Subject :     Issue of Notification No. 125/94-CE, dt. 31.8.94 regarding brand name provision  and for deletion of DGTD condition in the general SSI scheme.

        I am directed to refer to notification No. 105/94-CE, dated 4.5.94 and notification No. 107/94-CE, dated 11.5.94 which were issued with a view to  provide that in respect of goods falling under heading No. 83.01, the restriction on use of name or mark not belonging to any particular person will not apply for benefit of exemption / concession under notification No. 1/93-CE.

2.    In this connection your attention is kindly invited to the instructions contained in paragraph 9 of the Ministry's letter F No. 356/6/94-TRU, dated 5.5.94 and letter F.No.B.40/12/94-TRU, dated 12.5.94.  It was reported that there is a practice in the lock industry to use a name or mark even though such mark or name is not owned by any particular person. Such marks are freely available and any manufacturer can use them. A doubt was raised as to whether the use of such marks  or names by more than one manufacturer will deprive units of the benefits of small scale exemption scheme under notification No. 1/93-CE. In order to remove doubts and to carry out the intention of SSI exemption notification in such cases, a specific amendment was made to the notification by adding third proviso to the paragraph 4 by notification No. 105/94-CE, dated 4.5.94, further amended by notification No. 107/94-CE, dated 11.5.94.  It was, however, felt that even without such an amendment, the benefit seemed to be available. This view has been confirmed by the Law Ministry.

3.    In this connection, the relevant extracts of the opinion of the Law Ministry are reproduced below :

        "Perusal of the said explanation (Explanation IX to the notification No. 1/93-CE) will show that to satisfy the requirement of brand name or trade name, it is necessary that the trade name must indicate a connection in the course of trade between such specified goods and some person using such name or mark with or without any indication or identity of that person. Unless connection  between the  trade name and the person with whom that trade name is to be identified can be established, the requirement of brand name or trade name as provided for in the the said notification will not be satisfied.  It is an admitted case of the Department that in respect of locks, the units are making locks bearing the same name of mark even though there is no person who claims ownership to that mark or name. The names being used in the manufacture of locks by these small scale units do not belong to nay particular manufacturer and any unit is free to use any name. Therefore, in our view, without the issue of Notification of 4th / 11th May, 1994 units which are using trade name or brand name, which does not belong to any person, were eligible for exemption under the said notification because of explanation IX in the said notification. Admittedly, the notification dated 4th /11th May, 1994, is classificatory in nature and  the purpose could have been achieved by issuing a clarification to the field formations."

4.    From the above mentioned opinion of the Law Ministry, it is clear that if a brand name is not owned by any particular person, the use thereof  will not deprive a unit of the benefit of the small scale exemption scheme.  This applies not only to locks but to all other goods specified in notification No. 1/93-CE.

5.    Since the amendment made by notification No. 107/94-CE (or 105/94-CE earlier) was really not necessary but was made pending confirmation of our view by the Law Ministry, it has been decided to do away with this amendment and the third proviso added to paragraph 4 of notification No.1/93-CE has been deleted by notification no. 125/94-CE dated 31.8.94 (a copy of which is enclosed).  The field formations may be advised accordingly and the trade may be informed suitably, that even after deletion of the third proviso referred to above, the lock manufacturers can not be denied the benefit of exemption under notification No.1/93-CE merely on the ground that they are using marks, labels, etc. used by other manufacturers, so long as such marks, etc. do not belong to a particular person.  The case could be the same in respect of all other goods specified in notification No 1/93-CE.

6.    In the same amending notification, the condition that a DGTD registered unit will not entitled to the benefit under notification No. 1/93-CE has been removed. This has been done consequent to abolition of DGTD.