Small scale exemption and customer brand names: exclusive supply for own use did not defeat the notification benefit.

Small scale exemption under Notification No. 1/93-C.E. was available where goods manufactured exclusively for a customer bore that customer's brand name but were not traded in the market. The governing test was whether the brand name indicated a trade connection between the goods and a person using the name; on the stated facts, no such mischief arose because the goods were supplied only to the customer for its own use. Accordingly, affixation of the customer's brand name did not by itself defeat the exemption, and denial of the benefit on that ground was unsustainable.

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Issues: Whether the benefit of the small scale exemption under Notification No. 1/93-C.E. dated 28-2-1993 was denied merely because the goods bore the brand name of the customer and were supplied only to that customer.

Analysis: The relevant test was whether the branded goods indicated a connection between the goods and a person using the brand name, and whether such connection existed in the course of trade. Applying the Larger Bench view and the Board's circular, the deciding factor was that the goods were not traded in the market and were supplied only to the customer for its own use. On that reasoning, affixation of the customer's brand name on goods manufactured exclusively for that customer did not attract the mischief of the brand name prohibition in the exemption notification.

Conclusion: The assessee was entitled to the benefit of Notification No. 1/93-C.E. dated 28-2-1993, and denial of the exemption on the ground of use of the customer's brand name was unsustainable.

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