Brand-name exemption depends on proof of pre-clearance affixture; unreported removals may justify extended limitation and credit reversal.

Duty on seven air-conditioners and reversal of Modvat credit on three compressors were sustained because the unreported clearance was treated as suppression, so invocation of the extended period was upheld and the reversed credit could be appropriated against the confirmed demand. For the 14 air-conditioners, the duty demand and penalty were set aside because exemption could not be denied without proof that the manufacturer had affixed another person's brand name before clearance; the agreement, purchase orders and witness evidence did not establish such affixture at the manufacturing stage. The assessee succeeded only on the branded-goods issue, while the remaining duty-related demands were maintained.

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Issues: (i) whether the duty demand on the seven air-conditioners and the related Modvat credit reversal on three compressors were sustainable, including invocation of the extended period; and (ii) whether the duty demand and penalty in respect of the 14 air-conditioners were sustainable on the ground that the goods bore the brand name of another person so as to deny exemption.

Issue (i): whether the duty demand on the seven air-conditioners and the related Modvat credit reversal on three compressors were sustainable, including invocation of the extended period.

Analysis: The amount relating to the seven air-conditioners had already been debited by the appellants in their account and the duty on the compressors had also been reversed. The removal of the seven air-conditioners without payment of duty was not disclosed to the Department, and the omission was treated as suppression rather than a mere procedural lapse. Since the duty liability had ultimately been discharged, the invocation of the extended period was not interfered with, and the appropriation of the reversed credit toward the confirmed demand was also upheld.

Conclusion: The demand of duty on the seven air-conditioners and the reversal of Modvat credit on three compressors were sustained, and the extended period was held invokable, against the assessee.

Issue (ii): whether the duty demand and penalty in respect of the 14 air-conditioners were sustainable on the ground that the goods bore the brand name of another person so as to deny exemption.

Analysis: The agreement and purchase orders did not clearly establish that the appellants had affixed the brand name at the factory stage, and the evidence of the relevant witness was found unreliable. The exemption could not be denied unless it was proved that the manufacturer had affixed another person's brand name on the goods before clearance. Applying that principle, the finding that the appellants had cleared the goods with the brand name affixed at the manufacturing stage was held unsupported by material.

Conclusion: The duty demand of Rs. 1,21,080/- and the penalty of Rs. 25,000/- were set aside, in favour of the assessee.

Final Conclusion: The appeal succeeded only to the extent of the demand and penalty relating to the 14 air-conditioners, while the remaining duty-related appropriations concerning the seven air-conditioners and three compressors were sustained.

Ratio Decidendi: SSI exemption cannot be denied unless it is proved that the manufacturer affixed another person's brand name on the goods before clearance; affixture at a subsequent stage does not defeat the exemption.

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