Brand name use defeats SSI exemption, but export clearances escape duty and directors avoid personal penalty.

Use of another person's registered or established brand name disentitles an assessee to small scale industry exemption under Notification No. 8/2003-CE, so duty remains payable on domestic clearances even if the goods were supplied to OEM buyers. However, duty cannot be demanded on exported goods, and the demand must be reduced accordingly. Personal penalties on directors are not sustainable where the dispute turns on interpretation of the exemption and brand-name classification, and intentional evasion is not established. The unit therefore remains liable only to the extent of non-export clearances, while the directors are entitled to relief from penalty.

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Issues: (i) whether use of a brand name owned by another person disentitled the assessee to small scale industry exemption and whether duty was payable on clearances other than exports; (ii) whether personal penalties on the directors were sustainable.

Issue (i): whether use of a brand name owned by another person disentitled the assessee to small scale industry exemption and whether duty was payable on clearances other than exports.

Analysis: The assessee had used the mark only until it was restrained from doing so and later agreed to remove it pursuant to settlement, which showed that the mark was not its own. The mark was treated as belonging to another person and the assessee could not claim ownership from the inception merely because the registration was later obtained in another's name. Once the goods were found to bear another person's brand name, the exemption was not available. The assessee's supply to OEM buyers did not alter the position. At the same time, duty could not be demanded on goods exported by the assessee.

Conclusion: The assessee was not entitled to the exemption for domestic clearances under Notification No. 8/2003-CE, but duty demand was not sustainable on exported goods and the matter was remanded for corresponding reduction.

Issue (ii): whether personal penalties on the directors were sustainable.

Analysis: The dispute turned on interpretation of the exemption notification and the brand name controversy had also been subject to litigation. In these circumstances, intentional duty evasion by the directors was not established.

Conclusion: The personal penalties on the directors were set aside.

Final Conclusion: The assessee unit remained liable to duty on non-export clearances, the demand had to be curtailed for export goods, and the individual appellants obtained complete relief from penalty.

Ratio Decidendi: Use of another person's registered or established brand name disentitles an assessee to SSI exemption, while personal penalty cannot be sustained in the absence of intentional evasion where the dispute is one of bona fide interpretation.

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