ORDER
J.N. Srinivasa Murthy, Member (J)
The appellant has field this application praying for review and or modification of the stay order No. C-I/861 /29/4/99/4-5-1999, which directs for the (1) pre-deposit of Rs. 18 lakhs towards duty, for unconditional stay.
1. The grounds, on which the modification is sought for, are that the genuine submissions of the applicant are not appreciated properly, while coming to the conclusion in the stay order. The impugned order comes to the conclusion that the applicants have no prima facie case. The admission by the director of the applicant company that the logo Pethe belongs to PEPL is erroneously viewed by the Tribunal, as the said admission is factually and legally untrue and categorically disputed by the Chairman of the applicant, B.W. Pethe in his statement dated 9-4-1998. The observation on the statement of the said person is contrary to the evidence. There is a categorical statement of B.W. Pethe that they did not have any logo or brand name. The latest orders in the case of R.G. Cotton Industries v. C.C.E., Patna in 1999 (107) E.L.T. 657 appearing on 1st May 1999 issue, supports the applicants case in holding that the judgment of the Apex Court in Astra Pharmaceuticals is in all force in the case and hold that the mark RGGI used in the wrapper of the goods in a stylish manner representing the name of the appellant company in abbreviated from highlights the image of the manufacturer and cannot be said to be a brand name and the exemption Notification 185/87 cannot be denied. For the purpose of Notification 1/93 in order that the family name can be held as trade name or brand name it has necessarily to fall in line with the expressed provision of definition under explanation IX irrespective of the fact whether such family name has been registered as such under the Trade Mark Law. PETHE logo is not registered under the Trade Mark Law. There is no justifiable reason to uphold the finding of the Commissioner on the main issue that logo PETHE is a brand/trade name and to hold even a tentative view that the appellant has no prima facie case. It is further stated that the applicants did not have an opportunity of clarifying the point raised by the JDR and the factual aspect particularly in the context of the submissions that in the statements recorded, there is an admission by the concerned persons about the usage of the logo by both the companies and that there is an admission that the word PETHE belongs PEPL etc.
2. The ld. JDR ought to have drawn the attention to the particular portion in the statement to support his submission to satisfy the Bench. In the absence of it, no advise inference can be drawn against the applicants. On the other hand, the statement of Shri B.W. Pethe is altogether different that they did not have any logo or brand name and that they are not particular about putting the label on the product nor they are particular about name plate. They have changed the name plate many times in the last 15 years and PETHE is their surname and company name. When he was confronted, with the statement of D.S. Pethe, ho has clearly stated that it is their surname or company name and then being in use, denying the statement of D.S. Pethe that the ownership of this logo lies with the PEPL and it was using the said logo prior to the usage by the applicant. Both the PEPL and the applicants have not declared in their classification list gate pass or invoice about the usage of the logo as a brand name so as to attract the extended period of limitation. So no adverse conclusion can be drawn amounting to wilful suppression or intention to evade duty. Looking to the factual position, the honest and bonafide belief of both companies are that the said name is not brand name or trade name. The customers claiming the Modvat and the applicant also paying the duty and crossing the exemption limit, the allegation of intention to evade payment of duty is not sustainable. The applicants have an excellent prima facie case both of merits as well as on limitation and the balance of convenience lies in their favour. The Central Government circular and the admission in the impugned order enables the applicant to avail the exemption under Notification 1/93 escaped the attention of the Bench in passing the order. On the point of financial hardship the balance sheet now produced coupled with the poor performance of sales and its recovery, and the applicants having heavy liability to meet an account of loss in the business, they have no sufficient liquidity to meet unforeseen circumstances, and are facing undue hardship. In the course of the arguments the ld. Counsel had no chance to place this material.
