Small-scale industry exemption can be denied for use of another person's brand name where the exclusion serves anti-abuse objectives.

A small-scale industry exemption notification may validly exclude manufacturers using another person's brand name or trade name, because exemption is a conditional concession that must operate strictly within the notification's terms. The exclusionary clause was applied where the goods were marketed under a trade mark registered in a family member's name, and a private arrangement did not change that legal position. The constitutional challenge to the clause also failed: the restriction was held to have a rational nexus with preventing abuse, fragmentation, and misuse of the exemption scheme, and was not arbitrary or unreasonable under Articles 14 and 19(1)(g).

---

---

Issues: (i) whether manufacturers using a brand name or trade name registered in the name of another person were entitled to small-scale industry exemption under the relevant notification; (ii) whether paragraph 4 of the notification was arbitrary, unreasonable, or violative of Articles 14 and 19(1)(g) of the Constitution of India.

Issue (i): whether manufacturers using a brand name or trade name registered in the name of another person were entitled to small-scale industry exemption under the relevant notification.

Analysis: The exemption was held to be conditional and to operate strictly according to the language of the notification. Paragraph 4 was treated as an exclusionary condition denying the benefit where the goods bore the brand name or trade name of another person. The Court found that the petitioners were in fact using a trade mark registered in the name of one family member, and that the mutual arrangement between them did not alter the legal position that the goods were being marketed under another person's brand name for the purposes of the notification.

Conclusion: The petitioners were not entitled to the exemption and the issue was decided against the assessee.

Issue (ii): whether paragraph 4 of the notification was arbitrary, unreasonable, or violative of Articles 14 and 19(1)(g) of the Constitution of India.

Analysis: The Court held that exemption from duty is a concession and that the Government has wide latitude to impose conditions to prevent abuse, fragmentation, and misuse of the small-scale exemption scheme. A provision excluding units using another person's brand name was found to have a rational nexus with the object of ensuring that the concession reached genuine small manufacturers and could not be characterised as manifestly arbitrary or unreasonable. The challenge under Articles 14 and 19(1)(g) therefore failed.

Conclusion: Paragraph 4 of the notification was upheld as valid and the constitutional challenge failed against the assessee.

Final Conclusion: The exemption denial stood sustained, the impugned notification provision was upheld, and the writ petitions were dismissed.

Ratio Decidendi: A small-scale industry exemption notification may validly deny concessional benefit to manufacturers using the brand name or trade name of another person, and such an exclusionary condition is enforceable when it bears a rational nexus to preventing abuse of the exemption scheme.

---