Brand name misuse defeats small scale exemption; undisclosed use also triggers extended limitation, with duty recomputed on cum-duty basis.

Clearance of excisable goods under another person's brand name disqualifies the assessee from the small scale exemption, even if the mark is used on goods of a different type and is not registered for the same goods. Non-disclosure of that brand use to the Department attracts the extended period of limitation, so the demand is not time-barred. Where duty is computed from the sale price realised from buyers, that price must be treated as cum-duty price and the excise duty deducted on recomputation; the penalty is correspondingly liable to reduction. The exemption denial and limitation finding were upheld, while the duty and penalty were adjusted on cum-duty basis.

---

---

Issues: (i) whether clearance of excisable goods bearing the brand name of another person disentitled the assessee to the benefit of the small scale exemption notification; (ii) whether the demand was barred by limitation; and (iii) whether the duty was required to be recomputed on cum-duty price basis with consequential reduction in penalty.

Issue (i): whether clearance of excisable goods bearing the brand name of another person disentitled the assessee to the benefit of the small scale exemption notification.

Analysis: The exemption under the relevant notification was unavailable where the excisable goods bore the brand name of another person. The goods were found to be cleared under the brand name and logo of another concern, and the fact that the brand name was used on goods of a different type did not alter the statutory bar. The principle applied was that exemption is lost once the goods bear another person's brand name, irrespective of whether the mark is registered for the same goods.

Conclusion: The assessee was not entitled to the small scale exemption on this ground.

Issue (ii): whether the demand was barred by limitation.

Analysis: The use of another person's brand name and logo had not been disclosed to the Department. In these circumstances, the extended period of limitation under the central excise law was attracted.

Conclusion: The demand was not time-barred and the extended period was invocable.

Issue (iii): whether the duty was required to be recomputed on cum-duty price basis with consequential reduction in penalty.

Analysis: Where duty is demanded on sale price realised from buyers, the price is to be treated as cum-duty price and excise duty must be deducted while recomputing the demand. The penalty also had to be moderated in the facts of the case.

Conclusion: The duty was to be recomputed on cum-duty price basis and the penalty was reduced to Rs. 30,000.

Final Conclusion: The denial of exemption and invocation of limitation were upheld, but the duty demand was directed to be recalculated on a cum-duty basis and the penalty was substantially reduced.

Ratio Decidendi: Clearance of excisable goods under another person's brand name disentitles the assessee to small scale exemption, and where duty is recovered from the sale price, such price must be treated as cum-duty price for recomputation.

---