By TIOL News Service

MUMBAI, APR 23, 2015: THIS is a Revenue appeal.

The Respondent is engaged in the manufacture of Commercial Plywood falling under Chapter Heading No. 4408 and availing value based SSI exemption under Notification No. 8/99-C.E. upto the threshold limit of Rs. 1 crore in each FY during the period 1997-98 to 2001-02. The Respondent is using brand name, namely Rajat Ply, Assam Ply, Natraj Ply & Hit Ply.

It is the contention of the Revenue that these brand names were earlier used by the old management and there is no evidence that the brand name was transferred from earlier share holder to the present share holder of the company.

Inasmuch as since the appellant was using the brand name of other person, they are not eligible for SSI Exemption under notification No. 8/99-CE dated 1/3/1999. A demand of Rs.5,35,480/- came to be confirmed by the adjudicating authority but the Commissioner(A) set aside the same.

Before the CESTAT, the AR while reiterating the department stand also submitted that the respondent did not produce any evidence to establish that above brand names were transferred to their company after taking over previous company. Moreover, Assam plywood and Mysore plywood are brands of goods manufactured of M/s. Assam Plywood Industries and M/s. Mysore Plywood Ltd. and, therefore, these companies are the owner of these two brands, submitted the AR.

The respondent, at the outset, submitted that the ground of appeal that brand names Assam plywood and Mysore plywood belong to M/s. Assam Plywood Industries and M/s. Mysore Plywood Ltd respectively, was taken first time before the Tribunal and, therefore, the same cannot be entertained at this stage. On the grounds taken for denial of the SSI exemption, it is inter alia submitted that it is not a case of change of entity, however, only shareholders were changed but the company remained intact; that it is M/s. Shalini Plywood Pvt. Ltd. who have been owner of the brand name through out and, therefore, transfer of brand names does not exist in this case.

The Bench observed -

++ From the close reading of the show cause notice as well as adjudication order we find that whole basis of the case that the brand name in question were earlier used by same company under different management and thereafter due to change of management the brand name should have been transferred and in absence of that it cannot be said that brand name belong to the respondent. As far as this basis of demand, we completely disagree with the Revenue that admittedly there is no change in the identity of the company, it is only a change of management.

++ Change of management does not make in change of identity of the company. As regard private limited company it is the company who holds the identity and not share holders, therefore company remained intact irrespective of change of share holders.

++ In this position if the brand name were owned and used by the same company under the old management there is no need of transfer of brand name from old management to new management because brand name is not owned by the management but it is owned by the company only.

++ As regard the ground of appeal that some of the brand is related to different company, neither the show cause notice nor adjudication order dealt with this new submission, therefore same cannot be considered at this stage.

Holding that the Commissioner (Appeals) had rightly extended the benefit of SSI Notification No. 8/99-CE dated 1/3/1999 to the respondent, the Revenue appeal was dismissed.

But before concluding as above, the Bench extracted paragraph 13 of the adjudication order and quipped -

"…From the above finding of the adjudicating authority we surprise to note that when brand names belong to company how it could be transferred from earlier shareholder to present shareholder. This finding of the Ld. Adjudicating authority is absurd and beyond common sense…."

(See 2015-TIOL-732-CESTAT-MUM)