3. In support of the application, the ld. Counsel for the applicant has submitted in the course of the arguments that he was not provided with an opportunity to submit reply to the arguments of the JDR. The principles of natural justice were not observed by the Commissioner in passing the impugned order as mentioned in the stay application and the appeal memorandum with serious irregularities and patent errors committed in passing the stay order. There is a breach of statutory provisions enjoining on the Commissioner to give effective healing in the course of the adjudicating proceedings. The reply to the show cause notice and the submissions made during the hearing under the note is not appreciated and the government Circular No. 52/52-94 and interpretation of Explanation IX of the Notification 1/93 it is necessary to have a link between the specified goods and the use thereof for the purpose of 3 things named or marked as a brand/trade name, and use of mere name as such on the goods simply does not amount to making use of said name as brand or trade name like Pethe as in the instant case. The logo or the only name is not a brand/trade name. Paragraph 4 of the circular however clarifies that if a brand name is not owned by a particular person use thereof will not deprive the unit of the benefit of small scale exemption scheme and the instructions contained in the said circular are applicable to the manufacturers of specified goods and so it cannot be denied to the applicant. The adjudicating authority has not examined these aspects in passing the order. There is no reason to pass the impugned order having admitted that the applicant cannot be legally prevented from making use of the said logo PETHE and also conceding the correct legal position that it is the case of joint ownership of the said logo. Assuming for the name to be a brand/trade name, exposing the myth of the contradictory observation on that said logo PETHE belongs only to PEPL.
4. The ld. JDR has submitted in the course of the arguments that the applicants cannot challenge the stay order on the ground of review. This Tribunal cannot exercise that power. The entire appeal is argued of this stage by the applicants which cannot be considered now. The statement pointed out by him and the conclusion arrived at by the Bench in the stay order is proper and correct. The balance sheet produced by the applicants is for period ending 31-3-1998. Even according to that the applicants have sufficient means to pay the duty amount. The Sundry debtors are shown to pay Rs. 23,54,992/- and the cash in hand and at bank is shown at Rs. 37,93,719.36 and by sales the income is shown as Rs. 1,21,0831.83 (sic) and the sales of scraps is shown Rs. 23,635.50. On merits of the case, the ld. JDR has submitted that the admission of the applicants as pointed out in the impugned order, holds good, which clearly makes a prima facie case and it is not rebutted by any substantial material.
5. Perused the application, the stay order, the impugned order, the appeal memorandum, the stay application, the panchnama, show cause notice, reply and the Notification No. 1/93. From the contents of the application No. 574-R/99 it is evident that the applicants have challenged the stay order for the review and/or modification. As contended by the ld. JDR, submission of the ld. counsel is focussed mainly on the merits of the appeal. The scope of this proceedings is only limited to the modification of the stay order, and not for the review, which is not within the purview of the Bench. The stay order can be modified only to the limited extent of deterioration of the financial condition of the applicant as per the decision in 1990 (48) E.L.T. 270 in the case of Vishnu Processors v. C.C.E. and 1990 (50) E.L.T. 180 in the case of Eapann Forge Pvt. Ltd. v. C.C.E. and also 1993 (63) E.L.T. 245 in the case of Prem Nath Monga Foods and Beverages Pvt. Ltd. v. C.C.E. and at page 257 in the case of Nissan Rubber v. C.C.E. and page 570 in the case of Techno Pack Ltd. v. C.C.E. The modification is also permissible on the latest decision subsequent to the passing of the stay order, which applies to the case on hand. Modification is permissible in the light of the later decisions suporting the stand of the appellant on the merits of the issue in the appeal as per 1995 (79) E.L.T. 273 in the case of Eagles Sales Corporation v. C.C.E., 1995 (75) E.L.T. 305 in the case of Sadiq A. Futehally v. C.C.E., the Tribunal ordered modification of its earlier order taking note of the deterioration of the finance of the appellant though the petition of the appellant to the High Court against the order of the Tribunal had been earlier dismissed by the High Court. In 1995 (75) E.L.T. 470 in the case of M.I. Metals Sections Pvt. Ltd. v. C.C.E. the Karnataka High Court has held that the Tribunal should consider the impact of the later decision even on the issue of waiver. The plea of inability to deposit even if it is raised should be considered on merits and disposed of, after the failure of the deposit as ordered. In E.I.D. Parry (I) Ltd. v. C.C.E. – 1996 (84) E.L.T. 444, the Tribunal took note of the fact that the decision subsequent to the order on the application of waiver having settled the substantial issue in favour of the appellant, the earlier order was to be modified to withdraw the order for deposit. The Tribunal modified its earlier order regarding the deposit taking note of the illness of the appellant and his medical expenses in 1996 (85) E.L.T. 108 in the case of Baldev Krishan v. C.C.E. So in view of the above case laws, the stay order can be modified on the request of applicant subject to the above conditions.
