Brand name exemption denied for goods using another person's registered mark, but penalties deleted due to departmental understanding.

Goods cleared under a brand name registered in another person's name do not qualify for the small scale exemption under Notification No. 1/93-C.E., even if the assessee claims permissive use under a dissolution deed or honest concurrent use. The exemption denial was therefore sustained. Penalties, however, were found unwarranted because the assessee had acted under a departmental understanding allowing independent use of the brand name for small scale exemption purposes. The penalty portion was accordingly deleted.

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Issues: (i) Whether the appellants were disentitled to the benefit of Notification No. 1/93-C.E. because the goods were cleared under the brand name of another person; and (ii) whether the penalties imposed were sustainable.

Issue (i): Whether the appellants were disentitled to the benefit of Notification No. 1/93-C.E. because the goods were cleared under the brand name of another person;

Analysis: The benefit of the exemption was denied on the basis that the goods bore the brand name 'SANT', which stood registered in the name of Sant Brass Metal Works. The claim that the dissolution deed permitted use of the mark for non-ISI goods and that there had been honest concurrent use did not alter the fact that the brand name remained one registered in the name of another person for the purpose of the notification. The earlier High Court decision holding that independent use of a registered brand name of another person does not qualify for exemption was applied.

Conclusion: The appellants were not entitled to the exemption under Notification No. 1/93-C.E. and the denial of exemption was upheld against the assessee.

Issue (ii): Whether the penalties imposed were sustainable.

Analysis: The appellants had been allowed the small scale exemption under Notification No. 175/86 by departmental letter on the footing that they were using the brand name independently in their own right under the dissolution arrangement. In these circumstances, penal action was not warranted.

Conclusion: The penalties were set aside in favour of the assessee.

Final Conclusion: The exemption denial was sustained, but the penalty component of the impugned order was modified by deleting the penalties.

Ratio Decidendi: Goods cleared under a brand name registered in the name of another person do not qualify for the small scale exemption barred by the notification, but penalties may be unsustainable where the assessee acted under a departmental understanding permitting use of the brand name.

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