Small scale industry exemption denied on wrong trade mark class was unsustainable where manufactured goods fell in another class.

Small scale industry exemption under Notification No. 175/86 could not be denied where the department relied on a trade mark registration in Class 10, but the assessee's manufactured goods fell in Class 9. The factual basis for alleging violation of paragraph 7 was absent because the cited registration did not cover the goods actually manufactured. On that footing, the denial of exemption was unsustainable and the relief was restored in favour of the assessee.

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Issues: Whether the denial of small scale industry exemption under Notification No. 175/86 was justified when the brand name relied upon by the department related to trade mark Class 10, while the goods manufactured by the assessee fell under Class 9.

Analysis: The dispute turned on the class of goods covered by the relevant trade mark registration. The materials showed that the assessee's goods were in Class 9, whereas the cited registration in favour of the other concern related to Class 10 goods. Since the department proceeded on the basis of a Class 10 registration while the clear factual position was that the goods in question were Class 9 goods, the factual foundation for alleging violation of paragraph 7 of the notification was absent.

Conclusion: The denial of exemption was unsustainable and was set aside; the issue is decided in favour of the assessee.

Final Conclusion: The assessee was entitled to the benefit of the small scale industry exemption, and the impugned order refusing that relief could not be sustained.

Ratio Decidendi: Exemption under a small scale industry notification cannot be denied on the basis of a trade mark registration pertaining to a different class of goods when the manufactured goods fall outside that class and no violation of the relevant notification condition is established.

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