Brand-name clearance defeats small-scale exemption and supports extended limitation with mandatory penalty for suppression.

Goods manufactured and cleared under another entity's brand name do not qualify for small-scale industry exemption under Notification No. 8/2003, and the duty liability follows once branded clearance is established. The note also states that suppression of material facts, non-registration, and unrebutted investigation evidence justify invocation of the extended limitation period, and that pre-show-cause payment does not reduce mandatory penalty under Section 11AC once its ingredients are satisfied. The stated effect is denial of exemption, confirmation of duty demand, and application of penalty equal to the duty evaded.

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Issues: (i) whether the goods manufactured and cleared under a brand name belonging to another entity were entitled to small-scale industry exemption under Notification No. 8/2003 dated 1-3-2003; (ii) whether the demand was barred by limitation and the penalty under Section 11AC of the Central Excise Act, 1944 could be restricted to the portion of duty paid before issue of the show-cause notice.

Issue (i): whether the goods manufactured and cleared under a brand name belonging to another entity were entitled to small-scale industry exemption under Notification No. 8/2003 dated 1-3-2003.

Analysis: The evidence on record established that the brand name was affixed to the goods and that the brand belonged to another concern. The contemporaneous statements relied upon in investigation were not rebutted. Once the goods were found to be manufactured and cleared under another's brand name, the appellant could not claim the benefit of the small-scale industry exemption. The classification and duty liability followed from the admitted manufacture and clearance of branded goods without registration and without payment of duty.

Conclusion: The exemption claim was correctly denied and the duty demand was sustainable.

Issue (ii): whether the demand was barred by limitation and the penalty under Section 11AC of the Central Excise Act, 1944 could be restricted to the portion of duty paid before issue of the show-cause notice.

Analysis: The material gathered in search and investigation showed suppression of material facts and non-registration, bringing the case within the extended period. The finding of deliberate suppression also justified the invocation of mandatory penalty. Payment made before the show-cause notice did not furnish a legal basis to confine the penalty below the statutory measure once the ingredients for Section 11AC were established.

Conclusion: The demand was not time-barred and penalty equal to the duty evaded was payable without reduction for pre-notice payment.

Final Conclusion: The assessee's challenge failed on merits and limitation, while the Revenue's challenge to the reduced penalty succeeded; the adjudication order was substantially restored.

Ratio Decidendi: Goods manufactured and cleared under another's brand name are not entitled to small-scale industry exemption, and where suppression of facts and intent to evade duty are established, the extended period and mandatory penalty equal to duty apply.

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