decision in Maruti Udyog Ltd., supra. As the Appellant company has availed the benefit of Notification No. 8/99 though the excisable goods were bearing the brand name of another person (Modi Hoover International Ltd.), penalty is imposable on the Appellant company. After considering all the facts and circumstances a penalty of Rs. 10,000/- on the Appellant company will meet the end of justice. Accordingly we reduce the penalty to Rs. 10,000/- in respect of excisable goods cleared by them bearing brand name ‘Aqua Vita’. No case has been made for imposition of penalty on Shri Sandeep. We, therefore, set aside the penalty on Shri Sandeep and allow both the Appeals Nos. E/1854-1855/2003-NB(B) filed by him. Both the Appeals filed by the Appellant company are disposed of in the manner indicated in this Older. We make it clear that the Adjudicating Authority will be at liberty to impose any penalty on the Appellant Company while deciding the issue relating to brand name “Aqua Vita”.