Brand-name exclusion under small-scale exemption notification limits aggregate clearances to qualifying goods only

For a small-scale industry exemption notification that excludes goods bearing another person's brand name, duty-paid clearances of such excluded goods do not count towards the aggregate value of first clearances. Only clearances that actually qualify for the notification's benefit can be included in computing the exemption threshold. On that basis, the value of branded goods cleared on full duty was not includible in the prescribed limit, and the assessee remained entitled to exemption on its qualifying clearances.

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Issues: Whether, for computing the exemption limit of first clearances under Notification No. 175/86-C.E. issued under Rule 8(1) of the Central Excise Rules, 1944, the value of goods cleared on payment of full duty under another person's brand name was to be included.

Analysis: The notification grants exemption to the first clearances of specified goods up to the prescribed limit and denies the benefit where the specified goods bear the brand name or trade name of another person not entitled to the exemption. Goods cleared under such excluded category are not clearances made in terms of the exemption scheme itself. Therefore, while computing the aggregate value of first clearances, only those clearances enjoying the notification benefit can be counted, and duty-paid clearances of branded goods falling outside the notification's scope cannot be clubbed for this purpose.

Conclusion: The value of the duty-paid clearances under the other person's brand name was not includible in computing the Rs. 15 lakhs exemption limit, and the assessee was entitled to the benefit of the notification on its own qualifying clearances.

Ratio Decidendi: For a small scale industry exemption notification that excludes goods bearing another person's brand name, such excluded duty-paid clearances do not form part of the aggregate value of exempt first clearances for the purpose of the monetary threshold.

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