6. Coming to the financial hardship, in the stay application in paragraph 4 clause F, it is stated that the applicant is a small scale unit and the payment of the sums in terms of the impugned order would also result in great financial hardship so much so that it would be virtually impossible to continue the manufacturing activity. They crave leave to rely on the documents when produced. It is noted that in the course of the arguments it is submitted by the ld. Counsel for the applicant only to the extent of facing financial hardship as a small scale unit. Now the balance sheet and audit report for the period ending 1998 is produced along with modification application. On the perusal of the same, it is seen that the balance sheet and profit and loss account deals with the report and are in agreement with the books of accounts. As per the balance sheet the Sundry Debtors as per the schedule and cash in hand and in bank are indicated, according to which there is an increase in the amount of the sundry debtor from Rs. 31,99,356.63 to Rs. 37,93,719.36. As per profit and loss account, the income by sales is to the tune of Rs. 1,21,08,031.83 and the sale of scrap is Rs. 23,635.50, which is in the lower side as compared to the previous year. Under the heading profit and loss appropriation account, it is shown by net profit transfer from P&L A/c Rs. 80,179.73 is shown and income refund is shown as Rs. 5,767/-. The net profit is on the lower side when compared to previous year, which was Rs. 1,82,919.75. As per the impugned order, the duty amount involved is Rs. 37,10,607/- and equal amount of penalty under Section 11AC and penalty of Rs. 10 lakhs on the firm under Rule 173Q(1), which goes to nearly 85 lakhs. As against that under the stay order, the applicant is called upon to make a pre-deposit of Rs. 18 lakhs. As contended by the JDR looking to the above financial background, the applicants are not in such a bad shape to make a pre-deposit to pursue their appeal involving to the tune of Rs. 1 crore, if the redemption fine is also taken into consideration. The financial hardship was not substantiated in the course of the argument on the stay application as observed in paragraph 7 and the order, which is now made out. So for these reasons the stay order does not require to be modified only on the ground of financial hardship.
7. The applicants have tried to make out a case on the grounds of principle of natural justice. In that regard, the applicants have cited series of decisions from 1986 (23) E.L.T. 14,1987 (28) E.L.T. 61,1988 (37) E.L.T. 312,1990 (49) E.L.T. 360, 1991 (56) E.L.T. 481, 1991(56) E.L.T. 29, 1992 (61) E.L.T. 666, 1993 (63) E.L.T. 427,1997 (95) E.L.T. 589,1999 (107) E.L.T. 657. On the perusal of the above rulings and the impugned order in this case, it is seen that there is no failure of the principles of natural justice in giving an opportunity to the applicants to put forth their case before the adjudicating authority at all stages. The show cause notice is issued to them and the reply is filed by the applicants. Personal hearing was given and the applicant participated in the proceedings. Apart from the oral arguments, written submission is also received. So far as the question of affording opportunity to meet the the case of the department, there is no slackening. The impugned older shows prima facie that all that contentions of the applicant are considered in detail by the adjudicating authority. The rulings are also considered in the impugned order. Under paragraph 6 Sub-clause C in the stay application, the violation of principles of natural justice is alleged without details, which are referred to the appeal memorandum. So no independent case is made in that regard in the stay application. In the appeal memorandum under the heading Grounds of Appeal, under clause H in page 60, it is contended that the impugned order has been passed in violation of the principles of natural justice inasmuch as the Commissioner has not dealt with the vital submission and the Commissioner has not taken note of the applicable case laws cited and relied upon by the appellant contrary to the practice and procedure of the adjudication which has resulted in the denial of the justice to the appellants. This ground is not specific and general. In page 19 under clause M, it is submitted that the Commissioner has not dealt