By TIOL News Service

NEW DELHI, NOV 23, 2015: THE appellant M/s Deelux Cable Industries are engaged in the manufacture of PVC Wire, armoured/un-armoured cables and were availing SSI exemption.

It is the case of the department that the brand name "Deelux Premium" which the appellant used belonged to another unit, namely Deelux Cable & Wire Pvt. Ltd., Jaipur.

Proceedings were initiated against the appellants for recovery of CE duty on the branded goods and consequently an o-in-o came to be passed confirming the demand of excise duty of Rs.70,80,969/-. Penalties were also imposed and cables seized from various premises were confiscated but allowed to be redeemed on payment of fine.

The appellants are before the CESTAT and inter alia submit that -

+ They have been manufacturing cable since 1980 using the brand name "DEELUX". In 2006 they applied for registration of their brand name. On the same day, Deelux Cable & Wire Pvt. Ltd. also applied for registration of their brand name "DEELUX PREMIUM". This is a private limited company with some of the family members of the proprietor of the appellant as Directors. While the registration of 'Deelux Premium' was approved, the registration for 'Deelux' which is their brand name is still pending. Since they have been manufacturing cable for a long time with brand name 'Deelux' much before the starting of Deelux Cable & Wire Pvt. Ltd. there cannot be any presumption that they have used brand name of another person namely Deelux Premium to improve their sales.

+ The contention of Revenue that brand name 'Deelux' is part of the brand name 'Deelux Premium' that will bring association with another person making cable is not tenable. They were in the business of manufacturing cable with the 'Deelux' name for many years before the coming into existence of Deelux Premium brand. Hence, it cannot be said that they are deriving additional advantage by using part of somebody's brand name.

+ There is no tenable evidence with any corroboration to establish the case of Revenue that all their production and clearance during February 2006 to July 2010 has been only with brand name of Deelux Premium. The whole demand is based on presumptions only.

The AR while reiterating the findings of the original authority emphasized that seizure of cable with another persons' brand name in the premises of appellant clearly shows that they have been manufacturing with another persons brand name.

The Bench observed -

+ The case substantially relies on statements of ShriNarpat Singh and various dealers which were used against the appellant. Other than these statements, the other material evidence as claimed by the Original Authority is only the seizure of cables worth Rs.10,62,456/- at the premises of the appellant bearing brand name 'Deelux Premium'. The Revenue's case is that through out the period of demand the appellant made cables using another person's brand name. Accordingly, the SSI exemption was denied and duty confirmed. We could not find supportive evidence for such summary conclusion .

+ Even if it is conceded that such manufacture of the brand name of Deelux Premium is due to an error in the supply of print block, the appellant cannot escape the consequences of such error resulting in duty liability. Other than this, there is no direct or corroborative evidence to establish that the appellant manufactured and cleared cables with brand name of 'Deelux Premium' during the whole of period of demand. On the contrary there are evidences, both documentary and through statement, that the appellant did manufacture cables with their brand name "DEELUX" during the impugned period.

+ During the hearing the learned Counsel for the appellant submitted copies of large number of invoices from 1986 onwards to support his case that they have been manufacturing and clearing cables with Deelux name for many years before Deelux Cable & Wire Pvt. Ltd. came into existence with the brand name of 'Deelux Premium'. As such, we are unable to subscribe to the view that all the cables manufactured by the appellant during the impugned period are with brand name of another person, in the absence of any documentary/corroborative evidence to that effect. We find the confirmation of demand substantially relying on the statements of various people which were retracted later cannot be sustained, as the basic requirement of establishing the veracity of these statements by cross-examination has not been done.

+ The second allegation of the Revenue is to the effect that the brand name 'Deelux' is deceptively similar to 'Deelux Premium' which belongs to the company owned by family members of the appellant and, hence, the SSI exemption is to be denied. In the present case, the admitted fact is that the brand name of DEELUX has been in the use of the appellant for many years before coming into existence of Deelux Cable & Wire Pvt. Ltd. having different brand name Deelux Premium. In fact both the brand names were sought to be registered on the same day. However, the brand name 'DEELUX' is yet to be registered. Though the word "DEELUX" is an invented word, the brand name of M/s Deelux Cable & Wire Pvt. Ltd. is known as Deelux Premium. It is relevant to note that the name of both the units have this invented word and as such it cannot be said that the usage of word 'Deelux' is a part representative of 'Deelux Premium' and as such it established a link to that brand. The brand Deelux, unregistered during the impugned time, is apparently the part of the manufacturer's name. Another manufacturer Deelux Cable & Wire Pvt. Ltd. is a separate legal entity came into existence much later which got brand name Deelux Premium registered. Hence, the finding of the Original Authority that part usage of another persons brand name by the appellant should be considered as attracting the bar in order to deny the small scale exemption is not sustainable.

Conclusion: The original order is not sustainable and is required to be set aside except the duty demand relating to the cables seized at the appellant's premises bearing brand name of 'Deelux Premium' and penalty equal to the said duty. The appeal of the main appellant is partly allowed. The appeals of the other appellants are allowed.

(See 2015-TIOL-2462-CESTAT-DEL)