Use Of Common Or Assigned Brand Names Does Not Disqualify SSI Exemption Benefit: CESTAT Chennai
Pranav B Prem
The Customs, Excise & Service Tax Appellate Tribunal (CESTAT), Chennai Bench comprising Mr. P. Dinesha (Judicial Member) and Mr. Vasa Seshagiri Rao (Technical Member) held that the use of common or legally assigned brand names does not disqualify an assessee from claiming the Small Scale Industry (SSI) exemption under Notification No. 8/2003-CE. The Bench ruled that the use of the brand names “GANGA,” “NATIONAL,” and “SHINGHVI” on gas lighters could not be considered as use of another person’s brand name so as to deny SSI exemption. Consequently, the Tribunal set aside the duty demand of ₹12,35,906 along with interest and penalty imposed on M/s Aashish Enterprises, a proprietary concern engaged in the manufacture of electronic gas lighters.
Background Facts
The appellant, M/s Aashish Enterprises, was engaged in the manufacture of gas lighters falling under tariff heading 96138010 of the Central Excise Tariff Act. Being a small-scale industrial unit, the appellant had not obtained excise registration and was availing SSI exemption. Following an investigation, the Department alleged that during the period 2005–06 to 2009–10, the appellant manufactured and cleared gas lighters affixed with the brand names “GANGA,” “NATIONAL,” and “SHINGHVI,” which allegedly belonged to other persons. Based on this, it was concluded that the appellant was not entitled to SSI exemption under Notification No. 8/2003-CE. A show cause notice dated 13.05.2010 was issued demanding duty of ₹12,35,906 under the proviso to Section 11A(1) of the Central Excise Act, along with interest and penalty under Section 11AC. The Order-in-Original confirmed the demand and penalty, which was later upheld by the Commissioner (Appeals). The appellant then approached the CESTAT challenging the denial of SSI benefit.
Arguments
The appellant contended that the brand names used were either common names or had been legally assigned to the appellant. It was argued that the Department failed to establish ownership of these brand names by any other person and, therefore, could not deny SSI exemption. The counsel for the appellant relied upon CBIC Circular No. 52/52/1994-CX dated 01.09.1994, and decisions including Ample Industries v. CCE [2007 (218) ELT 456 (Tri.-Ahmd.)] and Pethe Brake Motors Pvt. Ltd. [1995 (179) ELT 57 (Tribunal)], which held that SSI exemption cannot be denied for using generic or non-exclusive brand names unless the Department conclusively proves ownership by another entity. The Department, on the other hand, argued that statements recorded during investigation indicated that the brands “GANGA,” “NATIONAL,” and “SHINGHVI” belonged to third parties and that the appellant was ineligible for exemption.
Tribunal’s Findings
The Tribunal examined the issue whether the use of brand names “GANGA,” “NATIONAL,” and “SHINGHVI” disqualified the appellant from claiming SSI exemption under Para 4 of the Notification. It noted that once a brand name is legally assigned or transferred, it ceases to be the brand name of “another person.” A deed of assignment dated 18.04.2005, transferring rights in the brand “NATIONAL” to the appellant, was produced and found to be valid. The Tribunal observed that this assignment occurred prior to the disputed period, confirming bona fide ownership.
With regard to “GANGA,” it was held that the name was generic and not owned by any individual. Similarly, “SHINGHVI” was found to be a family or common trade name, with no evidence of exclusive proprietary ownership by any third party. The Department had failed to verify ownership claims or produce evidence of registration or exclusive rights over these names. The Bench observed:“We have no hesitation to hold that the appellant is eligible for the benefit of SSI exemption… the entire demand is not sustainable and ordered to be set aside.” The Tribunal also emphasized that the onus lies on the Department to prove that a brand belongs to another person and that its use indicates an intention to exploit another’s goodwill. Absent such proof, SSI exemption cannot be denied.
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Relying on precedents such as Pethe Brake Motors Pvt. Ltd. and Ample Industries, the Tribunal held that use of a common or assigned brand name does not automatically imply use of another’s brand. Unless exclusive ownership and a trade connection are established, denial of SSI exemption is unsustainable. Accordingly, the CESTAT set aside the duty demand of ₹12.35 lakh, along with interest and penalty, and held that the appellant was eligible for SSI exemption under Notification No. 8/2003-CE. The Tribunal further held that, as the demand failed on merits, it was unnecessary to examine the issue of limitation.
Appearance
Counsel For Appellant: G. Natarajan, Advocate
Counsel For Respondent: M. Selvakumar, Authorised Representative
Cause Title: M/s. Aashish Enterprises Versus Commissioner of GST and Central Excise
Case No: Excise Appeal No. 42303 of 2016
Coram: Mr. P. Dinesha (Judicial Member), Mr. Vasa Seshagiri Rao (Technical Member)
