Cum-duty threshold and proof of manufacture defeat classification of traded goods as manufactured goods for exemption purposes.

Traded goods cannot be treated as manufactured goods merely because of an alleged logo branding claim when the record shows no evidence of branding or of a manufacturing facility. On those facts, the Department's case that all clearances were manufactured goods failed. For small scale industry threshold purposes, cum-duty benefit applies where excise duty was not collected from buyers, so turnover must be treated as inclusive of duty in computing the exemption limit. Applying that approach, the clearances remained within the threshold and the demand was found unsustainable on the facts recorded.

---

---

Issues: (i) Whether the goods cleared by the assessee were liable to be treated as manufactured goods on the basis of alleged branding with the assessee's logo. (ii) Whether the assessee was entitled to cum-duty benefit while determining eligibility under the small scale industry threshold.

Issue (i): Whether the goods cleared by the assessee were liable to be treated as manufactured goods on the basis of alleged branding with the assessee's logo.

Analysis: The record did not show any evidence that the assessee had branded the traded goods with its logo. There was also no material to establish that the assessee had a manufacturing facility for such goods. The Department's view that all clearances were manufactured goods was therefore not supported by evidence.

Conclusion: The goods could not be treated as manufactured goods merely on the basis of the alleged logo branding, and the assessee's plea was accepted.

Issue (ii): Whether the assessee was entitled to cum-duty benefit while determining eligibility under the small scale industry threshold.

Analysis: The assessee had not charged excise duty from buyers. The turnover therefore had to be treated as inclusive of duty for computing the relevant threshold. On that basis, the clearances for the relevant years remained below the applicable exemption limit.

Conclusion: Cum-duty benefit was directed to be granted and the assessee was found to remain within the exemption threshold.

Final Conclusion: The demand was unsustainable on the facts found, and the impugned order was set aside with relief to the assessee.

Ratio Decidendi: In the absence of evidence of branding or manufacturing facility, traded goods cannot be treated as manufactured goods, and where duty has not been collected from buyers, turnover must be examined on a cum-duty basis for exemption eligibility.

---