Small scale exemption and branded original equipment goods: brand use outside trade did not defeat the notification.

The small scale exemption under Notification No. 175/86-C.E. was not denied merely because the goods bore a brand name; the relevant exclusion applied only where the brand name was used in the course of trade. As the goods were supplied as original equipment to the buyer and were not shown to be marketed goods, they fell outside the mischief of Para 7. The Larger Bench view was applied to hold that the exemption remained available, and the Revenue's appeal failed.

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Issues: Whether the benefit of the small scale exemption notification was unavailable where branded goods were manufactured for use as original equipment and were not traded in the market.

Analysis: The dispute turned on the scope of Para 7 of Notification No. 175/86-C.E. The controlling principle applied was that the affixation of a brand name does not by itself attract the exclusion unless the brand name is used in the course of trade. On the facts, the goods were supplied as original equipment to the buyer and were not shown to be goods traded in the market. The issue was treated as covered by the Larger Bench view that such use falls outside the mischief of the notification.

Conclusion: The exemption was held to remain available and the Revenue's appeal failed.

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