TAXAP/330/2008 1/9 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD TAX APPEAL No. 330 of 2008 To TAX APPEAL No. 332 of 2008 With CIVIL APPLICATION No. 31 of 2008 To CIVIL APPLICATION No. 33 of 2008 For Approval and Signature: HONOURABLE MR.JUSTICE D.A.MEHTA HONOURABLE MS.JUSTICE H.N.DEVANI ========================================= 1 Whether Reporters of Local Papers may be allowed to see the judgment ? 2 To be referred to the Reporter or not ? 3 Whether their Lordships wish to see the fair copy of the judgment ? 4 Whether this case involves a substantial question of law as to the interpretation of the constitution of India, 1950 or any order made thereunder ? 5 Whether it is to be circulated to the civil judge ? ========================================= BABUBHAI V PATEL Versus THE COMMISSIONER OF CENTRAL EXCISE & CUSTOMS ========================================= Appearance : MR PARESH V SHETH for the Appellant MR HARIN P RAVAL for the Opponent ========================================= CORAM : HONOURABLE MR.JUSTICE D.A.MEHTA and HONOURABLE MS.JUSTICE H.N.DEVANI TAXAP/330/2008 2/9 JUDGMENT Date : 08/07/2008 ORAL JUDGMENT (Per : HONOURABLE MR.JUSTICE D.A.MEHTA) 1. All these three appeals have been preferred against consolidated order of Tribunal dated 30.11.2006. The appellant assessees in all the three appeals have proposed identical questions of law. For the sake of convenience, as requested by the learned advocate for the appellants, the facts as narrated in Tax Appeal No.332 of 2008 have been taken for disposal of all the three appeals. 2. The questions proposed as substantial questions of law in Tax Appeal No.332 of 2008 read as under: I. Whether the Hon. CESTAT, Ah'bad is correct in confirming the demand of Rs.4,18,620/- holding that the benefit of Notification No.1/93-CE dated 28.02.93 or 16/97-CE dated 1.3.97 or 8/98-CE dated 2.6.98 as amended is not available since the goods bare brand name belonging to others? II. Whether the Hon. CESTAT, Ah'bad is correct in not considering the decision of Hon. CESTAT, Delhi in the case of Quality Steel Industries v/s. Commission of Central Excise reported in 1989(43) ELT 775, confirmed by the Hon. Supreme Court as reported in 1999 (107) ELT A-61 and confirming the order of the lower authority? TAXAP/330/2008 3/9 JUDGMENT III.Whether the Hon. CESTAT, Ah'bad is correct in not considering the decision of Hon. CESTAT, Delhi in the case of Supreme Engineering Works v/s Collector of Central Excise reported in 1996(82) ELT 102, confirmed by the Hon. Supreme Court as reported in 1993(67) ELT A-156 and confirming the order of the lower authority? IV.Whether the Hon. CESTAT Ah'bad is correct in holding that the brand name “Priya” belongs to M/s Sramdeep Industries, though the department has not produced any evidence to prove such ownership and hence, the benefit of Notification No.1/93-CE dated 28.02.93 or 16/97-CE dated 1.3.97 or 8/98-CE dated 2.6.98 as amended is not available. V. Whether the Hon. CESTAT Ah'bad is justified in upholding the Redemption Fine of Rs.25,000/-? VI.Whether the Hon. CESTAT, Ah'bad is justified in upholding the Penalty of Rs.4,18,620?-? VII.Whether the Hon. CESTAT, Ah'bad is correct in not extending the benefit of cum-duty- price? 3. On behalf of the appellants, it is submitted that one Shri TAXAP/330/2008 4/9 JUDGMENT Babubhai Vaghji Patel is the proprietor of a concern named M/s Sramdeep Industries who is the owner of brand names “Priya” and “Rajan” since last more than 15 years and availing of benefit under Small Scale Industries Notification No.1/93- CE dated 28.2.1993 and similar subsequent notifications dated 1.3.1997 and 2.6.1998. One M/s Priya Manufacturers is the proprietary concern of Smt. Champaben B. Patel, wife of Shri Babubhai Patel. Insofar as the third appellant is concerned, namely M/s Raj Engineers, the same is a a partnership firm, wherein Shri Babubhai Patel is a working partner. It is the case of the appellant that clearance of all the three concerns is required to be clubbed in hands of M/s Sramdeep Industries, proprietary concern of Shri Babubhai Patel, because (1) Shri Babubhai Patel is the person looking after the affairs of all the three concerns; (2) Shri Babubhai Patel is power of attorney holder of Smt. Champaben Patel, proprietor of M/s Priya Manufacturers; (3) Shri Babubhai Patel is the only person who looks after the affairs of all the three concerns and utilizes the brand names by affixing the same on products manufactured by all the three concerns. It was therefore, submitted that the action of the respondent authorities, as confirmed by Central Excise and Service Tax Appellate Tribunal (the Tribunal), is bad in law as the exemption under the Notification to the extent of specified value is denied to M/s Priya Manufacturers and M/s Raj Engineers. That the ground taken by revenue to the effect that the concession to a Small Scale Industries cannot be granted if a concern has used the brand name belonging to another concern is not correct in law considering the decision of Tribunal in the case of Quality Steel Industries v/s. Collector of Central Excise reported in 1989 (43) ELT 775 (Tribunal), TAXAP/330/2008 5/9 JUDGMENT which has since been confirmed by the Apex Court as reported in 1999 (107) ELT A-61 The learned advocate therefore, urged that the impugned order of CESTAT, Delhi is not correct considering the settled legal position. 