TMI Blog1994 (7) TMI 91X X X X Extracts X X X X X X X X Extracts X X X X ..... s of the Small Scale Industries is concerned, it is exempted from excise duty if the goods are upto the tune of Rs. 20,00,000/- under the Notification dated 1-3-1986. But as far as the 2nd class of Small Scales Industries are concerned, it is not eligible for such exemption. 3.As the common questions of law and facts were involved in all the writ petitions, the petitions were heard together and are disposed of by a common judgment. 4.It has been submitted that the object of both the Notifications i.e. dated 1-3-1986 and 22-9-1987 is three fold; firstly to grant exemption to the manufacturers of the goods which sells the goods worth Rs. 20,00,000/-; secondly to see that the "Big Industrial House" did not avoid payment of excise duty; and thirdly to give an advantage to Small Scale Industries in the market as against "Big Industrial House". The question as to by putting the brand name of the purchaser or by not putting the brand name of the purchaser does in any way affect the manufacturing of the goods, because it was submitted that the excise duty is leviable on the manufacturing of the goods, deserved to be answered in this writ petition. A similar question came up for conside ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ter was again considered by the Hon'ble Supreme Court and the case of M/s. Sidhosons Another v. Union of India and Others (supra) was relied upon. 7.Thereafter by means of Notification No. 175/86-C.E., dated 1-3-1986, exemption to first clearance of specified goods up to the value of rupees fifteen lakhs and concessional duty on subsequent clearance in the case of manufacturer having clearance not exceeding rupees one and a half crores in the preceeding year was issued by Government of India. Explanation IV of the said Notification reads as under : "Explanation IV - For the purposes of this notification, where the specified goods manufactured by a manufacturer, are affixed with a brand name or trade name (registered or not) of another manufacturer or trader, such specified goods shall not, merely by reason of that fact, be deemed to have been manufactured by such other manufacturers or trader." 8.It seems that the aforesaid Notification was issued in confirmity with the aforementioned judgments of the Supreme Court. But the position was complicated again by issuance of another Notification No. 223/87-C.E., dated 22-9-1987 which reads as under : "GOVERNMENT OF INDIA ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... acturer affixes the goods with brand name of a person with whom he had entered into agreement, no exemption to him would be given, but the manufacturer puts its own brand name or not and sells it into the market or to the purchaser who puts its brand name upon such goods, such manufacturer would be entitled for the exemption. The Explanatory note to the amendment dated 22-9-1987, further made it clear that this amendment seeks to deny small scale exemption in respect of specified goods affixed with the brand name/trade name of a person who is not eligible for the exemption under Notification No. 175/86-C.E., dated 1-3-1986. 10.On 9-12-1987 this Court passed order to the effect that the counter affidavit may be filed on or before 11-1-1988. A rejoinder affidavit may be filed on or before the petitioner is taken up for admission. It was further provided if considered necessary the petition shall be disposed of at the admission stage. Operation of the Notification dated 22-9-1987, pertaining to the petitioner would remain stayed subject to the condition that the petitioner furnishes bank guarantee for the amount of the excise duty payable by them on the clearance of the goods with t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Therefore a mere adding of brand name is an irrelevant consideration as far as the excise duty is concerned. Therefore having regard to the settled legal position even if a small scale industrial unit like the petitioner, affixed the brand name of the large scale unit, the manufacturer would continue to be that of the small scale industry and the incidence of excise duty could be avoided by the large scale unit, by requiring the Small Industrial unit to produce specified goods without the brand name and then putting on the brand name itself and the large scale unit would, even under the impugned notification, reap the benefit of the exemption under the earlier notification. The distinct between the two classes of Small Scale Industries cannot therefore be justified with reference to the first object of the impugned notification. In my view the distinction between the two classes of Small Scale Industries cannot be justified even with reference to the second objective, viz. to protect Small Scale Industries from competition with large scale units. Whether or not the brand name is stipulated to be added to the goods by the large scale unit as part of its specification or servi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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