JUDGMENT
Gowri Shankar, Member (T)
1. The appellant manufactures in its factory at Nagothane couplings of steel for pipes. Part of the manufacture is on its own account, which it sells. The remaining manufacture was claimed to be in terms of Rule 57F(4), as job worker for Maharashtra Seamless Ltd. The letter company sent to the appellant short length of pipes, out of which the appellant manufactured couplings, fitted them on to other pipes with which they were to be put, and returned he assembly to Maharashtra Seamless Ltd. The appellant did not pay any duty on this job work, claiming the exemption contained in notification 214/86. It also did not pay any duty on the couplings that it manufactured on its own account, claiming the exemption contained in notification 16/97. This notification provides exemption to goods of specified value subject to fulfilment of the various conditions contained in that notification. The notice issued to the appellant proposed to demand duty to both the couplings claimed as having been made under job work and the other couplings. The basis for the demand was that couplings bore on them a monogram “JDILAPI” representing the initials of the American Petroleum Institute and this amounted to use of a brand name. The notice, in addition, demanded duty on structural elements, columns, beams etc. that the appellant manufactured and put to use in expending its factory.
2. The appellant replied denying the contentions in the notice. It contended that the letters “APT” which stood for American Petroleum Institute, only signified that its products were in conformity with the standards of that organisation and that this was by no means a brand name. It contended that the structurals that it manufactured were classifiable under heading 7308.50 which carried nil rate of duty.
3. The Commissioner did not accept these contentions. He confirmed the demand for duty and also imposed a penalty on the company, and its authorised signatory. Hence these appeals.
4. We are not able to find any basis in the show cause notice demanding duty on the couplings that the appellant manufactured as job worker, other than the use of the so called brand name. The departmental representative contends that basis for demand on these goods is that the appellant was not a job worker and not entitled to the benefit of Rule 57F(4). He says that the steel tubes that Maharashtra Seamless Ltd. sent to the appellant were not partially processed goods, they were final products liable to duty as such. It is not necessary for us to examine this claim in order to dispose of the appeal. As we have noted, the noted by no means alleges that the demand for duty is based on the ground that the appellant undertook was not job work. The Commissioner’s order in this regard is very clear. He says in paragraph 35 “The Noticees are also manufacturing coupling for M/s. MSL and also engaged in cold drawing of tubes under the provisions of Rule 57F(4), and have claimed exemption under Notification 214/86 dt. 15-4-86, which exempts from duty the goods manufactured on job work basis. I further finds that the show cause notice also mentions that M/s. JDIL are doing job work for M/s. MSL but as the monogram API, along with the name JDIL is marked on the couplings supplied as fittings along with such pipe sent to M/s. MSL, the quantity of those couplings sent to M/s. MSL cannot be treated as job work, as the same fall under the definition of “brand name, trade name” of M/s. JDIL and are manufactured item of M/s. JDIL, separately classifiable under chapter sub-heading 7307.00 of Central Excise Tariff Act, 1985, thus liable to duty.” The Commissioner has thus quite clearly understood that the notice proposed to deny the benefit of the notification 214/86, and demanded duty only on the ground that the goods bore a brand name.
5. He thereupon proceeds to find that the monogram is in fact the brand name and then proceeds to demand duty. In our opinion, he is wrong on both counts. Even if the goods bear the brand name of any other person that would be no ground for denying the notification 214/86. That notification did not contain any requirement with regard to brand name. In any event, in our opinion, the use by the appellant of the monogram of “JDILAPI” cannot be a brand name within the meaning of its definition contained in Explanation VA to notification 1/97. The letters “JDIL” are the appellant’s own initials. The American Petroleum Institute, we were told, is an organisation which lays down standard specifications for various parts all concerned with petroleum such as drilling pipes, valves etc. It also maintains the quality register and certifies members for their compliance with ISO standards. It permits use of its markings upon products which bear to its specifications thus ensuring a level of quality which the buyers can rely upon. It is certainly not the department’s claim that the API is a manufacturer or trader. Had this been the case, it cannot be said that the use of the logo “APT” indicates connection “in the course of trade” between the goods which bear the logo and “APT”. The position that the counsel for the appellant puts analogous to the goods bearing the initials of Bureau of Indian Standards, Bureau of Standards of United Kingdom. Therefore there was no basis for the denial of benefit of the notification.
6. The Commissioner has not dealt with the contention that the appellant raised before him that the structural material that it used would be entitled to be classifiable without payment of duty under heading 7308.50 of the tariff. The main heading includes “Structures and parts of structures”. The sub-heading reads “All goods fabricated at site of work for use in construction at such site”. Sub-heading reads nil rate of duty. The Commissioner declined to accept this claim on the ground that “the goods are complete identifiable item and marketable”. Whether they were marketable or not, however, if they were used at the site of work, they were entitled to be classifiable under that sub-heading. The Commissioner accepts that the goods were used captively. When he says so, he accepts that the goods used were in the factory of production. We do not find this to be anything different from being used at the site of their fabrication. It is also not disputed that the goods were used by the appellant for expansion of its own factory. This is the contention that was raised before the Commissioner and was not rebutted. The goods were therefore used in construction at the site of work. They would therefore be entitled to be classifiable under Sub-heading 50 of heading 73.08 at nil rate of duty. The counsel for the appellant does not press the ground relating to duty on scrap. We therefore confirm that duty.
7. We now turn to the availability of the exemption contained in notification 16/97 for the goods that the appellant manufactured and cleared on its own account. The duty has been demanded on the goods that were manufactured and cleared from September 1997 to August 1998, spanning part of the financial year 1997-98 and 1998-99. It is the contention of the appellant that the clearances in 1997-98 amounted to Rs. 19.75 lakhs, the clearances in 1998-99 amounted to Rs. 18.60 lakhs. This figure has been arrived at by excluding the value of Rs. 13.75 of 1990 for the couplings which the appellant did not manufacture, but traded in. This value has therefore been included in the value of clearances. The Commissioner had not considered these submissions since he found that the benefit of the notification was not available to the goods which according to him bore a brand name. Now that we have held that this cannot be a valid reason to deny the benefit of the notification, the matter will have to go back to the Commissioner to consider the applicability of the notification. He shall do so after considering the material that the counsel for the appellant undertakes to produce before him within two months of receipt of this order, and other materials that the department may produce, in accordance with the principles of natural justice. As a consequence of our discussions, penalty was not imposable on the company or on R.K. Gupta, its authorised signatory.
8. Appeal E/1356/01 allowed in part. Appeal E/1357/01 allowed.