Small scale exemption turns on who actually manufactured branded medicaments and whether the factory was merely hired to a loan licensee.

Eligibility for small scale exemption depended on whether branded medicament clearances were made by the assessee itself under another person's brand name, or whether the factory was genuinely hired out to a loan licensee who manufactured the goods in its own right. The legal position accepted that branded clearances are excluded only in the former situation, while they are includible where the loan licensee manufactures in the hired factory. As the decisive factual question had not been examined against the documentary evidence relied on by the appellant, the matter was remanded for fresh factual verification and the impugned order was set aside.

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Issues: Whether the clearances of branded medicaments were to be included in the aggregate value of clearances for eligibility to the small scale exemption, and whether the factual matrix established that the factory had been hired to the loan licensee.

Analysis: The legal position was accepted that where an assessee merely gives the factory on hire to a loan licensee who manufactures goods under its own brand name, the clearances are to be counted for eligibility purposes. Conversely, where the assessee itself manufactures goods under the brand name of another person, those clearances are excluded from the aggregate for exemption purposes. The dispute therefore turned on facts, namely whether the goods were manufactured by the loan licensee in the appellant's factory or by the appellant on behalf of the loan licensee. The factual issue had not been examined on the basis of the documentary evidence said to support the appellant's stand.

Conclusion: The matter required fresh factual examination and the impugned order was set aside with remand to the original adjudicating authority.

Ratio Decidendi: In determining eligibility under the small scale exemption, branded clearances are excluded only when they are goods manufactured by the assessee under another person's brand name, whereas clearances are includible when the factory is in fact hired out to the loan licensee and the latter manufactures the goods itself.

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