Pranav B Prem

The Chennai Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) comprising P. Dinesha (Judicial Member) and Vasa Seshagiri Rao (Technical Member) has held that Small Scale Industry (SSI) exemption under Notification No. 8/2003-CE cannot be denied merely because the assessee uses a common or legally assigned brand name. The Bench observed that once a brand name is legally assigned or transferred, the SSI unit becomes the “owner” of the brand, and it no longer remains the “brand name of another person.” Accordingly, the bar under Condition No. 4 of the Notification would not apply.

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Background

The appellant, M/s Aashish Enterprises, a proprietary concern engaged in the manufacture of gas lighters under Heading 96138010 of the Central Excise Tariff Act, had not obtained Central Excise registration, claiming the benefit of SSI exemption. During investigation, the Department found that for the period 2005–06 to 2009–10, the appellant had cleared gas lighters bearing the brand names ‘Ganga’, ‘National’, and ‘Shinghvi’ without payment of excise duty. It was alleged that these brand names belonged to other persons, thereby disqualifying the appellant from availing SSI exemption under Notification No. 8/2003-CE. A show cause notice dated 13.05.2010 was issued proposing duty demand of ₹12,35,906 under the proviso to Section 11A(1) of the Central Excise Act, 1944, along with interest and penalty under Section 11AC. The Adjudicating Authority confirmed the demand, which was later upheld by the Commissioner (Appeals). Aggrieved, the appellant approached the CESTAT.

Appellant’s Submissions

Counsel for the appellant contended that the brand names in question were either common, unregistered names or had been legally assigned to the appellant, and therefore, the use of such names did not attract the bar under Paragraph 4 of the Notification. It was further argued that the Department had failed to establish that the brand names belonged to “another person” or that the appellant had used them to exploit another’s goodwill. Reliance was placed on CBIC Circular No. 52/52/1994-CX dated 01.09.1994 and Tribunal rulings such as Ample Industries v. CCE [2007 (218) ELT 456 (Tri.-Ahmd.)], holding that SSI exemption cannot be denied when common or unclaimed brand names are used.

Tribunal’s Findings

The Bench noted that under Condition No. 4 of Notification No. 8/2003-CE, SSI exemption is not applicable to goods bearing the brand name or trade name of another person. However, the Department must establish two essential conditions:

1. That the brand indeed belongs to another person, and

2. That its use by the assessee indicates an intention to exploit that person’s goodwill.

The Tribunal emphasized that the burden of proof lies entirely on the Department. If the assessee demonstrates legal ownership, assignment, or lack of third-party ownership, the restriction under Paragraph 4 does not apply. Regarding the facts of the case, the Bench found:

• ‘Ganga’ was a common name, not registered or shown to be owned by any specific entity.

• ‘National’ had been legally assigned to the appellant through a settlement deed dated 18.04.2005 executed by G. Sampath, the appellant’s brother-in-law. The transfer of ownership predated the period of dispute.

• ‘Shinghvi’ was a family name and not owned by “Shinghvi Brothers” or any third party.

The Tribunal further relied on precedents such as CCE v. Pethe Brake Motors Pvt. Ltd. [1995 (179) ELT 57 (T)], upheld by the Supreme Court, and Poonam Perfect Cannon Trade Link & Ors. v. CCE, Mumbai-IV [2017-TIOL-527-CESTAT-MUM], which reiterated that SSI exemption cannot be denied merely for using common or freely available brand names without evidence of intent to exploit another’s goodwill. The Bench observed: “Once a brand name is legally assigned or transferred, the SSI unit becomes the owner of the brand. Therefore, it is no longer the brand name of another person, and the restriction in Condition No. 4 of Notification No. 8/2003-CE does not apply.”

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Holding that the Department failed to establish that the brands in question belonged to another person, the Tribunal ruled that the appellant was eligible for SSI exemption. It also held that since the demand failed on merits, there was no need to examine the issue of limitation or penalty. Accordingly, the CESTAT set aside the impugned order and allowed the appeal with consequential reliefs. The order was pronounced on October 30, 2025.

Appearance

Counsel for Appellant/ Assessee: G. Natarajan

Counsel for Respondent/ Department: M. Selvakumar

Cause Title: M/s. Aashish Enterprises v. Commissioner of GST and Central Excise

Case No: Excise Appeal No. 42303 of 2016

Coram: P. Dinesha (Judicial Member), Vasa Seshagiri Rao (Technical Member)