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Excise on Sold Brand name

Suresh Patel (Director) (33 Points)

19 February 2011

We was manufacturing a brand named product previously. Now we sold out that brand name to some other xyz company by signing an agreement. Now we are not manufacturing that product. We are trading it by purchaging from xyz. So i would like to know that is it excisable for that company or not ? Please note that that trademark was registered in the name of our company we sold it to xyz by an agreement not tranfered trademark.

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5 Replies

Arun Kumar Singh (GST Advocate) (15220 Points)
Replied 19 February 2011

Some large units get their goods manufactured from others under their brand name, instead of manufacturing it themselves. then usually control quality and may even supply the design. e.g. Bajaj electricals get many electrical goods manufactued from others; Bata procures some foot-wear from others and supplies under its brand name. In such cases; Bajaj and Bata companies will not be treated as 'Manufacturer' even if they exercise quality control, or allow use of their brand name. brand name owner will not be manufacturer.

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HS Negi (Senior Executive- F&A) (590 Points)
Replied 21 February 2011

Dear Suresh Patel

Arunji is absolutely correct. I am agree with him.

Regards

HS Negi

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Suresh Patel (Director) (33 Points)
Replied 21 February 2011

Thanks Mr. Arun Kumar singh and Mr. HS Negi for your reply. Comapany XYZ is liable for excise or not, It is SSI unit. SSI benefit of 1.5 crore is available for them or not.?

Arun Kumar Singh (GST Advocate) (15220 Points)
Replied 21 February 2011

Company xyz will be liable to pay Excise duty and they can avail SSI benefit.

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CA Unnikrishnan Nair N (Chartered Accountant) (2083 Points)
Replied 21 February 2011

Under given facts your company has not transferred the trade mark to xyz , but only gave right to use . Now they are manufacturing goods using the trade mark belonging to your company hence, xyz is not eligible for SSI exemption . But if the factory of xyz is situated in a rural area, they can still use the trade mark and avail exemption.