Small scale exemption and trade mark assignment: unregistered brand and questioned consideration did not justify denial of notification benefit.

Small scale exemption could not be denied merely because the department questioned the genuineness of a trade mark assignment or the absence of brand registration. Once the assignment was on record and accepted, the adequacy or timing of consideration could not be reopened to discredit the transfer. The unregistered status of the brand was treated as immaterial where an application for transfer or registration had already been filed and was not disputed. On those facts, the notification benefit remained available and the related duty demand and penalties were unsustainable.

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Issues: Whether the assessees were entitled to the benefit of the small scale exemption despite the department's challenge to the genuineness of the trade mark assignment and the absence of registration of the brand name.

Analysis: The transfer of the brand name was on record, and the Court declined to deny exemption merely because the consideration for the assignment appeared low or was paid later. Once the assignment was accepted, the department could not re-examine the adequacy of consideration to discredit the transfer. The absence of registration was also held to be immaterial, particularly when an application for transfer/registration had already been filed and the fact of such application was not disputed. Although the surrounding facts created doubt about the transaction, the department had still proceeded on the footing that the assessees were manufacturers, and there was no separate sustainable basis to deny the notification benefit solely on the alleged lack of genuineness of the assignment.

Conclusion: The assessees were entitled to the small scale exemption, and the duty demand and penalties were unsustainable.

Ratio Decidendi: Once a trade mark assignment is accepted as existing, its validity for exemption purposes cannot be denied merely because the consideration appears inadequate or the transfer is not yet registered.

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