Small-scale exemption and brand name bar: pre-printed supplier marks did not defeat the exemption claim.

Small-scale industry exemption under Notification No. 175/86 was not barred merely because printed paper containers already bore the ITC mark on the inner flap when received from the supplier. The decisive question was whether the specified goods carried the brand name or trade name of another person not entitled to the exemption; the source or stage at which the mark was affixed was treated as immaterial. The mark was regarded as a house mark, not the trade name or brand name of the goods packed in the containers. On that basis, the bar in para 7 did not apply, and the exemption claim, duty demand, and penalty were unsustainable.

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Issues: Whether the benefit of the small-scale industry exemption under Notification No. 175/86 could be denied because the printed paper containers received by the appellants already carried the mark of ITC on the inner flap, although the appellants themselves had not affixed that mark.

Analysis: The containers were received from the supplier with the mark already printed, and the appellants only carried out the processing to convert them into packing boxes. The mark was held not to be the trade name or brand name of the goods packed in the containers. The exclusion in para 7 of the notification applies where the specified goods carry the brand name or trade name of another person not entitled to the exemption, and the manner in which the mark was placed was treated as immaterial. The reasoning adopted in the earlier Tribunal decision, as affirmed by the Supreme Court, and the distinction between a house mark and a trade name supported the appellants' claim.

Conclusion: The mark of ITC did not attract the bar under para 7 of the notification, and the denial of exemption, duty demand, and penalty were unsustainable. The issue was decided in favour of the assessee.

Ratio Decidendi: For the purpose of a small-scale industry exemption, the decisive factor is whether the specified goods carry the brand name or trade name of another ineligible person; it is not material whether the mark was affixed by the manufacturer or already appeared on the inputs or packaging at an earlier stage.

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