Brand-name restriction does not bar SSI exemption where goods are made to order for exclusive customer use, not open-market trade.

Branded elastic tapes made to the specification of hosiery manufacturers for exclusive use in finished articles were not denied Small Scale Industry exemption merely because they bore the customer's brand name. The operative test was whether the goods were marketed and traded as branded goods in the open market; on the stated facts, they were manufactured only to order as components and not sold as standalone marketable goods. The brand-name restriction was therefore inapplicable, and the demand, penalty and interest were held unsustainable.

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Issues: Whether branded elastic tapes manufactured to the specification of hosiery manufacturers, and not traded in the open market as such, were eligible for Small Scale Industry exemption despite bearing the brand name of others.

Analysis: The exemption under the relevant notifications was denied on the ground that the goods bore another person's brand name. The assessee showed that the elastic tapes were manufactured only to the order and specification of particular hosiery manufacturers for use as components in the finished article and were not sold as standalone marketable goods. On that footing, the brand-name restriction was examined in light of the departmental circular relied upon by the assessee and the fact that the goods were not used in the course of trade as branded goods in the open market. The reasoning accepted that where branded goods are made for a particular customer for exclusive use in a separate final product and are not traded as such, the brand-name condition does not operate to deny the exemption.

Conclusion: The branded elastic tapes were not disentitled to SSI exemption, and the demand, penalty, and interest were unsustainable.

Ratio Decidendi: Goods manufactured to order for exclusive use by a customer, and not traded in the market as such, are not hit by the brand-name bar for SSI exemption merely because they bear the customer's brand name.

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