Registered brand name exemption upheld where garments cleared before actual registration were covered by bona fide belief and trade notice support.

Readymade garments cleared before actual registration of the brand name remained eligible for exemption where the notification required a registered brand name and registration was obtained later with retrospective effect. Mere filing of an application was insufficient to deny the exemption, and a departmental trade notice supported that position. The extended period of limitation could not be invoked because the clearances were made under a bona fide belief, and penalty was also unwarranted absent contumacious conduct. Duty demand and penalty were therefore held unsustainable, with consequential relief following.

---

---

Issues: (i) Whether readymade garments cleared during March and April 2001 were entitled to exemption when the brand name had only been applied for and was not actually registered during the relevant period; (ii) whether the demand could be sustained by invoking the extended period of limitation and imposing penalty.

Issue (i): Whether readymade garments cleared during March and April 2001 were entitled to exemption when the brand name had only been applied for and was not actually registered during the relevant period.

Analysis: The exemption under the relevant notification applied only to garments bearing a registered brand name. During the period of clearance, the brand name had not been actually registered, and the registration was obtained later with retrospective effect. The Trade Notice also clarified that duty would apply only when the brand name was actually registered, and mere filing of an application would not attract duty. On that basis, the clearances made during the relevant period fell within the exemption.

Conclusion: The issue is answered in favour of the assessee.

Issue (ii): Whether the demand could be sustained by invoking the extended period of limitation and imposing penalty.

Analysis: The appellants acted under a bona fide belief supported by the Trade Notice, and the goods were cleared when registration was still pending. In these circumstances, the department could not establish the ingredients required for invoking the longer limitation period, and the record did not disclose contumacious conduct justifying penalty.

Conclusion: The issue is answered in favour of the assessee.

Final Conclusion: The duty demand and penalty were not sustainable, and the appeal succeeded with consequential relief.

Ratio Decidendi: For exemption conditional upon a registered brand name, duty cannot be fastened for clearances made before actual registration, and where the assessee acts under a bona fide belief supported by departmental clarification, the extended period and penalty are not justified.

---