SSI exemption for made-to-order goods upheld where OEM logo did not amount to brand name use

Small-scale goods manufactured to order and supplied exclusively to the original equipment manufacturer for its own use were not treated as branded goods merely because they bore that manufacturer's logo. Reading the exemption notification with the CBEC clarification, the text states that goods made to a customer's specifications and not traded in the market do not amount to use of another's brand name for denying SSI benefit. On those facts, the small scale exemption remained available and the denial of duty and penalty relief was unsustainable.

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Issues: Whether goods manufactured by a small scale unit and cleared with the logo of the original equipment manufacturer, solely for supply to that manufacturer for use in its machinery/components/equipment, were to be treated as branded goods so as to deny the benefit of the SSI exemption.

Analysis: The applicable exemption notification was read with the CBEC clarification that goods manufactured to the specifications of a particular customer and supplied to that customer for its own use, without being traded in the market, do not amount to use of another's brand name for denying small scale exemption. The goods here bore the logo of the original equipment manufacturer and were supplied exclusively to that manufacturer, and the factual assertion that the entire production was sold to the original manufacturer remained uncontroverted. On that basis, the goods were treated as falling within the scope of the exemption and not as branded goods attracting duty and penalty.

Conclusion: The assessee was entitled to the SSI exemption and the denial of benefit was unsustainable.

Final Conclusion: The order confirming duty and penalty was set aside and the assessee's exemption claim succeeded with consequential relief.

Ratio Decidendi: Where small scale goods are made to order and supplied exclusively to the original equipment manufacturer for its own use, affixing that manufacturer's logo does not by itself amount to use of a brand name so as to deny SSI exemption, provided the goods are not traded as such in the market.

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