ORDER
Lajja Ram, Member (T)
1. These are two appeals; one filed by M/s. Western India Dyestuffs Corpn. (‘WIDCO’ for short), and the other by M/s. Chika Ltd., being aggrieved with the common order-in-original dated 18.3.1991 passed by the Addl. Collector of Central Excise, Bombay. As both these appeals arise out of the common order-in-original and involve common facts, they were heard together and are being disposed of by this common order.
2. The matter relates to the eligibility of M/s. WIDCO for the benefit of small scale exemption under notification no. 175/86-CE dated 1.3.1986 (as amended) in respect of the pigment dyestuff cleared under the brand name of M/s. Chika Ltd., who were a trader and were not covered by the scheme of small scale exemption. The Additional Collector of Central Excise, Bombay, who adjudicated the matter confirmed the demand of central excise duty of Rs. 1,87,016.68. He imposed a redemption fine of Rs. 19,000/- and penalty of Rs. 50,000/- on M/s. WIDCO. A fine of Rs. 50,000/- was also imposed in lieu of confiscation of plant and machinery. A penalty of Rs. 50,000/- was also imposed on M/s. Chika Ltd.
3. Both the appeals were posted for hearing on 30.10.1998 when Shri S.P. Mathew, advocate, appeared for the appellants. Shri Satnam Singh, SDR, represented the respondent/Revenue.
4. Shri S.P. Mathew, advocate, submitted that the period involved in these proceedings was from 5.4.1989 to 18.9.1989 and the show cause notice was issued on 6.4.1990. M/s. WIDCO had filed classification lists in which it was mentioned that the goods were to be cleared under the brand name ‘Chikaprint’. In their invoices also the brand name, ‘Chikaprint’ was mentioned. The appellants had no intention to evade payment of central excise duty and it was a case of genuine doubt. He pleaded that there was no justification for demanding central excise duty beyond the normal period of limitation.
5. In reply, Shri Satnam Singh, SDR, submitted that the appellants had not disclosed that the brand name ‘Chikaprint’ did not belong to them. At no stage there was a declaration that the brand name belonged to outside party which were not eligible for the benefit of small scale exemption. It was not mentioned that the brand name ‘Chikaprint’ belonged to the trader who was not eligible for small scale exemption. The matter was without any doubt and it was a case of suppression of facts and deliberate evasion of central excise duty. The learned SDR submitted that the matter was covered by the Tribunal’s decisions in the case of (1) Intercity Cable Systems (P) Ltd. v. CCE New Delhi ; and (2) Harts Cocoa Products Pvt. Ltd. v. CCE Madras .
6. We have carefully considered the matter. M/s. WIDCO were engaged in the manufacture of pigment dyestuff and other excisable goods classifiable under sub-heading no. 3204.19 and sub-heading no. 3801.00 of the Central Excise Tariff. They were clearing excisable goods under their own brand name and were availing of the small scale exemption under notification no. 175/86-CE dated 1.3.1986, as amended. There is no dispute about such clearances. In addition, however, they also cleared a part of their production under the brand name ‘Chikaprint’ which brand name did not belong to them. The brand name ‘Chikaprint’ belonged to M/s. Chika Ltd. who were a trader and were not eligible for small scale exemption under notification no. 175/86-CE dated 1.3.1986, as amended. M/s. WIDCO availed of the small scale exemption even in respect of the clearances under the brand name ‘Chikaprint’, although under notification no. 175/86-CE dated 1.3.1986, as amended by notification no. 223/87-CE dated 22.9.1987, the small scale exemption was not applicable to the goods where the manufacturer had affixed the said goods with a brand name or trade name registered or not, of another person who was not eligible for the grant of small scale exemption under that notification dated 1.3.1986, as amended.
7. Under notification no. 175/86-CE dated 1.3.1986 (as amended), the specified excisable goods cleared for home consumption on or after the first day of April in any financial year by a manufacturer from one or more factories, were eligible for exemption/concessional rate of central excise duty, subject to the various conditions and limitations provided in that notification. It was provided in that notification that the exemption contained therein shall not apply to the specified goods where the manufacturer affixed the specified goods with a brand name or trade name (registered or not) of another person who was not eligible for the grant of exemption under that notification. It was explained that the brand name owner on that account will not become the manufacturer of the excisable goods manufactured by the assessee and affixing with the brand name of the brand name owner. The manufacturer of the specified excisable goods will continue to remain the manufacturer even when he affixed the brand name of non-eligible person.
