M/s. Voltas Limited vs Commissioner Of Central Excise

P. Dinesha, Member (J)

The appellant, namely, M/s. Voltas Limited, Teynampet, Chennai, appears to be the owner of the brand name who procured Automatic Voltage Stabilizers (‘AVS’ for short) in this case from M/s. St. Roch Enterprises, Chennai and the impugned order reveals that M/s. St. Roch Enterprises is a proprietary concern basically manufacturing and supplying AVS to M/s. Voltas Ltd. in their brand name namely, “V-Service” since 2005, besides their own brand namely, “Info Power”.

2.1 On a certain input, it appears that the Revenue entertained a doubt that the said M/s. St. Roch Enterprises had manufactured and cleared goods bearing the brand name of another person without payment of appropriate duty during the years 2008-09, 2009-10, 2010-11 and 2011-12; it also appeared to the Revenue that the above activity of manufacturing by the said M/s. St. Roch Enterprises and clearance through the trading company M/s. St. Roch Electricals was after crossing the SSI exemption limit during the year 2010-11 and hence, a Show Cause Notice dated 17.07.2013 was issued to M/s. St. Roch Enterprises.

2.2 The appellant before this Bench was also called upon to Show Cause as to why penalty under Section 26 of the Central Excise Rules, 2002 shall not be imposed on them since they were the other party who had received the non-duty paid goods from the said M/s. St. Roch Enterprises.

It appears that both the co-noticees filed their respective replies separately. The appellant namely, M/s. Voltas Ltd., appears to have contended primarily that the relationship between them and the manufacturer was purely commercial in nature, governed by the purchase order; they had no knowledge about the non-payment of Excise Duty by the manufacturer nor did they have any knowledge about the manufacturer claiming, for all those years, exemption from payment of Excise Duty.

The adjudicating authority-Commissioner of Central Excise, Chennai-II Commissionerate having considered the explanation of the appellant, passed a common adjudication order vide Order-in-Original No. 01/2014 dated 16.01.2014, wherein he has confirmed the proposals made in the Show Cause Notice against the appellant before this forum.

Seriously aggrieved by the levy of penalty under Rule 26 of the Central Excise Rules, 2002, the appellant namely, M/s. Voltas Ltd., has preferred the present appeal before this forum.

Heard Smt. J. Ragini, Ld. Advocate for the appellant and Shri N. Satyanarayanan, Ld. Assistant Commissioner for the Revenue, and having considered their rival contentions, I have also gone through the documents placed on record including the judicial precedents relied upon during the course of arguments.

I find that the only issue to be decided by me is: whether the Revenue is justified in levying penalty under Rule 26 ibid. on the appellant?

A perusal of the documents, order of the lower authority, Show Cause Notice and reply thereto, which are placed on record, clearly reveals that the appellant had outsourced the manufacture of AVS, for which the said manufacturer was to affix the brand name of

“V-Service”, it is also a fact borne on the record that the said manufacturer was marketing the stabilizers manufactured by it under its own name “Info Power”. That there is a possibility of the said manufacturer catering to the needs of other similar purchasers holding different brand names cannot be ruled out.

9.1 Be that as it may, the Revenue has not brought on record as to the role of the appellant in the non-payment of Excise Duty by the said manufacturer; the appellant has pleaded that it was only procuring the said AVS and the only relationship that existed was that of manufacturer and purchaser and nothing more than that, which is not disputed by the Revenue. Even the fact that the said manufacturer was enjoying the exemption being the SSI unit, has also been claimed by the appellant as being unaware of, which is also not denied by the Revenue.

9.2 Moreover, I find that the granting of exemption for SSI unit is based on certain criteria of the particular claimant/unit and it does not depend on the business understanding, if any, of the said unit with any other person. Having obtained the SSI exemption, it was for the said unit to comply with the requirements of the applicable statutes including the Central Excise provisions insofar as the liability to duty of the product/s manufactured by it are concerned, and it is not the case of the Revenue that the said manufacturer is catering to the needs of the present appellant alone.

In that view of the matter, I am of the view that the penalty levied under Rule 26 ibid. cannot sustain, for which reason the impugned order deserves to be set aside.

Resultantly, the impugned order is set aside insofar as the present appellant is concerned and the appeal is allowed with consequential benefits, if any, as per law.