SSI Exemption Can't Be Denied Merely For Using Common/Assigned Brand Names: CESTAT

The Tribunal opined that 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.

The Tribunal was addressing the issue of whether the use of the brand names GANGA, NATIONAL and SHINGHVI disentitles the assessee from SSI exemption under Para 4 of Notification No. 8/2003-CE, i.e., whether these brands can be said to be “brand name or trade name (whether registered or not) of another person”.

Notification No. 8/2003-CE is a Central Excise Exemption notification that provides Small Scale Industry (SSI) exemption from central excise duty.

Condition No. 4 of Notification No. 8/2003-CE states that the SSI exemption is not applicable to specified goods with another person's brand name or trade name.

P. Dinesha (Judicial Member) and Vasa Seshagiri Rao (Technical Member) stated that the Department must prove (a) that the brand belongs to another person, and (b) that the use by the assessee indicates a connection (i.e., intention to exploit another's goodwill). If the assessee shows documentary proof of ownership/assignment or shows lack of ownership/claim by any third party, the bar of Para 4 is not attracted.

In this case, the assessee/appellant is a proprietary concern engaged in the manufacture of Gas Lighters falling under 96138010 of the Central Excise Tariff Act.

As per the department, the assessee had manufactured "Gas Lighters" with brand names "Ganga", "National" and "Singhvi" but had not obtained Central Excise Registration and had not paid excise duty. As the goods bear the brand names owned by other persons, the assessee is not entitled to the small-scale exemption.

A show cause notice was issued to the assessee proposing to demand duty under the proviso to Section 11A(1) of the CEA, 1944. The department confirmed the duty demand along with interest and imposed an equal penalty under Section 11AC of CEA, 1944.

Aggrieved by the order, the assessee filed an Appeal before the Commissioner (Appeals), Chennai and the Commissioner (Appeals) rejected the Appeal.

The assessee submitted that the denial of the benefit of SSI exemption, on the ground that he is not entitled to the same inasmuch as the goods have been affixed with the brand name of other persons, is not at all sustainable in law.

The bench further stated that the core question is whether the brand belongs to another person. The notification (and Explanation) must be read to ascertain whether a mark indicates a connection in the course of trade between the goods and some other person. The burden to establish that the brand actually belongs to “another person” and that the use indicates a connection rests with the Department.

The use of the brand names GANGA, NATIONAL and SHINGHVI will not disentitle the appellant from claiming SSI exemption under Para 4 of Notification No. 8/2003-CE, i.e., whether these brands can be said to be “brand name or trade name (whether registered or not) of another person”, the Tribunal held.

The bench held that the assessee is eligible for the benefit of the exemption notification, and the entire demand is not sustainable.

In view of the above, the Tribunal allowed the appeal.

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

Case Number: Excise Appeal No. 42303 of 2016

Counsel for Appellant/ Assessee: G. Natarajan

Counsel for Respondent/ Department: M. Selvakumar

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