Exclusion of branded goods value under small-scale exemption failed where no contemporaneous evidence supported third-party manufacture.

Entitlement to Notification No. 175/86 depended on the aggregate value of clearances in the preceding financial year, and para 3 permitted exclusion of branded goods manufactured for another person. The appellants failed to disclose in their classification list or reply to the show cause notice that they had manufactured branded goods for a third party, and produced no contemporaneous evidence before the adjudicating authority to support that claim. Their own declaration stated that they did not manufacture branded goods. Later letters and gate passes were therefore treated as unreliable and as an afterthought, so the value of branded goods could not be excluded and denial of the notification benefit was upheld.

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Issues: Whether the appellants were entitled to the benefit of Notification No. 175/86 by excluding the value of branded goods allegedly manufactured for a third party while computing the aggregate value of clearances for the preceding financial year.

Analysis: The benefit of the notification depended on the aggregate value of clearances in the preceding financial year and the exclusion, under para 3, of the value of branded goods manufactured by an assessee for another person. The appellants did not disclose in the classification list or in reply to the show cause notice that they had manufactured branded goods for any third party, and no contemporaneous evidence was produced before the adjudicating authority to support that claim. Their own declaration in the classification list stated that they did not manufacture branded goods. In these circumstances, the later-produced letters and gate passes were not accepted as reliable evidence, and the plea for exclusion of branded goods value was treated as an afterthought.

Conclusion: The appellants were not entitled to exclude the value of branded goods, and denial of the benefit of Notification No. 175/86 was upheld.

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