with this submission regarding the supply of items to OEMS who are claiming Modvat and in terms of proviso clause to said clause 4 of the notification, negative covenant under said clause H as no application in any event which has resulted in the denial of the principles of natural justice. But on the perusal of the impugned order, it is seen that each and every contention recorded in the order is met with by the adjudicating authority. The impugned order has dealt with in detail about investigation made and the issue of the show cause notice and the reply of the applicant in detail and also recorded the written submission and discussed it under the heading Finding from page 3 to 8. This cannot be said to be a non-speaking order as observed in 1990 (49) E.L.T. 360 in the case of S.K. Nayyar and Ors. v. C.C.E. and 1986 (23) E.L.T. 14 in the case of Rungta Sons Pvt. Ltd. and Anr. v. C.C.E. Vishakapatnam and Ors. regarding personal hearing and and 1997 (95) E.L.T. 589 Nippon Power v. C.C.E. and 1993 (63) E.L.T. 427 in the case of Advani Orelikon Ltd. v. C.C.E. at page 429 covering 3 rules of principles of natural justice, and 1992 (61) E.L.T. 666 in the case of Hind Tin Industries v. C.C.E. paragraph 19; and 1991 (56) E.L.T. 481 in the case of Shalimar Industries Ltd. v. C.C.E. page 482 at paragraph 5 and 1991 (56) E.L.T. 29 in the case of GTC Industries Ltd. v. U.O.I. regarding the cross examination of the witness and right to read and oral documentary evidence in support of the case. So under these circumstance the contention of the applicant that the principles of natural justice is not applied in the instant case and thereby the applicant is prejudiced cannot be accepted and it is rejected.
8. The only other ground made out by the applicants is the latest decision of the Tribunal subsequent to the argument on the stay application, which is appearing in the issue of May 1999. In 1999 (107) E.L.T. 657 in the case of R.G. Cotton Industries v. C.C.E. the Eastern Bench deals with the Notification No. 185/87 of Central Excise and the brand name. Astra Pharmaceuticals 1995 (75) E.L.T. 214 the Supreme Court has relied upon and 1996 (83) E.L.T. 411 in the case of Collector v. Technics India is referred. It is a case of absorbent cotton wool. The Notification 185/87 is observed as not applicable to absorbent cotton wool, which is sold under the brand name. The controversy involved in this case is whether the RGGI marking displayed on the wrapper which has covered the goods in that package in a stylish manner is brand name or not. So from this the subject matter of the above decision is not similar to the issue involved in this case. As observed in the stay order in paragraph 5 of the orders, the applicant has challenged the impugned order in all respects and to decide the points attacked by the applicants, i.e. to test whether logo by itself is a brand name or trade name in a true and proper manner and the applicability of the provision of paragraph 4 of the Notification 1/93 and explanations and the appreciation of facts in this case, and the rulings referred to by the applicant, on the applicability of the law laid down under the ruling cited, requires a detail consideration on the merits of the appeal.
9. The passing of the stay order is only a step in aid for that purpose. The applicant has to pursue the appeal in that regard. Now from the material available on record only a prima facie is required to be seen for the purpose of decision of the stay application and modification if required. On the other hand, as contended by the applicant if all the above issues are considered now nothing else remains to be considered while dealing with the appeal on merits. So the applicability of the ruling, in 1999 (107) E.L.T. 657 in the case of R.G. Cotton Industries in which the Supreme Court judgment in Astra Pharmaceuticals Pvt. is relied on has to be considered while dealing with the appeal on merits. So under these circumstances, the applicant has not made out a case for modification of the stay order dated 29-04-1999. Hence the following order :
ORDER
For the reason discussed above, the application for the modification of the stay order cannot be allowed, and it is rejected. The applicant is directed to comply with the stay order within two months from the date of the receipt of the order and report compliance on 29-11-1999.