Small scale exemption under brand name rules applies only when another person uses the same mark on identical goods.

Under Notification No. 1/93-C.E., small scale exemption was available where the manufacturer used its own registered brand name, even if the same mark was also used by another person for different goods. The exclusion in paragraph 4 was held to operate only when the other person used the same brand name on identical goods, so that the products became commercially indistinguishable in the market. On that basis, the assessee with its own brand registration was entitled to exemption, while the remaining matters were remitted for disposal on the factual issue of brand-name similarity.

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Issues: (i) Whether a manufacturer clearing goods under its own registered brand name was entitled to small scale exemption under Notification No. 1/93-C.E. despite the brand name also being used by another person for different goods; (ii) whether the bar in paragraph 4 of Notification No. 1/93-C.E. applied only when the brand name owner used the same brand name on identical goods as those manufactured by the small scale unit.

Issue (i): Whether a manufacturer clearing goods under its own registered brand name was entitled to small scale exemption under Notification No. 1/93-C.E. despite the brand name also being used by another person for different goods.

Analysis: The disputed period for the appeal involving Sputnik Switch Gears Pvt. Ltd. was covered by a trade mark registration certificate showing that the brand name "Sputnik" stood registered in its favour in respect of MCBs from 28-4-1994. On that basis, the goods were treated as cleared under the assessee's own brand name, so paragraph 4 of the notification was not attracted.

Conclusion: The assessee was entitled to small scale exemption and the Revenue's appeal in that matter was rejected.

Issue (ii): Whether the bar in paragraph 4 of Notification No. 1/93-C.E. applied only when the brand name owner used the same brand name on identical goods as those manufactured by the small scale unit.

Analysis: Paragraph 4 of Notification No. 1/93-C.E. was read with Explanations IX and X. The expression "brand name or trade name" was held to require a connection in the course of trade between the specified goods of the small scale unit and the other person using the mark. Relying on the structure of the exemption, the burden on the Revenue, the object of the notification, the earlier Supreme Court ruling on the predecessor notification, and the Board's circular, the Court held that the exclusion operated only where the other person used the same brand name on identical goods, so that the goods became indistinguishable in the market. If the brand name owner used the mark on different goods, the bar did not apply.

Conclusion: The bar under paragraph 4 was applicable only where the brand name owner used the same brand name on identical goods, and not merely because the brand name belonged to another person.

Final Conclusion: The reference was answered in favour of the assessees on the scope of paragraph 4, one appeal was dismissed on the basis of the assessee's own brand registration, and the remaining appeals were remitted for final disposal on the unanswered factual issue of brand-name similarity.

Ratio Decidendi: For the exclusion in a small scale exemption notification to apply, the branded goods of the manufacturer must be such that, by reason of use of another's mark on identical goods, they become commercially indistinguishable from the goods of that other person.

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