8. M/s. WIDCO were the manufacturers of specified excisable goods. With regard to the specified goods where they were affixing them with the brand name of the non-eligible person, they availed of the small scale exemption in contravention of the provisions of the exemption notification. In their classification lists, they had indicated the brand name ‘Chikaprint’, but had not declared that the brand name ‘Chikaprint’ did not belong to them or belonged to a person who was or was not eligible for the benefit of small scale exemption. Their classification lists for the relevant period were not approved and the approval was accorded under communication dated 9.1.1990 rejecting their claim for the benefit of small scale exemption under notification no. 175/86-CE dated 1.3.1986, as amended, with regard to the branded goods with brand name ‘Chikaprint’.
9. Shri Ramanbhai Ambalal Patel, partner of M/s. WIDCO, in his statement dated 11.10.1989 admitted that they should not have cleared the pigment dyestuffs under the brand name ‘Chikaprint’ at the concessional rate of duty to M/s. Chika Ltd., the traders who were not entitled to the concessional rate of duty available under notification no. 175/86-CE. He stated as under:
I also agree that the pigment dyes cleared with brand name Chikaprint should not have been cleared at the concessional rate to M/s. Chika Ltd. as they are traders only and they are not entitled to the concessional rate of duty available under exemption notification no. 175/86-CE.
The appellants had shown their willingness to pay the differential central excise duty. Shri Ramanbhai Ambalal Patel, partner, stated as under:
I am prepared to pay the differential duty on the pigment dyes cleared to M/s. Chika Ltd. at the concessional rate.
10. In the case of Intercity Cable Systems (P) Ltd. v. CCE, New Delhi , the Tribunal had observed that the benefit of exemption under notification no. 175/86-CE dated 1.3.1986, as amended by notification No. 223/87-CE dated 22.9.1987 was not available when the brand name belonging to any person who was not eligible for exemption under the above notification was affixed by the appellants. The Tribunal had relied upon the Madras High Court decision in the case of Bell Products Co. v. HOI . In that case the Madras High Court had held that the benefit of small scale exemption was not available when the manufacturing units were using the brand name of one of their partners who was not eligible for small scale exemption.
10.1. In the case of Harts Cocoa Products (P) Ltd. v. CCE, Madras , it was observed that the small scale exemption under notification no. 175/86-CE was not available when goods were affixed with traders’ brand name, the trader was not having a factory and was not eligible to small scale exemption.
11. As the provisions of the law are clear and unambiguous, we agree with the view of the adjudicating authority that the goods which had been manufactured and clear by M/s. WIDCO with the brand name ‘Chikaprint’ belonging to M/s. Chika Ltd. were not eligible for exemption as provided under notification no. 175/86-CE dated 1.3.1986, as amended.
12. The facts that the pigment dyes and misc. chemicals had been cleared under the brand name of Chika Ltd., Chikaprint which did not belong to M/s. WIDCO had been suppressed from the Department. M/s. Chika Ltd. were not eligible to avail of the concessional rate of duty under notification no. 175/86-CE dated 1.3.1986, as amended, which was available to small scale units. The classification lists no. 2/89 effective from 1.3.1989, 4/89 effective from 1.3.1989, 5/89 effective from 1.4.1989, 8/89 effective from 4.5.1989 were only approved under letter dated 29.12.1989/19.1.1990 with the remarks that the benefit of notification no. 175/86-CE dated 1.3.1986 was not available to the branded goods with brand name ‘Chikaprint’ since the brand name was of a trader. M/s. WIDCO were directed to pay full duty on those products. The show cause notice had been issued on 6.4.1990 for the period 5.4.1989 to 18.9.1989. As admitted by the appellants themselves, the classification lists for the period in question were only approved on 29.12.1989.
13. Mere mention of the brand name ‘Chikaprint’ without any indication whatsoever that it did not belong to them and that it belonged to their customers, could not be considered as a correct declaration. It was the responsibility of the assessee to disclose the facts necessary for determination of the correct duty liability. The adjudicating authority had concluded that the goods in question were manufactured and cleared by the assessee company under the brand name of M/s. Chika Ltd. by suppressing the fact of manufacturing and clearing them under the brand name of M/s. Chika Ltd. thereby wrongly availing of the exemption provided under notification no. 175/86-CE dated 1.3.1986 and evading the payment of central excise duty.
14. Shri Vishnu Ramchandra Ponkshe, Company Secretary, in his statement had submitted that they were also receiving some of the goods from other manufacturers who had cleared the goods on payment of central excise duty. They were aware of the scheme of excise law and had not been able to establish their bona fide in the matter.
15. In the facts and circumstances of the case, we agree with the conclusions drawn by the adjudicating authority. We do not find any merit in both these appeals and the same are rejected.
16. The operative part of this order was pronounced in the open court on 30.10.1998.