Trade-marked components and contract-linked markings excluded exemption under Notification No. 175/86-C.E. for ancillary units

Ancillary units were treated as manufacturers for central excise purposes, but the exemption under Notification No. 175/86-C.E. was unavailable because the finished components had to bear stencilled work-order, project, code and related particulars linking them to the principal manufacturer and project recipient. Those markings were held to create a connection in the course of trade and to attract Explanation VIII to paragraph 7 of the notification, which excludes goods bearing another person's brand name or trade name. The prior practice of clearing the goods on duty and the contractual arrangement between the parties reinforced application of the exclusion, so the exemption claim failed.

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Issues: Whether the petitioners' ancillary units were entitled to the exemption under Notification No. 175/86-C.E. dated 1-3-1986 when the finished components bore stencilled particulars and were supplied under a contract linking them to the principal manufacturer and project recipient.

Analysis: Although the ancillary units were treated as manufacturers for central excise purposes, the exemption was denied because the facts showed that the components were required to be stencilled with work order, project, code and related particulars, thereby indicating a connection in the course of trade between the goods and the concerned persons. On this factual matrix, the markings attracted Explanation VIII to paragraph 7 of the notification, which excludes goods bearing a brand name or trade name of another person. The earlier practice of clearing such goods on duty and the contractual arrangement between the parties reinforced the conclusion that the notification's exclusion applied.

Conclusion: The exemption under Notification No. 175/86-C.E. dated 1-3-1986 was not available, and the petitioners' claim failed.

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