Small scale exemption for branded intermediate forgings used in further manufacture cannot be denied solely on brand name marking.

Forgings cleared as intermediate goods for further manufacture into nuts and bolts were eligible for small scale exemption because they were not complete finished products at the stage of clearance. The presence of the brand name on the forgings, incorporated through the die, did not by itself disqualify the exemption where the goods were supplied for further processing by the customer. The duty demand was therefore unsustainable, and the connected penalties and confiscation based on alleged clearance of branded finished goods without duty payment also could not survive.

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Issues: Whether forgings cleared bearing the brand name of another unit, and supplied for further manufacturing into finished nuts and bolts, were entitled to small scale exemption and, if so, whether the duty demand, penalties and confiscation could be sustained.

Analysis: The forgings manufactured by the first unit were cleared to the appellant unit, where further processes such as reducing and threading were undertaken to make complete nuts and bolts. The brand name appeared on the forgings because it was incorporated in the die, and the goods were not complete finished products at the stage of clearance from the first unit. The Board's circular on forgings/castings cleared for use in further manufacture supported the position that small scale exemption cannot be denied merely because the intermediate goods bear a brand name when they are meant for further manufacture by the customer.

Conclusion: The forgings were eligible for the benefit of small scale exemption and the duty demand was unsustainable.

Final Conclusion: The connected penalties and confiscation based on alleged clearance of branded finished goods without duty payment also could not survive.

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