Small-scale exemption and brand name use: concessional duty cannot be denied unless the brand owner is ineligible for the benefit.

Concessional duty under Notification No. 175/86-C.E. is denied under paragraph 7 only when the manufacturer uses the brand name of another person who is not eligible for the exemption. Where the brand name owners were registered small scale industrial units and themselves qualified for the benefit, the exemption could not be refused merely because another user of the same brand name had clearances above the prescribed limit. The Department had not shown that the brand name owners were ineligible, and turnover could not be clubbed on that basis. The benefit of the notification was therefore available and denial of the concessional rate was unjustified.

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Issues: Whether the respondents were entitled to concessional duty under Notification No. 175/86-C.E. dated 01.03.1986 despite use of a brand name also used by another unit whose clearances exceeded the prescribed limit.

Analysis: The exemption under paragraph 7 of the notification is denied only where the manufacturer uses the brand name of another person who is not eligible for the exemption. The brand name owners in this case were registered small scale industrial units and were themselves eligible for the exemption. The Department did not establish that the brand name owners were ineligible, and the mere fact that another user of the brand name had clearances exceeding two crores of rupees did not justify clubbing turnover or denying the concession.

Conclusion: The respondents were entitled to the benefit of the notification and denial of the concessional rate of duty was not justified.

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