Trade mark assignment secured small-scale exemption, while penalty demands failed and stock-shortage duty was sent back for recomputation.

Valid assignment of the trade mark 'Decon', together with goodwill, entitled the assignee-manufacturer to the benefit of Notification No. 1/93, because goods made under an owned mark could not be treated as branded goods of another. Once the exemption was upheld, the principal duty demand and the consequential penalties under Rule 173Q and Rule 209A could not survive, as no independent violation was established against the firm or partner. The stock-shortage finding was not disturbed, but the duty attributable to that shortage was remitted for fresh computation on the correct legal basis after notice.

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Issues: (i) Whether the assignee of the trade mark "Decon" was entitled to the benefit of Notification No. 1/93 for goods manufactured under that trade mark. (ii) Whether the penalties imposed under Rule 173Q and Rule 209A could survive once the principal duty demand was set aside. (iii) Whether the duty demand relating to stock shortage required interference or recomputation.

Issue (i): Whether the assignee of the trade mark "Decon" was entitled to the benefit of Notification No. 1/93 for goods manufactured under that trade mark.

Analysis: The decisive question was whether the trade mark had been merely permitted for use or had been validly assigned. The record showed an outright assignment of the proprietary rights in the trade mark together with goodwill in favour of the appellant firm. Once the firm became owner of the mark, manufacture of goods under that mark could not be treated as manufacture of branded goods belonging to another. The exemption was therefore available to the appellant. The contrary view that the assignment was a sham was rejected.

Conclusion: The issue was decided in favour of the assessee.

Issue (ii): Whether the penalties imposed under Rule 173Q and Rule 209A could survive once the principal duty demand was set aside.

Analysis: The major duty demand rested only on denial of the exemption. Once the exemption was held admissible, the foundation for the penalty on the firm disappeared. No separate material was shown to justify penalty on the partner either, as there was no established violation independent of the firm's entitlement to manufacture under the assigned trade mark.

Conclusion: The penalties under Rule 173Q and Rule 209A were set aside.

Issue (iii): Whether the duty demand relating to stock shortage required interference or recomputation.

Analysis: The finding regarding shortage in stock was not interfered with. However, since the appellant was held entitled to the exemption, the duty attributable to the shortage had to be worked out afresh on the correct legal basis and after notice to the appellant.

Conclusion: The shortage-related duty was remitted for recomputation.

Final Conclusion: The impugned order was substantially set aside, the principal duty demand and penalties were annulled, and only the stock-shortage liability was left open for fresh computation.

Ratio Decidendi: A valid assignee of a trade mark becomes entitled to claim the small-scale exemption for goods manufactured under that mark, and penalties based solely on denial of that exemption cannot survive once ownership of the mark is established.

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