4. The Tribunal has recorded the following facts in the impugned order. 3. The relevant facts, in brief, are as follows. a) M/s Priya Manufacturer, a proprietary concern of Smt. Champaben B. Patel is engaged in manufacturing of machine tools and machinery like blowers, grinders, bumers, polishers and compressors etc. The day to day activities of this form are being looked after by Shri Babubhai V. Patel, husband of proprietor of M/s Priya Manufacturer as her Power of Attorney Holder. b) M/s Sramdeep Industries, is a proprietary concern of Shri Babubhai V. Patel “Priya” and “Raj” are brand names owned by this firm. c) M/s Raj Engineers is a partnership concern with Shri Babubhai V. Patel as one of the partner and the work relating to this form was also being looked after by Shri Babubhai V. Patel. d) In other words Shri Babubhai V. Patel is looking after the work relating to his own proprietary concern ant the proprietary concern in the name of his wife and also the partnership concern namely M/s Raj Engineers. TAXAP/330/2008 6/9 JUDGMENT e) The products manufactured by the above firms were marketed with the brand name 'Priya” and “Raj” and these brand names belonged to M/s Sramdeep Industries his proprietary concern. f) The original authority denied concession meant for SSI exemption for clearances made by M/s Priya Manufacturer and M/s Raj Engineers on the ground that they have used the brand name belonging to M/s Sramdeep Industries. g) The Commission (A) has upheld the view of the original authority and rejected the appeal by the parties. 5. After reproducing the contentions of the appellants and the revenue, the Tribunal has recorded the following findings. 6. We have carefully considered the rival submissions. It is not in dispute that the brand names “Priya” and “Raj” belong to M/s Sramdeep Industries, and the goods were cleared during the relevant period by the other two firms had the brand name of “Priya” and “Raj”. The reasons given for treating the clearances from M/s Priya Manufacturer or M/s Raj Engineers as belonging to M/s Sramdeep Industries only are not convincing. Therefore, in view of the condition contained in Para 4 of Exemption Notification No.1/93 CE and similar condition contained in other SSI exemption TAXAP/330/2008 7/9 JUDGMENT notifications, the benefit of exemption notification was not available to them in respect of goods cleared and manufactured under brand name “Priya” and “Raj”. Also the manufacturing activity of branding goods were willfully suppressed from the department with an intention to evade duty of excise leviable there on. Admittedly, in some cases, the goods were cleared without invoice or a on a bogus/duplicate invoice and, therefore, the findings of evasion of duty by the original adjudicating authority and confirmed by the Commissioner (A) cannot be faulted. The confiscation of the seized goods is also. However, in the light of entire facts and circumstances some leniency is called for in respect of penalty. The appeals are disposed off as follows. a) Confiscation of goods valued at Rs.12,12,613/- seized from M/s Priya Manufacturer is upheld and the redemption fine is reduced to Rs.25,000/- from Rs.1.25 lakhs. b) The duty demand of Rs.4,18,620/- from M/s Priya Manufacturer and imposition of equal penalty of Rs.4,18,620/- are confirmed. Similarly, demand of duty of Rs.63,428/- from M/s Raj Engineers and imposition of equal penalty on them are confirmed. c) In view of the penalty imposed under Se.114C on M/s Priya Manufacturer and M/s Raj Engineers, the penalties of Rs.2.5 lakhs imposed on M/s Priya TAXAP/330/2008 8/9 JUDGMENT Manufacturer and Rs.35,000/- imposed on M/s Raj Engineers under Se.173 Q are set aside. d) Penalty imposed on Shri Babubhai V. Patel is reproduced from Rs.1.5 lakh to Rs.25,000/-. 6. In the aforesaid set of circumstances, it is apparent that the Tribunal has recorded findings of fact after appreciating the evidence on record. The Tribunal has found as a matter of fact that the manufacturing activity of branded goods was willfully suppressed from the department with an intention to evade duty of excise leviable on such goods. It has further been found by the Tribunal that some of the goods have been cleared without invoice or under a bogus/duplicate invoice. It is in this context that the findings of evasion of duty by the adjudicating authority and Commissioner (Appeals) have been confirmed by the Tribunal. 7. In light of the aforestated findings, it is not possible to accept the submission that the decision in case of Quality Steel Industries (supra) can be made applicable to the facts of the present case. In fact, in paragraph No. 17 of the decision, it has categorically been recorded that there was no clandestine or surreptitious removal of goods. Hence, in absence of any error of law having been committed by the Tribunal, the impugned order does not merit interference. None of the questions, as proposed or otherwise, can be termed to be a question of law, much less a substantial question of law so as to entertain the appeal. 8. Accordingly, all the three appeals are dismissed. TAXAP/330/2008 9/9 JUDGMENT 9. In light of the order of dismissal of appeals, all the three civil applications have become infructuous and are rejected accordingly. (D.A. MEHTA, J.) (HARSHA DEVANI, J.) shekhar/-