Per S.S. Sekhon :

The appellants are engaged in the manufacture of shock pulse analyser and shock pulse testers falling under Chapter 90 of the Central Excise Tariff Act, 1985. In terms of a collaboration agreement signed the by appellant No. 2, Shri S.K. Mehta, Managing Director of Appellant Private Limited Company, with M/s. SPM Instruments AB-Sweden by which they were granted the non-transferable right and licence to use the trade name of the foreign company. They were using the brand name "SPM instrument". The appellants were availing the benefit of Notfn. 175/86-CE dtd. 1.3.86 available for the small-scale units and were either availing exemption for the initial clearances or paying duty at the appropriate rates.

2. A show cause notice was issued on 8.11.93 proposing to demand duty and impose penalty for the period and on the grounds as :-

After the appellants submitted the reply to the show cause notice, the impugned order has been passed by the Commissioner confirming the demands as above and imposing penalty of Rs. 10 lakhs on appellant company and Rs. 5 lakhs on Shri S.K. Mehta. Hence these appeals.

3. We have heard both sides and considered the submissions and find:-

a) In terms of the collaboration agreement dtd. 19.4.91 and 11.12.91, the appellant has been granted a non-transferable right and licence to use the trade name of the foreign company. Thus, the appellants are the only company entitled to use this brand name in India. The ownership of a brand name flows either from registration or by use. In this case, the appellants, by virtue of the fact that they are the only company entitled to use the brand name and no other company is entitled to use the brand name in the country, they become the owners of the brand name by continued use of the brand name. Reliance is placed on the decision of the Calcutta High Court in the case of CCE Vs. ESBI Transmissions Pvt. Ltd., reported in 1997 (91) ELT 292. Nothing contrary has been shown to us. Therefore demand on this account cannot be sustained.

b) The demand is barred by limitation for the following reasons.

i) They had provided the collaboration agreement along with the application for grant of Central Excise license vide their letter dtd. 16.3.92 at Page 118 of the Paper Book. The fact that the appellants are using the brand name is evident from the letter dtd. 16.3.92 given to the Department.

ii) The only ground for the Commissioner to invoke the longer period of limitation is, the appellants had not mentioned the same in the classification list. On this aspect, the Tribunal in the case of Intercity Cable System Pvt. Ltd. Vs. CCE, New Delhi reported in 1995 (11) RLT 170 (CEGAT)=1995 (80) ELT 445, had held, Rule 173B of the Central Excise Rules, 1944 does not require the disclosure regarding a brand name and this view has been followed in the case of Queen Electrical Industries Vs. CCE, Madurai reported in 2002 (51) RLT 62. The perusal of the Classification List effective from 6.7.92 filed by the appellants, reveals that benefit of Notfn. 175/86 has been specifically claimed. A further classification list effective from 7.4.93 was also filed claiming the benefit of the successor Notfn. No. 1/93. The appellants, vide their letter dtd. 23.4.93, contended that since the brand name pertained to a person situated outside India, there was no reason for them to indicate the said brand name in the classification list. The classification lists were thereafter approved by the Department on 26.5.93 and the RT-12 return for the period July 1992 to February 1993 were finally assessed on 26.10.93. The Tribunal in the case of Vora Products Vs. CCE, Pune reported in 2002 (50) RLT 966