Judgment

Arjan Kumar Sikri, J.

1. These appeals are preferred by the Commissioner of Central Excise, Jamshedpur (hereinafter referred as 'the Revenue') questioning the validity of judgment and final order dated 18.2.2003 passed by the Customs, Excise Gold (Control) appellate Tribunal, Kolkata, (hereinafter referred as 'the CEGAT'). By the judgment the CEGAT has allowed the appeal of the Respondent herein and set aside the Order-in-Original passed by the Commissioner Excise levying the excise duty in the sum of Rs. 34,67,164/-. Penalty of an identical amount is also imposed under the provisions of Section 11A(C) of the Central Excise Act. Penalty of Rs. 8.50 lakhs was imposed Under Rule 173Q of the Central Excise Rules, 1944 with further penalty of Rs. 3.50 lakhs on the partner of the Respondent-firm. Consequently, these penalties have also been set aside.

2. The issue involved in the present case pertains to the entitlement of the excise exemption in terms of exemption Notification No. 1/93 dated 28.2.1993 issued by the Department. As per the said Notification small scale industries are allowed exemption in certain circumstances. We are, however, concerned with para 4 of the said Notification No. 1/93 which denies this exemption under certain circumstances. Said para 4 reads as under:

The exemption contained in this Notification shall not apply to the specified goods where a manufacturer affixes the specified goods with a brand name or trade name (registered or not) of another person who is not eligible for the grant of exemption under this Notification:

Provided that nothing contained in this paragraph shall be applicable to the specified goods which are component parts of any machinery or equipment or appliances and cleared from a factory for use as original equipment in the manufacture of the said machinery or equipment or appliances and the procedure set out in Chapter X of the said Rules is followed:

Provided further that nothing contained in this paragraph shall be applicable to the specified goods where a manufacturer affixes the specified goods with a broad name or trade name (registered or not) of the Khadi and village Industries Commission or of the State Khadi and Village Industries Board.

3. It is not in dispute that the Respondent is a small scale industry. However, it was denied the exemption by the Revenue invoking the provisions of para 4 above on the ground that the Respondent is using the brand name of M/s. TISCO Ltd. i.e. TISCOG and therefore comes within the mischief of para 4.

4. The relevant facts which are to be taken note of for this purpose are that M/s. Tata Iron and Steel Company Ltd. (TISCO) has given authorization to the Respondent vide the letter dated 9.1.2001 to manufacture TISCOG. This letter not only gives authorization to the Respondent to manufacture the goods i.e. Steel Cog Stool as per the TISCO patent design but also gives right to the Respondent to market the said goods. Armed with the aforesaid authorization the Respondent has been receiving orders from various parties to manufacture and supply it to them the Steel Cog Stools with the patent design for which authorization is given by TISCO Ltd.

5. The Respondent did not pay any excise duty on the premise that it was entitled to the exemption under the aforesaid Notification. When the show cause notice was issued to the Respondent to pay the excise duty, defence of the Respondent was that the Respondent was not affixing the said brand name TISCOG on the goods which were supplied by Respondent to the parties from which he received the orders. It was stated that such a name was mentioned only in the invoices which were raised by the Respondent. As mentioned above, this contention was not accepted by the Commissioner in his order.

6. However, in appeal filed before the CEGAT, CEGAT has accepted the aforesaid plea of the Respondent resulting into the quashing of the impugned demand as well as the penalties. Therefore, the only issue which is to be det