Trade mark assignment can preserve small scale exemption where the manufacturing unit is purchased as a going concern.

A purchaser of a manufacturing unit acquired the business as a going concern together with its assets, goodwill, trade marks, designs, know-how and connected rights, and was permitted to use the same name and style after the sale. On that basis, the article notes that use of the assigned trade mark did not amount to use of another person's brand name for the relevant goods, because the mark had been transferred to the purchaser. It further reflects the principle that assignment of a trade mark can preserve eligibility for small scale exemption, and that the same brand name may lawfully subsist in different ownership for different classes of goods. The exemption benefit was therefore available.

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Issues: Whether the assessee was entitled to the benefit of Notification No. 175/86-C.E. despite using the brand name/trade mark acquired on purchase of the manufacturing unit as a going concern.

Analysis: The unit was sold along with its assets, goodwill, trade marks, designs, know-how and connected rights. The agreement showed that the purchaser was entitled to carry on the business under the same name and style and to use the trade mark after completion of the sale. The restriction relied upon by the authorities did not establish that the brand name continued to belong to the seller for the goods manufactured by the assessee. The use of a trade mark assigned to the purchaser did not amount to use of somebody else's brand name. The principle recognised in the cited Supreme Court decision was that assignment of a trade mark can preserve eligibility to small scale exemption, and the same brand name may lawfully exist in different ownership for different classes of goods.

Conclusion: The assessee was entitled to the small scale exemption and denial of the notification benefit was not sustainable.

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