Nirlex Spares Pvt. Ltd vs Commissioner Of Central Excise

2. Before deciding this question, it would indeed be worthwhile to briefly highlight the facts of the present appeal.

3. The appellant i.e. Nirlex Spares Pvt. Ltd. was and/or is engaged in the business of manufacture and sale of Riderless Steel Healds and Flat Steel Healds. It is important to note that these goods were manufactured and sold by the company under its own brand names/trade names viz. Intatex and Intaco which were affixed/ printed on its corrugated boxes. However, since it is a company registered as a Small Scale Industrial Unit, it was availing the benefit of exemption from payment of central excise duty under the notification, which grants such exemption to Small Scale Industrial Units.

4. The appellant, however, from 1st of April, 1990 started printing a hexagonal artistic design (alleged monogram) along with its brand names/trade names Intatex and Intaco on its corrugated boxes. On 30th of September, 1992, an investigation was carried out in the factory of the appellant. The investigating officers came to the conclusion that the appellant was making use of a monogram of a related person, namely, L.M.S. Marketing Company (in short the Marketing Company) as a brand name for the goods manufactured and cleared by it and therefore, the appellant was not entitled to exemption in view of paragraph 7 read with Explanation VIII of the notification for the period from 1st of April, 1988 and 30th of September, 1992. The investigating officers had also found that the Marketing Company to which the appellant sold its goods was a related person and therefore, the correct assessable value was the price at which the goods were sold by the Marketing Company and not the price at which the goods were sold to the Marketing Company by the appellant. Accordingly, a show cause notice dated 26th of March, 1993 was issued to the appellant under which the following demands were raised:

5. The appellant filed its reply dated 22nd of November, 1993 denying and disputing the allegations made in the show cause notice. The Commissioner of Central Excise, however, by his order dated 8th of April, 1994 confirmed the entire demand for duty and the value difference to be paid, as was arrived at by the investigating officers. Thereafter, the appellant preferred an appeal under S.35 of the Central Excise Tariff Act, 1985 to Customs, Excise and Gold (Control) Appellate Tribunal (in short the CEGAT). The CEGAT also confirmed the decision of the Commissioner of Central Excise by the impugned order except that it had dropped the demand for excise duty for the period before 1st of April, 1990 since it accepted the contention of the appellant that the monogram was used by it only from 1st of April, 1990 onwards. Aggrieved by the impugned order passed by the CEGAT, the appellant has approached this court by filing this appeal, which was heard in presence of the learned counsel for the parties.

18. For the reasons aforesaid, we are not in agreement with the views expressed by the CEGAT and the Commissioner of Central Excise and accordingly, we answer the question posed by us, as noted herein earlier, by holding that the benefit of exemption under the notification in question would be available to the appellant.

19. Accordingly, the order of the CEGAT and that of the Commissioner is set aside and we hold that the appellant shall be permitted to get exemption under the notification No. 175/86-CE dated 1st of March, 1986.

20. The appeal is thus allowed with no order as to costs.